# In the matter of Mehar Steels Private Limited CONY. P 23-ND-2021 in IB No.1208-ND-2018

> NCLT judgment dated 2022-05-04. Citation: TCN-2022-NCLT-02898. The case involves a Contempt Application filed under Rule 11 of NCLT Rules 2016, read with…

- **Court:** NCLT
- **Order date:** 4 May 2022
- **Citation:** TCN-2022-NCLT-02898
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/mehar-steels-private-limited-cony-p-23-nd-2021-in-ib-no1208-nd-2018-da596a5c

## Summary

### Background

The case involves a Contempt Application filed under Rule 11 of NCLT Rules 2016, read with Section 420 of the Companies Act, on behalf of the Operational Creditor, seeking initiation of contempt of Court proceedings and directions against the Corporate Debtor for revival of the IB petition. The Operational Creditor had initially filed an application under Section 9 of the IBC Code, which was followed by a settlement agreement between the parties. A joint application for withdrawal of the initial application was filed, and the application was dismissed as withdrawn. Subsequently, the respondent-Corporate Debtor allegedly failed to adhere to the terms of the settlement agreement, leading to the dishonoring of several cheques.

## Facts

M/s Stallion, an operational creditor, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 against M/s Mehar Steels Private Limited, the corporate debtor. During the pendency of the application, both parties entered into a settlement agreement dated February 6, 2019, which included terms for repayment of the debt. Subsequently, a joint application was filed to withdraw the initial application, and it was dismissed as withdrawn on February 20, 2019. The corporate debtor allegedly failed to adhere to the settlement terms, resulting in the dishonoring of several cheques. However, the operational creditor had already received Rs. 17,12,892/-. The operational creditor then filed a contempt application seeking revival of the initial application,

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## Issues and analysis

### Issue 1: Whether the contempt proceedings can be initiated against the respondent-Corporate Debtor for …

**Ratio:** Contempt proceedings are initiated only in exceptional cases where the parties have

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**Reasoning:** The Tribunal reasoned that the failure to adhere to the settlement agreement, while a

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**Interpretation:** The interpretation is that contempt proceedings are a drastic remedy reserved

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**Application:** In this case, the applicant's claim was based on the breach of a settlement

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## Parties

- **Judges:** DHARMINDER…; HEMANT KUMAR…
- **Appellants:** M/s Sta…
- **Respondents:** M/s Mehar Steels…

## Timeline

- **2018-09-12 — Application under…**: The Operational Creditor, M/s Stallion, filed an application under Section 9 of the IBC…
- **2019-02-06 — Settlement Agreement…**: A settlement agreement was executed between the parties, containing various terms and…

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