NCLT, Mumbai allows withdrawal of CIRP process of Sahara Hospitality Ltd., as parties enter into settlement
NCLT, Mumbai allows withdrawal of CIRP process of Sahara Hospitality Ltd., as parties enter into settlement
The bench comprised of Justice P.N. Deshmukh (Judicial Member) and Shri Shyam Babu Gautam (Technical Member).
The Mumbai Bench, National Company Law Tribunal ("NCLT") has recently permitted the withdrawal of insolvency proceedings and termination of Corporate Insolvency Resolution Process ("CIRP") against Sahara Hospitality Ltd., as the Parties have entered in a full and final settlement.
The facts of the case are that Sahara Hospitality Ltd. ("Corporate Debtor") had awarded Delta Electro Mechanical Pvt. Ltd. ("Operational Creditor") a work order for supplying, installation, testing and commission of HVAC and electrical system at Hotel Sahara Star, Mumbai, for an amount of Rs. 32 crore (approx.).
Upon defaulting in paying the payments, the Operational Creditor in 2018 filed a Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC"), seeking to initiate CIRP against the Corporate Debtor for a default of Rs. 51,77,97,495/- (Principal Amount of Rs. 32,72,03,256 and Interest @ 18% Rs. 19,05,94,239/-). However, the petition was deposed of in 2021 by the NCLT when the parties entered into a settlement of 20 crores to the Operational Creditor in 14 instalments. The NCLT Bench had granted liberty to the Operational Creditor to revive the Petition in case of breach of settlement terms.
However, the Corporate Debtor failed to adhere to the settlement terms and the Operational Creditor filed MA 2649 of 2019 seeking revival of the earlier Company Petition. Subsequently, a Second Terms of Settlement were drawn between the Parties on 21.11.2019. Nonetheless, the Corporate Debtor yet again failed to oblige with the payment commitments.
Owing to the clear existence of debt and default, there was a liability on the Corporate Debtor to repay the said debt. Therefore, the petition was admitted under Section 9 of the IBC and initiated CIRP against the Corporate Debtor. Ms. Mamta Binani was appointed as the Interim Resolution Professional ("IRP").
The IRP filed an application under Section 12A of the IBC seeking withdrawal of the petition filed by the Operational Creditor, in view of full and final settlement entered between parties for an amount Rs. 8,00,00,000/- to be paid by the Corporate Debtor. It was confirmed by the Operational Creditor that the entire settlement amount has been received.
Accordingly, the Bench observed that taking the consent terms into account, nothing survives in the Company Petition.
The order was passed on 28.07.2022.
