Operational Creditor's Petition Rejected for Failure to Prove Debt

Jyoti Ltd. Versus Prasad And Company (Project works) Limited

Jyoti Ltd. Versus Prasad And Company (Project works) Limited - TMI Issues Involved:
1. Whether the Corporate Debtor defaulted in repaying the operational debt.
2. Whether the claim of the Operational Creditor is premature.
3. Whether the suspension of work by the Government of Maharashtra affects the claim.
4. Whether the Operational Creditor is entitled to the retention money.

Detailed Analysis:

1. Whether the Corporate Debtor defaulted in repaying the operational debt:
The Operational Creditor, M/s Jyoti Limited, claimed that the Corporate Debtor, M/s Prasad and Company (Project Works) Limited, defaulted in repaying Rs. 2,97,79,977.24 as of 10.12.2016. The Operational Creditor issued a Demand Notice on 24.05.2018, but the Corporate Debtor did not reply within the mandatory 10 days. Instead, an email and letter dated 31.05.2018 from Prasad-Shreehari (JV) stated that the claim was premature due to non-erecting and commissioning by the Operational Creditor. The Corporate Debtor contended that 75% of the value as per the purchase order was paid and the remaining 25% was retention money against erection and commissioning, which had not been completed due to the suspension of work by the Government of Maharashtra.

2. Whether the claim of the Operational Creditor is premature:
The Corporate Debtor argued that the claim was premature as the Operational Creditor had not completed its part of the contract, specifically the erection, commissioning, and trial run of the equipment. The Operational Creditor countered that the delay was due to the Corporate Debtor's inability to complete the project, and thus, it was entitled to recover the retention amount. The Tribunal found that the suspension of work by the Government of Maharashtra was an unforeseen event beyond the control of the Corporate Debtor, and therefore, the claim was premature.

3. Whether the suspension of work by the Government of Maharashtra affects the claim:
The Corporate Debtor stated that the suspension of work by the Government of Maharashtra was beyond its control and not due to any fault on its part. The Tribunal agreed, noting that the suspension order did not indicate any failure on the part of the Corporate Debtor. Consequently, the Tribunal concluded that the Corporate Debtor could not be blamed for the delay caused by the suspension order, and thus, the retention money was not due until the completion of the contract.

4. Whether the Operational Creditor is entitled to the retention money:
The Tribunal examined the terms of the purchase order, which stipulated that 25% of the payment was retention money to be paid after the erection, commissioning, and trial run of the equipment. Since the Operational Creditor had not completed these tasks due to the suspension of work, the Tribunal found that the retention money was not yet due. Therefore, there was no debt due and payable, and consequently, no default.

Conclusion:
The Tribunal concluded that the Operational Creditor failed to establish that there was a debt due and payable and that the Corporate Debtor had committed a default. As a result, the petition was rejected.