# In the matter of Safetech Trailer Parts LLP

> NCLT judgment dated 2023-08-10. Citation: TCN-2023-NCLT-02095. The case involves an application filed by Guangzhou Huajing Machine Manufacture Company Limited…

- **Court:** NCLT
- **Order date:** 10 Aug 2023
- **Citation:** TCN-2023-NCLT-02095
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/safetech-trailer-parts-llp-036eecaf

## Summary

### Background

The case involves an application filed by Guangzhou Huajing Machine Manufacture Company Limited (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, against Safetech Trailer Parts LLP (Corporate Debtor) for initiating Corporate Insolvency Resolution Process (CIRP). The Operational Creditor claimed a total debt of $727,818.48, including principal and interest, arising from an Exclusive Agency Agreement where the Corporate Debtor was to market the Operational Creditor's products in India. The Operational Creditor supplied goods from October 2015 to June 2016, with payments becoming due from July 2016 to October 2016. Despite several reminders and a settlement attempt, the debt remained unpaid.

## Facts

Guangzhou Huajing Machine Manufacture Company Limited (Operational Creditor) filed an application under Section 9 of the I&B Code against Safetech Trailer Parts LLP (Corporate Debtor) for unpaid dues. The Operational Creditor and Corporate Debtor entered into an Exclusive Agency Agreement on 26.09.2015, valid from 01.10.2015 to 30.09.2018, where the Corporate Debtor would market the Operational Creditor's products in India. The Operational Creditor supplied goods from October 2015 to June 2016, with payments due from 14.07.2016 to 06.10.2016. The total debt claimed was $727,818.48, including principal and interest. The Operational Creditor sent reminders and attempted a settlement. The Corporate Debtor acknowledged the debt and sought extensions for payment. A

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## Issues and analysis

### Issue 1: Whether the date of default can be taken as the fresh date of default for the whole of the debt …

**Ratio:** A breach of settlement only restores the original debt amount and does not create a new

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**Reasoning:** The court reasoned that the breach of the settlement agreement only related to the

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**Interpretation:** The interpretation is that a settlement agreement, if breached, only affects

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**Application:** The court applied this principle to the facts by stating that the breach of the

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## Parties

- **Judges:** Prabhat…; KISHORE VEMULAPALL…
- **Appellants:** Guangzhou Huajing…
- **Respondents:** Safetech Trailer…
- **Advocates:** Ms Krupa…

## Timeline

- **2015-09-26 — Exclusive Agency…**: Operational Creditor and Corporate Debtor…
- **2015-10-01 — Agreement V…**: Exclusive Agency Agreement valid…

## 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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