By Fiona Mehta
In the case of Delta Electro Mechanical Pvt. Ltd. v Sahara Hospitality Ltd, it was permitted withdrawal of insolvency proceedings and termination of Corporate Insolvency Resolution Process (CIRP) against Sahara Hospitality Ltd. has been terminated as Parties enter full and final settlement, according to the National Company Law Tribunal (“NCLT”), Mumbai Bench, on July 28, 2022.
Facts of the case: For a total of Rs. 32 crore, Sahara Hospitality Ltd. (the “Corporate Debtor”) had given Delta Electro Mechanical Pvt. Ltd. (the “Operational Creditor”) the go-ahead to supply, install, test, and commission the HVAC and electrical system at the Hotel Sahara Star in Mumbai (approx.).
The Operational Creditor filed a petition under Section 9 of the Insolvency and Bankruptcy Code 2016 (“IBC”) in 2018 after the Corporate Debtor fell behind on payments, asking for the start of CIRP against the Corporate Debtor for a default of Rs. 51,77,97,495 (principal amount of Rs. 32,72,03,256 and interest at 18 percent, Rs. 19,05,94,239/-). When the parties came into settlement terms on April 23, 2019, the NCLT decided to dismiss the case in 2021. Under these conditions, the Corporate Debtor agreed to pay the Operational Creditor Rs. 20 Crore over 14 instalments. In the event that the provisions of the settlement are broken, the Operational Creditor is free to resurrect the Petition, according to the NCLT Bench.
The Operational Creditor filed MA 2649 of 2019 to request the reactivation of the earlier Company Petition since the Corporate Debtor disregarded the conditions of the settlement agreement. The Parties then agreed upon a Second Terms of Settlement on November 21, 2019. However, the Corporate Debtor once more disregarded its obligations to make the payments.
Application for withdrawal: In light of the full and final settlement reached between the parties for an amount of Rs. 8,00,00,000/- to be paid by the Corporate Debtor, the IRP filed an application under Section 12A of the IBC seeking the dismissal of the petition filed by the Operational Creditor.
In light of the full and final settlement reached between the parties for an amount of Rs. 8,00,00,000/- to be paid by the Corporate Debtor, the IRP filed an application under Section 12A of the IBC seeking the dismissal of the petition filed by the Operational Creditor.
Before the Bench, the operational creditor confirmed that it had received the total sum specified in the settlement agreement. The Bench noted that nothing remains in the Company Petition after accounting for the consent requirements, and therefore the rigour of the CIRP was terminated against the Corporate Debtor.
NCLT Mumbai Bench: Justice P.N. Deshmukh (Judicial Member)
Counsel for Operational Creditor: Mr. Abhay Itagi
Counsel for Corporate Debtor: Mr. Nausher Kohli
Counsel for erstwhile management: Mr. Sandeep Bajaj