# In the matter of Saraswati Timber Private Limited IA. 3247-ND-2022 in Company Petition No. (IB)-1441(ND)-2018

> NCLT judgment dated 2022-08-11. Citation: TCN-2022-NCLT-01394. Bajaj Rubber Company Private Limited, the operational creditor, filed an application to revive…

- **Court:** NCLT
- **Order date:** 11 Aug 2022
- **Citation:** TCN-2022-NCLT-01394
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/saraswati-timber-private-limited-ia-3247-nd-2022-in-company-petition-no-ib-1441n-57f025bc

## Summary

### Background

Bajaj Rubber Company Private Limited, the operational creditor, filed an application to revive CP-IB/1333/ND/2018 against Saraswati Timber Private Limited, the corporate debtor, under Section 9 of IBC 2016. An earlier application (IB)-1333(ND)/2018 was withdrawn on 21.01.2019 due to a settlement between the parties, with liberty to revive the petition if the settlement terms were defaulted. The operational creditor sought to revive the application based on the breach of the settlement agreement.

## Facts

Bajaj Rubber Company Private Limited (operational creditor) filed an application (IB)-1333(ND)/2018 under Section 9 of IBC 2016 against Saraswati Timber Private Limited (corporate debtor). On 21.01.2019, the application was withdrawn due to a settlement between the parties, with liberty to revive it in case of default. The operational creditor filed IA. 3247/ND/2022 to revive the application, claiming that the corporate debtor breached the settlement agreement dated 17.01.2019 by dishonoring post-dated cheques. The operational creditor argued that the corporate debtor failed to adhere to the terms of the settlement deed. The NCLT considered the application and referred to previous judgments, including one from the NCLT Allahabad Bench, which held that unpaid

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## Issues and analysis

### Issue 1: Whether the breach of a settlement agreement constitutes an 'operational debt' as defined under the …

**Ratio:** A claim based on the breach of a settlement agreement does not fall under the definition

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**Reasoning:** The NCLT relied on previous judgments, including a decision from the NCLT Allahabad Bench

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**Interpretation:** The term 'operational debt' under Section 5(21) of the IBC is interpreted to

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**Application:** In this case, the operational creditor's claim was based on the breach of the

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## Parties

- **Judges:** Sh. Dharminder…; SH. L. N.…
- **Appellants:** Bajaj Rubber…
- **Respondents:** Saraswati Timber…

## Timeline

- **2018-01-01 — Filing of App…**: Bajaj Rubber Company Private Limited filed an application (IB)-1333(ND)/2018 under…
- **2019-01-21 — Withdrawal of…**: The application (IB)-1333(ND)/2018 was withdrawn due to a settlement between the parties,…

## 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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