### Time Extension for Settlement Performance Permissible to Achieve IBC Objective of Corporate Debtor Rehabilitation

The Corporate Debtor (CD), Nobal Buildtech Pvt. Ltd., stood as a corporate guarantor for Non-Convertible Debentures issued by Kindle Infraheights Pvt. Ltd. to Respondent No. 3.

Following a default, the Financial Creditor (FC), Orbis Trusteeship Services Pvt. Ltd., initiated Section 7 CIRP proceedings.

On 09.05.2025, the parties entered a Settlement Agreement for ₹210 crore, leading to the withdrawal of the CIRP under Section 12A on 31.07.2025.

The CD paid ₹120 crore but defaulted on a ₹25 crore tranche, leading the FC to file for revival of CIRP via RA 83/2025.

Although the ₹25 crore was subsequently paid and accepted, the Adjudicating Authority (NCLT) restored the CIRP on 07.01.2026, granting only 10 days to pay the remaining ₹90 crore.

The NCLT later extended this stay only until 04.02.2026 via order dated 21.01.2026 in IA 312/2026.

The CD appealed, citing delays in fund infusion due to the unavailability of original title deeds.

The court primarily applied Section 12A of the Insolvency and Bankruptcy Code (IBC) regarding the withdrawal of CIRP applications.

It relied on the principle from *Swiss Ribbons Pvt. Ltd. v. Union of India*, which established that the primary focus of the IBC is the revival and continuation of the CD, rather than being a mere recovery legislation.

The court further cited *Anuj Jain v. Axis Bank Ltd.* regarding the "parental and nursing role" of financial creditors in restructuring loans.

And *E.S. Krishnamurthy v. Bharat Hi-Tecch Builders Pvt. Ltd.*, which held that settlements must be encouraged to facilitate the rehabilitation of the CD.

Finally, it exercised inherent powers under Rule 11 of the NCLT Rules, 2016, to grant equitable relief.

The court found that out of a ₹210 crore settlement, a significant sum of ₹120 crore had already been paid to and accepted by the FC.

It noted that the delay in paying the final ₹90 crore was not due to willful default but was linked to the unavailability of original title deeds (which were in the FC's or Noida Authority's possession), hindering the CD’s ability to complete investor due diligence for fund infusion.

The court reasoned that since the FC is the sole creditor and the CD has demonstrated bona fides by paying more than half the settlement amount, the NCLT’s refusal to grant a 90-day extension was contrary to the IBC’s objective of rehabilitation.

The court underscored that the "pivotal role" of a financial creditor includes facilitating restructuring rather than forcing a "hostile takeover" through rigid triggers when a viable settlement is in sight.

The court held that the CD is entitled to a 90-day extension from the date of the judgment to pay the balance ₹90 crore.

It directed that if the payment is made within this period, the CIRP shall stand terminated and the withdrawal order dated 31.07.2025 shall become operative.

The RP and FC were directed to render all necessary assistance to implement the Settlement Deed.