NCLT Mumbai Admits APRN Enterprises Insolvency Case, Emphasises Courts Cannot Rewrite Contracts

The Mumbai Bench of the National Company Law Tribunal (NCLT) on 6 April held that courts and tribunals cannot rewrite contracts and must enforce the bargain as agreed between parties, unless the agreement is vitiated by fraud, coercion, or illegality.

A Bench of Judicial Member Nilesh Sharma and Technical Member Sameer Kakar admitted an insolvency application filed by APRN Enterprises Pvt Ltd against Marveledge Realtors Pvt Ltd. It observed:

“Courts cannot rewrite contracts for the parties and must enforce the bargain as agreed, unless it is diminished by fraud, coercion or illegality, none of which is even alleged in the present case. Contractual rights, particularly those arising from financial documents and guarantees, must be respected and cannot be interfered with except in accordance with law. The Insolvency framework does not permit adjudicatory authorities to ignore binding contractual stipulations, especially where they clearly define the consequences of default.”

The corporate debtor defaulted in repayment, leading to a recall notice dated 31 October 2023 demanding over Rs. 174 crores. The parties thereafter entered into a Settlement Agreement dated 20 January 2025, under which they agreed to complete repayment by 28 February 2025. Upon failure to comply, the parties cancelled the settlement on 14 May 2025, prompting initiation of insolvency proceedings.

The Tribunal noted that once parties enter into a binding settlement, they must strictly enforce its terms, including consequences of default. It referred to Clause 6 of the Settlement Agreement, which provided that upon breach, all original loan rights, securities, and guarantees would revive.

It further held that the corporate debtor could not invoke limitation while simultaneously disregarding the Settlement Agreement. The Bench observed that permitting such conduct would amount to rewriting the contract and would undermine commercial certainty and the sanctity of agreements.

Accordingly, the NCLT initiated a corporate insolvency resolution process (CIRP), declared a moratorium, and appointed Nilesh Rajendra Kothari as the Interim Resolution Professional.

For Applicant: Adv. Ayush Rajani a/w Adv. Khushboo Shah, Adv. Mitali Bhatt i/b AKR Legal

For Respondent: Adv. Saumya Goyal, Adv. Rahul Gupta i/b Adv. Mr. Amir Arsiwala