Mere breach of terms of any agreement including a Settlement Agreement by a party, whereby some payment is due cannot take colour of an Operational Debt arising out of supply of any goods or services as envisaged under Section 5(20) of the IBC, 2016 – Agson Global Pvt. Ltd. v. Prodalim B.V – NCLT New Delhi Bench Court-III
NCLT New Delhi Bench Court-III held that:
(i) Mere breach of terms of any agreement including a Settlement Agreement by a party, whereby some payment was due, would not fall within the scope of IBC, so as to constitute a ‘Debt’.
(ii) Mere obligation to pay under a Settlement Agreement would not amount to disbursal of amount for consideration against the time value of money, and thus, breach of such obligation would not entitle a party to invoke CIRP against the other party.
(iii) This Adjudicating Authority cannot stand as a sentinel/guardian and is not bound to observe every Settlement payment agreed between of the parties.
(iv) The outstanding debt as claimed in the present application does not fall under the definition of Operational Debt as defined under Section 5(21) of the Code, 2016 as the debt claimed is not the debt owed for the supply of goods or rendering of services, it is a debt which has arisen from the breach of the Settlement Agreement.
