Work order termination upheld as valid; jurisdiction lacking in contractual dispute; bank guarantee invocation valid

The Tribunal found that the termination of work orders by the Corporation was valid and not in violation of the extension letters, Government orders, or the Insolvency and Bankruptcy Code. It was determined that the Adjudicating Authority did not have jurisdiction over the contractual dispute between the parties. The invocation of the bank guarantee was upheld as valid, and the appeal was allowed with no order as to costs.

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Issues Involved:
1. Termination of Work Order No. 1
2. Termination of Work Order No. 2
3. Violation of Sections 14 & 238 of IBC
4. Invocation of Bank Guarantee

Issue-wise Detailed Analysis:

Issue 1: Termination of Work Order No. 1
The Corporate Debtor was awarded Work Order No. 1 on 28.03.2017 for the construction of a building, with a completion date of 09.07.2018. Despite several extensions, the work was not completed. On 30.03.2020, the Corporation extended the completion date to 30.06.2020. However, due to continued delays, the work order was terminated on 11.06.2020 under clauses 59, 60, and 61 of the agreement. The Tribunal found that the termination was not in violation of the extension letter dated 30.03.2020 or the Government's order dated 08.06.2020, which granted extensions only to non-defaulters as of 19.02.2020. The Corporate Debtor was already in default before this date.

Issue 2: Termination of Work Order No. 2
Work Order No. 2 was awarded on 13.03.2019 with a completion date of 12.05.2019. The Corporate Debtor failed to complete the work even after multiple extensions. The work remained closed from May 2019 to February 2020 and showed no substantial progress post-lockdown. Consequently, the work order was terminated on 04.08.2020. The Tribunal held that the termination was not in violation of the Government order dated 08.06.2020, as the Corporate Debtor was already a defaulter before 19.02.2020.

Issue 3: Violation of Sections 14 & 238 of IBC
The Tribunal examined whether the termination of work orders violated Sections 14 and 238 of the IBC. Section 14 pertains to the moratorium on suits and proceedings against the Corporate Debtor, while Section 238 provides the IBC with overriding effect over other laws. The Tribunal referred to the Supreme Court's judgments in Gujarat Urja Vikas Ltd. vs. Amit Gupta and Tata Consultancy Services Ltd. vs. Vishal Ghisulal Jain, which clarified that the NCLT's jurisdiction under Section 60(5)(c) of IBC is limited to disputes arising out of or in relation to the insolvency resolution process. The Tribunal found that the termination of work orders was due to performance issues and not related to the insolvency of the Corporate Debtor. Therefore, Sections 14 and 238 of IBC were not applicable, and the Adjudicating Authority did not have jurisdiction over the contractual dispute.

Issue 4: Invocation of Bank Guarantee
The Tribunal held that since the termination of work orders was not in violation of the extension letter dated 30.03.2020, the Government order dated 08.06.2020, or Sections 14 and 238 of IBC, the invocation of the bank guarantee by the Corporation was not illegal. The Adjudicating Authority's findings were erroneous, and the invocation of the bank guarantee was upheld as valid.

Conclusion:
The Tribunal concluded that the Adjudicating Authority did not have jurisdiction under Section 60(5)(c) of IBC to entertain the contractual dispute between the Corporation and the Corporate Debtor. The termination of work orders and the invocation of the bank guarantee were found to be valid. Consequently, the judgment of the Adjudicating Authority was set aside, and the appeal was allowed with no order as to costs.

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