The Ahmedabad National Company Law Tribunal (NCLT) on 29 July held that claims arising solely from a Memorandum of Settlement (MoU) or settlement agreement do not constitute “operational debt” under Section 5(21) of the Insolvency and Bankruptcy Code, 2016 (IBC), as such claims do not arise from the supply of goods or services.
A Bench comprising Judicial Member Chitra Hankare and Technical Member Dr V.G. Venkata Chalapathy rejected the insolvency petition filed by N.S. Company against Corporate Debtor Sadbhav Engineering Limited, holding that the claim was based on the MoU entered between the parties and not on any operational debt. It held:
“Claims arising purely out of a settlement agreement, MoU, or breach of contract…