Case Note & Summary
The appeal was filed by United Futuristic Trade Impex Pvt. Ltd. (the Operational Creditor) against an order dated 22.01.2025 passed by the NCLT, Jaipur Bench, which closed its Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC) against Varaha Infra Ltd. (the Corporate Debtor). The Operational Creditor had filed the application claiming an amount of Rs. 5,54,29,101/-, including interest of Rs. 92,59,040/-. During the proceedings, the Corporate Debtor stated that the entire principal amount of Rs. 4,61,00,000/- had been paid, and a substantial part of the interest would be paid shortly. The NCLT recorded this on 29.04.2024 and listed the matter for further hearing. Subsequently, the NCLT found that the Corporate Debtor had paid a total of Rs. 6,17,45,142/-, which covered the entire principal and substantial interest, and therefore closed the application. The Operational Creditor appealed, arguing that the payments were not in accordance with consent terms allegedly entered between the parties during the pendency of the Section 9 proceeding. The NCLAT considered the submissions and perused the record. It held that the Adjudicating Authority was correct in closing the application since the entire principal amount and substantial interest had been paid. The NCLAT noted that the consent terms, even if not adhered to, do not override the statutory scheme of the IBC, and once the debt is satisfied, the petition cannot be revived. The appeal was dismissed, and the order of the NCLT was upheld.
Headnote
A) Insolvency Law - Section 9 Application - Payment of Principal Amount - The NCLT closed the Section 9 application after the Corporate Debtor paid the entire principal amount of Rs. 4,61,00,000/- and additional amounts totaling Rs. 6,17,45,142/-, observing that the entire amount mentioned in Part IV was received. The NCLAT upheld this, holding that once the debt is satisfied, the petition cannot be revived. (Paras 1-6) B) Insolvency Law - Consent Terms - Non-compliance - The Appellant argued that payments were not in accordance with consent terms entered during the proceedings. The NCLAT rejected this, stating that the consent terms do not override the statutory scheme of the Insolvency and Bankruptcy Code, 2016, and the Adjudicating Authority was justified in closing the application. (Paras 3-6)
Issue of Consideration
Whether the NCLT was correct in closing the Section 9 application after the Corporate Debtor paid the entire principal amount and substantial interest, despite the Appellant's contention that payments were not in accordance with consent terms.
Final Decision
Appeal dismissed. Order of NCLT, Jaipur Bench dated 22.01.2025 closing the Section 9 application is upheld.
Law Points
- Section 9 application under Insolvency and Bankruptcy Code
- 2016 can be closed if entire principal amount is paid
- even if interest remains disputed
- consent terms between parties do not override the statutory scheme of the Code
- once debt is satisfied
- the petition cannot be revived.
