NCLT Upholds CIRP despite Settlement Default

The National Company Law Tribunal, Chennai Bench, admitted a Section 9 application and initiated the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. 

Rejecting the defence that a subsequent settlement agreement had novated the original contract, the Tribunal held that the settlement merely recorded the manner of repayment of an already crystallised operational debt. 

Since the debt arose from transportation services, there was no pre-existing dispute and the settlement remained unhonoured, the operational creditor was entitled to invoke the insolvency process.