# In the matter of KLT Automotive and Tubular Products Ltd.

> NCLT judgment dated 2023-12-21. Citation: TCN-2023-NCLT-00103. K. Amishkumar Trading Pvt. Ltd. filed a Company Petition on 2020-12-22 under Section 9 of the…

- **Court:** NCLT
- **Order date:** 21 Dec 2023
- **Citation:** TCN-2023-NCLT-00103
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/klt-automotive-and-tubular-products-ltd-f700467b

## Summary

### Background

K. Amishkumar Trading Pvt. Ltd. filed a Company Petition on 2020-12-22 under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate Corporate Insolvency Resolution Process (CIRP) against KLT Automotive & Tubular Products Ltd. The petition pertains to an operational debt of Rs. 13,10,53,327.49, which includes Rs. 9,58,41,443.67 outstanding on invoices and Rs. 3,52,11,883.82 as interest at 18% p.a. from 2018-12-01 to 2020-12-14. The Operational Creditor had previously filed a commercial suit which resulted in a settlement deed, but the Corporate Debtor failed to fully comply with the settlement terms.

## Facts

K. Amishkumar Trading Pvt. Ltd. (Operational Creditor) filed a petition against KLT Automotive & Tubular Products Ltd. (Corporate Debtor) for an outstanding operational debt of Rs. 13,10,53,327.49, comprising Rs. 9,58,41,443.67 on invoices and Rs. 3,52,11,883.82 as interest. The date of default was 2019-05-10. Previously, the Operational Creditor had filed a commercial suit against the Corporate Debtor, which led to a settlement deed dated 2016-09-22, where the Corporate Debtor agreed to pay Rs. 21,00,00,000. However, only Rs. 12,50,00,000 was paid. Subsequently, a consent term was agreed upon on 2018-12-21, where the Corporate Debtor agreed to pay Rs. 7,50,00,000 as a full and final settlement, but only Rs. 4,02,00,000 was paid. A demand notice was issued on

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## Issues and analysis

### Issue 1: Whether the outstanding amount qualifies as an 'operational debt' under Section 5(21) of the …

**Ratio:** The existence of settlement terms between the Corporate Debtor and Financial Creditor,

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**Reasoning:** The court reasoned that the settlement entered into between the parties was primarily

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**Interpretation:** The interpretation is that entering into a settlement agreement does not change

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**Application:** In this case, the court applied the ratio by stating that the settlement deeds

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## Parties

- **Judges:** Reeta K…; Madhu S…
- **Appellants:** K. Amishkumar…
- **Respondents:** KLT Automotive &…
- **Advocates:** Shyam Ka…; Vikram Na…; +4 more

## Timeline

- **2016-09-22 — Settlemen…**: Corporate Debtor agreed to pay Rs.…
- **2018-12-21 — Consent…**: Corporate Debtor agreed to pay Rs.…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

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