Corporate Insolvency Resolution Process Can Be Resume On Failure Of Settlement Agreement: NCLAT Chennai
Akshay Sharma
30 April 2022 12:38 PM IST
NCLAT Chennai bench comprising of Justice M Venugopal and Mr. Kanthi Narahari in the case of ICICI Bank versus OPTO Circuits (India) limited held that Corporate Insolvency Resolution Process (CIRP) can be revive/resume in case of failure of settlement agreement between the parties. ICICI Bank filed an appeal before NCLAT Chennai under Section 61 of the Insolvency & Bankruptcy...
NCLAT Chennai bench comprising of Justice M Venugopal and Mr. Kanthi Narahari in the case of ICICI Bank versus OPTO Circuits (India) limited held that Corporate Insolvency Resolution Process (CIRP) can be revive/resume in case of failure of settlement agreement between the parties.
ICICI Bank filed an appeal before NCLAT Chennai under Section 61 of the Insolvency & Bankruptcy Code, 2016 against the order dated 17.08.2020 of NCLT Bengaluru wherein it has allowed the withdrawal of IBC petition but instead of giving liberty to revive the CIRP granted liberty to file a fresh petition under IBC against OPTO Circuits (India) limited (OPTO).
Brief Background
ICICI Bank filed a petition under Section 7 of the Code against OPTO which was admitted by NCLT Bengaluru on 18.03.2020 and CIRP was initiated. OPTO filed a writ petition before Karnataka High Court and a stay was granted on CIRP on 24.03.2020. However, in the meanwhile settlement was entered between ICICI Bank and OPTO. Accordingly, ICICI Bank file an application before NCLT Bengaluru to terminate the CIRP and grant liberty to revive/resume CIRP in case of failure of settlement between the parties.
NCLT Bengaluru allowed the termination of CIRP but did not grant the liberty to revive/resume rather granted liberty to file a fresh petition against OPTO.
Contentions Of ICICI Bank
It was contended by ICICI Bank that liberty to revive/resume the CIRP ought to have been granted by NCLT in terms of the Appellate Tribunal judgement dated 14.07.2020 in the case of Vivek Bansal v. Burda Druck India Pvt. Ltd.
Contentions Of OPTO
It was contended by OPTOT that it has unable to pay the balance amount as its accounts have been blocked in terms of order passed by Enforcement Directorate and it may be permitted to submit a fresh proposal of settlement to ICICI Bank.
Decision/Analysis By NCLAT
NCLAT noted that there is only one point of consideration in the present appeal whether the Adjudicating Authority's decision in directing that failing to adhere to terms and conditions of one-time settlement, the Appellant Bank is entitled to file fresh Company Petition is justifiable?
NCLAT held that the NCLT ought to have taken into consideration the decision of NCLAT in the case of Vivek Bansal as a precedent in a similarly situated facts.
"21…Even otherwise the Adjudicating Authority failed to take note of the prayer made by the Corporate Debtor in I.A. No. 273 of 2020 dated 05.08.2020 wherein it is prayed that the matter may be disposed of as settled by giving liberty to the Petitioner Bank (Appellant) to resume the CIRP in case of non-compliance of the terms of the OTS."
NCLAT modified the liberty granted by NCLT Bengaluru and granted liberty to ICICI Bank to seek revival/restoration of CIRP in case of non-compliance of the settlement agreement.
Case title: ICICI Bank versus OPTO Circuits India Limited
Counsel for Appellant: Mr. V Suresh, Mr.Dev Eshwar,
Counsel for Respondent: Mr. Navaneetha Krishnan, Mr. NP Vijaya Kumar
