The National Company Law Appellate Tribunal (NCLAT), New Delhi bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Technical Member was hearing on Monday, an appeal on the revival of a withdrawn Company Petition and held that consent terms in a settlement agreement can revive a withdrawn Company Petition in case of default, even without a revival provision in the withdrawal order.
In the present case, the Financial Creditor filed a Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016 alleging default. A consent term was executed between the Financial Creditor and the Respondent, which was placed on record. The Company Petition was subsequently withdrawn based on the consent terms. However, the Respondent defaulted on the payment as per the consent terms, and the Financial Creditor filed an application seeking the revival of the Company Petition, which was rejected by the Adjudicating Authority.
The main issue in this appeal was whether the consent terms allowed for the revival of the Company Petition in case of default. The Financial Creditor argued that the consent terms clearly stipulated that in the event of default, the settlement shall be cancelled, and the company petition can be revived. On the other hand, the Respondent argued that since no specific liberty was granted in the order allowing the withdrawal of the Company Petition, there was no provision for reopening the petition.
The Appellate Tribunal examined the consent terms and observed that Clause 10 of the consent terms provided an undertaking by the Respondent for revival in case of default. The Appellate Authority also referred to a previous judgment that supported the Financial Creditor's argument, where it was held that consent terms entitling the revival of the petition in case of default should be treated as part of the order.
The Appellate Authority concluded that the consent terms in the present case allowed for reviving the Company Petition in case of default. The absence of specific liberty granted by the Adjudicating Authority in its order allowing the withdrawal of the petition did not preclude the revival. The Appellate Tribunal set aside the impugned order and revived the Company Petition to be heard by the Adjudicating Authority in accordance with the law.
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