Appeal Dismissed for Section 9 Application Due to Genuine Disputes

The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision to reject the Section 9 application due to genuine pre-existing disputes between the parties and the improper clubbing of claims from different work orders. The Tribunal emphasized the need for further investigation into the disputes, in line with the Supreme Court's precedent.

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Issues Involved:
1. Pre-existing disputes between the parties.
2. Clubbing of claims from different work orders.
3. Payment terms and obligations under the contracts.
4. Role of IOCL in the payment process.

Detailed Analysis:

1. Pre-existing disputes between the parties:
The Tribunal found that there were genuine pre-existing disputes between the parties prior to the issuance of the demand notice. The Appellant had admitted in a letter dated 20.12.2018 that there were serious problems with the racking system installed, which had not undergone a safety audit and was non-certified. The Petitioner had recommended IOCL not to use the racking system due to its condition. The Tribunal emphasized that an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) must be dismissed if genuine disputes exist, as supported by the Supreme Court's judgment in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. and Kay Bouvet Engineering Ltd. v. Overseas Infrastructure Alliance (India) Private Limited.

2. Clubbing of claims from different work orders:
The Tribunal noted that the Appellant had clubbed payments from two separate projects (Haldia and Bongaigaon) under different work orders into a single petition. The Tribunal referred to the NCLAT's decision in International Road Dynamics South Asia Pvt. Ltd., which held that claims arising from different agreements or work orders with different amounts and default dates cannot be clubbed together. Therefore, the joint application by the Appellant was deemed defective and not maintainable.

3. Payment terms and obligations under the contracts:
The Appellant argued that the Corporate Debtor had not made the outstanding payments despite several requests. The Tribunal acknowledged the payment terms outlined in the purchase orders and work orders, which included advance payments, payments against letters of credit, and final payments upon commissioning. However, the Tribunal found that the project had not been completed, and the Appellant had abandoned the Haldia project without rectifying the defective work. Consequently, the Appellant could not claim payment for incomplete and defective work.

4. Role of IOCL in the payment process:
The Tribunal examined the Comfort Letter issued by IOCL, which undertook to release payments to the Appellant due to the Corporate Debtor's financial difficulties. The Tribunal noted that the correspondence between the Appellant and IOCL indicated that IOCL had taken responsibility for making payments directly to the Appellant. This correspondence included emails and letters discussing payment terms and discrepancies. The Tribunal concluded that the payments were to be made by IOCL, and the Corporate Debtor could not be held liable for these payments.

Judgment:
The Tribunal dismissed the appeal, affirming the Adjudicating Authority's decision to reject the Section 9 application due to the existence of pre-existing disputes and the improper clubbing of claims from different work orders. The Tribunal emphasized that the disputes were not spurious or hypothetical and required further investigation, aligning with the Supreme Court's guidance in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.

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