NCLT New Delhi Dismisses Section 7 Plea, Holds Compromise Deed Obligations Do Not Constitute Financial Debt Under IBC
Pranav B Prem
The National Company Law Tribunal (NCLT), New Delhi Bench–IV, has held that a mere obligation to pay arising out of a compromise deed or settlement arrangement cannot constitute a “financial debt” under Section 5(8) of the Insolvency and Bankruptcy Code (IBC), unless there is a clear disbursement against the consideration for the time value of money. The Tribunal dismissed a Section 7 application filed by Samridhi Realty Homes Private Ltd. seeking initiation of CIRP against Nexgen Infracon Pvt. Ltd.
The matter was heard by Shri Manni Sankariah Shanmugha Sundaram (Judicial Member) and Shri Atul Chaturvedi (Technical Member). The applicant claimed that it had disbursed a loan of ₹1 crore to the corporate debtor under a loan agreement dated 30 March 2021. Nexgen Infracon repaid ₹30 lakh on 13 September 2024, and the remaining dues were acknowledged through balance confirmations and reflected in the corporate debtor’s financial statements. When the debtor failed to repay the loan by the extended date of 29 June 2024, the applicant issued a demand notice dated 14 February 2025 for ₹1,07,61,455.
Subsequently, the parties executed a compromise deed dated 11 April 2025 under which the corporate debtor agreed to repay ₹1 crore in five monthly instalments of ₹20 lakh each, with a clause that default in any instalment would render the entire outstanding amount of ₹1,07,61,455 immediately due along with 16% interest from 12 February 2025. The corporate debtor defaulted on the very first instalment due on 31 May 2025, prompting the applicant to issue a loan recall notice and file the Section 7 petition.
The Tribunal, however, observed that the application lacked essential supporting documents. It noted the absence of the financial creditor’s balance sheet and the required NeSL Form-D. The Tribunal also pointed out inconsistencies in the loan documentation, including a loan recall notice that appeared to be issued jointly by entities other than the applicant. In its analysis, the Tribunal reiterated the statutory requirement that a financial debt must involve disbursement against the time value of money. It held: “A mere breach of the terms of an agreement, including a Settlement or Compromise Deed under which payment becomes due, would not constitute a financial debt in the absence of such disbursement.”
The Bench found that although there was an initial disbursement of ₹1 crore under the loan agreement, the obligation to pay under the compromise deed was not itself a disbursement and therefore could not independently constitute a financial debt. The Tribunal further noted that even if the original loan transaction were considered, the Section 7 application appeared to be time-barred because the first instance of default (31 March 2022) made the petition filed on 30 July 2025 beyond limitation. Holding that the claim did not fall within the definition of a financial debt under Section 5(8) of the IBC, the Tribunal dismissed the petition as not maintainable.
The NCLT dismissed the Section 7 application filed by Samridhi Realty Homes Pvt. Ltd., holding that a breach of a compromise deed does not constitute a financial debt and that the petition suffered from evidentiary deficiencies and limitation issues. The Tribunal granted the applicant liberty to pursue remedies under other appropriate laws.
Appearance
For the Applicant: Mr. Madhur Dhingra, Ms. Harleen Dhingra, Mr. Akshay Sharma, Advs.
Cause Title: Samridhi Realty Homes Pvt. Ltd. Vs. Nexgen Infracon Pvt. Ltd.
Case No: Company Petition (I.B.) No. 421 Of 2025
Coram: Shri Manni Sankariah Shanmugha Sundaram (Judicial Member), Shri Atul Chaturvedi (Technical Member)
