Shapoorji Pallonji Faces Insolvency Petition After Settlement Agreement Breach

(The Corner Office Journal) -- India's National Company Law Tribunal (NCLT) ordered the restoration of insolvency petition filed by Elixir Met Form Private Ltd. against Shapoorji Pallonji & Company Private Ltd. after the breach of settlement agreement.

The NCLT’s Mumbai bench is set to hear Elixir Met’s insolvency petition against Shapoorji Pallonji on 18 August, according to the tribunal’s order dated 7 August.

Elixir Met had originally filed the petition against Shapoorji Pallonji under Section 9 of the Insolvency & Bankruptcy Code in 2020. However, the parties entered into a settlement agreement on 19 October 2023 and sought withdrawal of the insolvency petition.

The NCLT allowed the withdrawal of the insolvency petition against Shapoorji Pallonji on 27 October 2023, but gave the liberty to the company’s operational creditor to revive its original petition in the event of failure of any of the settlement terms.

Under the agreement, Shapoorji Pallonji was required to pay 3.74 crore rupees ($426,891) to the Elixir Met as full and final settlement, according to the NCLT’s latest order. Out of the total amount, Shapoorji Pallonji paid 1.50 crore upfront, and the balance 2.24 crore rupees was payable in a staggered manner, the order showed.

Restoration Appeal

In February 2025, Hyderabad-based Elixir Met sought the restoration of insolvency petition against Mumbai-based Shapoorji Pallonji alleging default and breach of the settlement agreement.

Shapoorji Pallonji contended that it has paid 3.04 crore rupees to Elixir Met and there is only a balance amount of 69.11 lakh rupees is outstanding. The company said this amount is payable only after Elixir Met performs its contractual obligations under the work orders as recorded in their settlement agreement.

In its response, Elixir Met said that 69 lakh rupees was payable after completion of the defect liability period as per original work order terms, or within 18 months from the date of the settlement agreement, whichever is earlier. It also noted that 18 months’ period expired on 18 April 2025, but Shapoorji Pallonji failed to pay any amount towards this instalment.

Elixir Met said Shapoorji Pallonji continues to be in breach of the settlement agreement even after payment of 55 lakh rupees after the filing of the present interlocutory application on 14 February 2025 and therefore, the insolvency petition against the company should be restored.

The operational creditor also said that the balance amount payable as on the date of filing of interlocutory application was 1.24 crore rupees, which exceeds the IBC’s default threshold limit of one crore rupees. Therefore, its petition, if restored, is still maintainable, it added.

The Verdict

The NCLT, which heard the parties and examined the material available on record, said there is no doubt that a default in making payment as per the terms of the settlement agreement has taken place.

The contentions of Shapoorji Pallonji as made in its reply cannot be gone into at this stage and the same may be considered by the bench while adjudicating Elixir Met’s petition.

“In view of the foregoing findings and discussion, we deem it appropriate to order revival/restoration of CP(IB) No. 259/MB/2020 without prejudice to the rights and contentions of the parties,” the NCLT said in its order on 7 August 2025.

The tribunal also said that Elixir Met has a right to get its original petition restored and both the parties are free to place rival contentions on merits of the matter.

The order was passed by Judicial Member Nilesh Sharma and Technical Member Sameer Kakar.

Elixir Met was represented by Ramakanth Malapalli along with Dhanyashree Jadeja, Arun Unnikrishnan and Ishani Saxena, instructed by Jadeja & Satiya.

Amir Arsiwala along with Radha Naik, instructed by The Law Point, appeared on behalf of Shapoorji Pallonji.

Note: $1 = 87.6102 Indian rupees

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