2017 (10) TMI 356
X X X X Extracts X X X X
X X X X Extracts X X X X
....ents in respect of the first two contracts executed at Patiala & Kaithal. It is submitted that bills amounting to Rs. 16,98,578/- were raised more specifically vide invoices detailed as under :- a. Invoice Book No. 001, T1 No. 0010 : Rs. 9,72,213/- b. Invoice Book No. 001, T1 No. 0011 : Rs. 5,26,365/- c. Invoice Book No. 001, T1 No. 0012 : Rs. 2,00,000/- 3. The withholding of these amounts is not disputed. The Corporate Debtor has held back the aforesaid amounts along with the payments claimed for the work done under the 3rd contract as lien towards counter recoveries to be made for the alleged unsatisfactory work carried out at Barsingsar. Though the Operational Creditor had prayed for delinking of the payments under the 1st two contracts with the payment for the job order executed under the 3rd contract, their request was not conceded to. The payment claimed for the work done at Barsingsar was the subject matter of Arbitration proceeding which culminated in an Award dated 30th April 2015 in favour of the Operational Creditor. 4. Ld. Counsel for the Operational Creditor has submitted that Objection to the Award passed in their favour was filed under section 34 of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er dated 24.10.2009 that the Risk & Costs amount stood at Rs. 42,24,244/-. The amounts claimed under the earlier bills were to be adjusted against the same as per their entitlement under the terms and condition of the job work. Ld. Senior Counsel has drawn the attention of the Adjudicating Authority to clause B. 7.4 of the agreement (referred to on pg no. 75 of the petition) which stipulates as under: "To recover any moneys due from the Contractor, from any moneys due to the contractor under this or any other contract or from the Security Deposit." 9. It is also submitted by the Ld. Sr. Counsel for the Corporate Debtor that an appeal under Section 37 of the Arbitration Conciliation Act had been filed on 11.05.2017, prior to the Operational Creditor issuing the notice under section 8 of the Code. The filing and pendency of the same was communicated to the Operational Creditor and was well within their knowledge, but they have failed to disclose it in the present petition which was filed on 09.08.2017. It is further argued that it is well settled that the pendency of an Appeal under Section 37 of the Arbitration Act is a continuation of the arbitration proceedings. The filing of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e amount was well within the knowledge of the Operational Creditor. The Operational Creditor had prayed for delinking the payments under these two contracts with the payment due under the third, but the Corporate Debtor never agreed to the same. Though the Award may have been passed in favour of the Operational Creditor, it still has not attained finality. 14. Upon hearing both the Ld. Counsels, this Bench is of the opinion that in terms of the conditions stipulated in the job orders, pursuant to which the Operational Creditor undertook the work, the Corporate Debtor reserved its right to withhold amounts due to the contractor (Operational Creditor) and was also not be liable to pay any interest thereon. The Corporate Debtor has therefore exercised its lien to withhold the amounts claimed under the invoices, linking it with their entitlement to recover amounts against the work under the 3rd contract at Barsinagsar. Though the Operational Creditor has an Award in its favour, the appeal under section 37 of the Arbitration Act is still pending. It is well settled that proceedings under Section 37 of the Arbitration Act are a continuation of the arbitration proceedings and therefore i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sis of clause 5.6 of the agreement referred to above. It is for this reason, under similar circumstances, the Hon'ble Apex Court disallowed any interest for the pre-award period to the claimant in the matter of Bharat Heavy Electricals Ltd. v. Tata Projects [2015] 5 SCC 682 holding that a clause in the agreement that bars payment of interest on earnest money / Security deposit, or any money due to the Contractor would be binding. It is also on this ground that while dismissing the petition under Section 34 in OMP 534/2017, the Hon'ble High Court of Delhi disallowed the interest for the pre-award period granted by the Arbitrator. Moreover, the interest claimed in the present petition is under the MSME, the liability to pay thereunder is totally disputed. Ld. Sr. Counsel has submitted that such a dispute can only be adjudicated under the dispute resolution mechanism under the Act. Till then the liability to pay any interest thereunder does not crystalisc. 20. Per contra, Ld. Counsel for the Operational Creditor has placed reliance on a decision of the Hon'ble Principal Bench of the NCLT in the matter of Vidul Sharma v. Technopak Advisors (P.) Ltd. [CP (IB)- 53(PB)/2017, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ithhold, and also in respect of the liability to pay interest, the insolvency resolution process against the Corporate Debtor cannot be admitted. The petition is therefore Rejected. 23. Further, we take note of the fact that the Operational Creditor has failed to disclose the filing of the petition under Section 37 by the respondent Corporate Debtor. It is brought to our notice that the objection under Section 34 were disposed of on 16.03.2017 while an appeal under Section 37 was filed on 11.05.2017. Notice of Section 8 of the Code was sent subsequently on 3rd July, 2017 and the petitioner was duly notified about the filing of the appeal under Section 37 on 29.07.2017. The present petition which was filed subsequently on 09.08.2017 fails to disclose the filing of the appeal. 24. Though the Ld. Sr. Counsel appearing for the Corporate Debtor presses his prayer for penalising the Operational Debtor under Section 76 of the Code for failure to disclose the factum of pendency of the appeal under Section 37 of the Arbitration and Conciliation Act, we are not inclined to do so. However, a serious note is being taken of a reporting alleged to have been made at the instance of the Operatio....