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Informative

Breach Of Settlement Agreement Not 'Operational Debt' Under Section 5(21) Of IBC: NCLT Kolkata

Update / Judgement Date

13 Jun 2024

Source

Live Law

Author

Team — WCP Legal Desk

Reading Time

1 min read

Insolvency & Bankruptcy Code

The NCLT Kolkata bench, comprising D. Arvind (Technical Member) and Bidisha Banerjee (Judicial Member), ruled that breach of a settlement agreement between M/s. Simplex Infrastructure Limited (Corporate Debtor) and M/s. Amrik Cranes and Infrastructure (Operational Creditor) does not qualify as "Operational Debt" under Section 5(21) of the IBC. \r


Despite a settlement for Rs. 2,86,27,594 in six instalments, only the first was paid, leading the Operational Creditor to file under Section 9 of IBC. Citing Trafigura India Pvt. Ltd. v. TDT Copper Ltd and Maldar Barrels Pvt Ltd v. Pearson Drums and Barrels Pvt Ltd, NCLT held it lacked jurisdiction for settlement breaches, advising parties seek alternative legal remedies. \r


Consequently, the petition was dismissed by the NCLT.