# In the matter of Desh Bhushan Jain vs. Abhay Kumar

> NCLAT judgment dated 2024-05-20. Citation: TCN-2024-NCLAT-00423. This case involves an appeal against an order passed by the Adjudicating Authority (National…

- **Court:** NCLAT
- **Order date:** 20 May 2024
- **Citation:** TCN-2024-NCLAT-00423
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/desh-bhushan-jain-vs-abhay-kumar-b46753a8

## Summary

### Background

This case involves an appeal against an order passed by the Adjudicating Authority (National Company Law Tribunal) admitting a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC). The appellant, the erstwhile director of Angel Promoters Pvt. Ltd. (Corporate Debtor), challenges the admission of the petition filed by the financial creditors. The corporate debtor had availed a loan from the financial creditors and defaulted on repayment. A settlement agreement was reached, and the first petition filed by the financial creditors was withdrawn. However, the corporate debtor failed to adhere to the terms of the settlement, leading the financial creditors to file a second petition under Section 7 of the IBC, which was admitted by the Adjudicating

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## Facts

Angel Promoters Pvt. Ltd. (Corporate Debtor) availed a loan from financial creditors. Upon defaulting, the creditors initiated insolvency proceedings under Section 7 of the IBC. A settlement was reached on 2018-07-26, leading to the withdrawal of the initial insolvency petition on 2018-07-27. The settlement involved the Corporate Debtor agreeing to pay Rs. 4,34,00,000/- plus interest. The Corporate Debtor failed to make timely payments, and post-dated cheques were dishonored. The Financial Creditors then filed a second petition under Section 7 of the IBC. The Adjudicating Authority admitted the second petition on 2023-12-20. The erstwhile director of the Corporate Debtor filed an appeal against this order. The appellant deposited Rs. 3,34,07,686/- by way of FDR in the

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## Issues and analysis

### Issue 1: Whether the second petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 is …

**Ratio:** A settlement agreement does not necessarily bar a financial creditor from filing a

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**Reasoning:** The court reasoned that allowing the corporate debtor to benefit from its default on the

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**Interpretation:** The interpretation is that a settlement agreement is not a complete bar to

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**Application:** In this case, the Corporate Debtor defaulted on the settlement agreement. The

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## Parties

- **Judges:** Rakesh Kuma…; Naresh Sa…; +1 more
- **Appellants:** Desh Bhusha…
- **Respondents:** angel promoters…; Abhay K…

## Timeline

- **2018-07-26 — Settlement Ag…**: A settlement agreement was…
- **2018-07-27 — Withdrawal of First…**: The first petition filed by the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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