Petition dismissed for not meeting Operational Debt criteria under Insolvency & Bankruptcy Code. Dispute recommended for Civil Court.

The Tribunal dismissed the petition as the claim did not meet the criteria for an Operational Debt under the Insolvency and Bankruptcy Code, 2016. It was found that non-payment of the mobilization advance did not constitute an Operational Debt as the construction work had not commenced. The Tribunal emphasized that the dispute should be resolved in a Civil Court rather than under its summary jurisdiction. The application was dismissed without cost, permitting parties to seek alternative forums for resolution.

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Issues Involved:
1. Claim of Operational Debt under Section 9 of Insolvency and Bankruptcy Code, 2016.
2. Non-payment of mobilization advance.
3. Classification of the claim as an Operational Debt.
4. Existence of a pre-existing dispute.

Detailed Analysis:

1. Claim of Operational Debt under Section 9 of Insolvency and Bankruptcy Code, 2016:
The petition was filed by M/s KLA Construction Technologies Pvt. Ltd. (Operational Creditor) against M/s CKG Reality Pvt. Ltd. (Corporate Debtor) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016). The Operational Creditor claimed a default amount of Rs. 11.00 lakhs due to non-payment of an advance required for mobilizing machinery and equipment at the construction site for a project valued at Rs. 7,41,35,813.32.

2. Non-payment of mobilization advance:
The Operational Creditor argued that a sum of Rs. 11.00 lakhs was agreed to be paid as mobilization advance before starting the construction work. Despite the agreement and subsequent demand for Rs. 21.00 lakhs (inclusive of Rs. 11.00 lakhs), the Corporate Debtor did not make the payment. The Operational Creditor issued a demand notice under Section 8 of IBC, 2016, which was duly served but elicited no response from the Corporate Debtor.

3. Classification of the claim as an Operational Debt:
The Corporate Debtor contended that the mobilization advance was subject to the completion of the mobilization process by the Operational Creditor, which was not completed. They argued that the claim does not constitute an 'Operational Debt' under Section 5(21) of IBC, 2016, as no goods were supplied or services rendered. The Tribunal noted that the construction work, being a composite contract involving both supply of materials and rendering of services, had not commenced, and hence, the claim of advance payment could not be classified as an Operational Debt.

4. Existence of a pre-existing dispute:
The Corporate Debtor claimed that the site was not ready for concreting due to water logging and that the Operational Creditor had not fully mobilized the required equipment. The Tribunal observed that there was no independent report or certificate to substantiate the Operational Creditor's claim of full mobilization. The Tribunal emphasized that the non-payment of mobilization advance, even if full mobilization had occurred, could only give rise to a breach of contract, which should be adjudicated in a Civil Court, not under the summary jurisdiction of the Tribunal.

Conclusion:
The Tribunal concluded that the petition was not maintainable as the claim did not qualify as an Operational Debt under IBC, 2016. The Tribunal found credence in the Corporate Debtor's arguments that non-payment of advance cannot give rise to a claim under Section 5(21) of IBC, 2016. The Tribunal dismissed the application without cost, allowing the parties to approach other forums if advised.

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