TaxTMI 
TaxTMI 
2017 (8) TMI 1537
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....tors have made such averments stated as under: - 1. That the corporate debtor company commits default in making payment of the operational debt due to the applicant; 2. That the applicants sent a demand notice in Form 3 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to the Corporate Debtor company demanding the payment of his operational debt as consultancy fee, but it remains still unpaid; 3. That no notice of existence of dispute has been received by the applicant (the operational creditor) from the corporate debtor company within stipulated period of ten days from the receipt of statutory demand notice; 4. Thus there has been no repayment to the applicant of his unpaid operational debt from the Corporate Debtor Company. 2. The applicant in the prescribed format of the present application made such averments that the total amount due towards operational debts is Rs. 38 crores (as per the column 1 part 4 of the application) and the corporate debtor company is liable to make payment to the applicant for a sum of Rs. 59,20,49,559/- (Rupees Fifty-Nine Crores Twenty Lakhs Forty-Nine Thousand Five Hundred and Fi....
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....being successful in getting awarded the project to the M/s Isolux Corsan India Engineering and Construction Ltd. the principal contractor. It is alleged that corporate debtor company commits default in making payment of the agreed amount fall due under the such final settlement agreement. Therefore, he is constrained to file the present application seeking initiation of the Corporate Insolvency Process under the I & B Code in respect of the present corporate debtor company. 6. The respondent/corporate debtor company however has seriously opposed the present application by disputing the amount of debt/claim. It has filed a preliminary objection on maintainability of the present application by making such allegation that the applicant/operational creditor has suppressed and concealed with the material fact intentionally and maliciously with this Tribunal those were well within his knowledge about the pendency of similar nature of company petition no.(IB)-11(PB)/2017 before the NCLT, Chandigarh which was based on same set of facts wherein he has made similar claim in respect of providing the same consultancy services to M/s Isolux Corsan India Engineering and Construction Ltd. Such....
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....the Applicant to enter into a Final Settlement and Consultancy Agreement dated March 15, 2016 ("Final Settlement Agreement") with the Applicant in order to fully and finally settle their claims and dues without having any intention to honour its obligations. A copy of the Final Settlement and Consultancy Agreement dated March 15, 2016 is annexed herewith as Annexure 11(D). b. Under the terms of the Final Settlement Agreement, one M/s South East Uttar Pradesh Power Transmission Company Limited ("SEUPPTCL"), which is a subsidiary of the Corporate Debtor, had undertaken to pay to the Applicant an amount of Rs. 38,00,00,000/- (Rupees Thirty-Eight Crores only) alongwith ail direct and indirect taxes, as a full and final settlement amount for the services rendered by the Applicant. However, neither the Corporate Debtor nor SEUPPTCL has made any payments to the Applicant under the said Final Settlement Agreement. 10. Thus, the applicant earlier made an attempt before another forum of law (e.g. NCLT Chandigarh/New Delhi) to retract from final settlement agreement dated 15"' March, 2016 (which is a tripartite agreement) and already reverted back to its claim/amount due under....
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....nnot be treated as barred by the principle of res judicata. The applicant further contends that a proceeding before this court and the remedy sought under the I & B Code is not a Trial Court or a recovery proceeding, moreover in case the present application is allowed, for admission then the remedy would be not in personam against but generally in favour of all the creditors of the corporate debtor company. 13. Thus, the applicant/operational creditor made an effort to substantiate its averments/pleadings made in both the applications and thus prayed for rejection of the preliminary objection as raised by the corporate debtor company. He further pressed for an appropriate order to be passed for admission of the present application. 14. It is a matter of record that an original service agreement of the lsolux Corsan India Engineering and Construction Pvt. Ltd. made with the present applicant was entered into on 8th July, 2010 for providing some consultancy service for which the applicant/operational creditor was appointed as a consultant and in consideration of such services to be provided as per the agreed terms his consultancy fee was fixed as 2% of the total cost of the pro....
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.... other power utility company. Hence, as per the corporate debtor, the trigger date for making such payment has not yet arrived. It is further contended that on execution of this agreement which is subject matter of the present petition, the SEUPPTCL/Corporate Debtor has already made payment of Rs. 2 crores to Mr. Dassani who is stated to have duly admitted and acknowledged the same by putting his signature on such final settlement & consultancy agreement. Hence, as per the corporate debtor company there is no debt fallen due by it for making payment of the initial amount and the further date of payment in instalment of such amount has not yet arrived at nor commences. Hence, the question for making such payments does not arise at all. Therefore, due to this reasons, the present petition is liable to be dismissed with an exemplary cost. 17. It is further seen that the corporate debtor company in its response to a demand notice dated 21.12.2016 as sent by Mr. Dassani strongly opposed to it and made formal reply to it on 03.01.2017 and thus seriously disputed the operational creditor's claim and contended such that the applicant has already made a claim of Rs. 84 crores from th....
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.... 19. The corporate debtor company without prejudice to its above stated contention took further alternative plea stating such the date of payment due under such final settlement agreement has not been yet commenced because the applicant has already admitted and acknowledged the receipt of amount of upfront payment of Rs. 2 crores and the balance claim of Rs. 36 crores (as per the Schedule A of the alleged settlement agreement) is payable in such monthly instalments of Rs. 3 crores each from the 30th day only when such payment is received by the corporate debtor company from the Uttar Pradesh Transmission Company Ltd. or any of DISCOM of Uttar Pradesh and/or any other power utility company. Thus, as per the corporate debtor, a trigger dale as defined in the alleged agreement dated 15.03.2017 has not arrived yet. As no payment has been received from the Uttar Pradesh Transmission Company Ltd. or any of DISCOM of Uttar Pradesh, hence, no payment is due. Therefore, such claim of the applicant and consequently the demand notice issued to the corporate debtor company is premature without any cause of action and bad in law. 20. It may be seen that the corporate debtor company raised s....
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....SCL 365 (NCLT - Chd.) during the month of January, 2017 before, later on, it was transferred to the Chandigarh Bench of the NCLT. In the part 4 column I (d) of such application he pleaded such that on 15th March, 2016 the corporate debtor (herein Isolux Corsan India Engineering and Construction Pvt. Ltd.) fraudulently induce the applicant to enter into a final settlement and the consultancy agreement dated 15th March, 2016. In order to fully and finally settled their claims and dues without having any intention on its application. 23. It may be seen that during the course of hearing of his application filed before the Hon'ble Chandigarh Bench of NCLT, the applicant through his counsel took such stand which has been referred to by the Hon'ble NCLT, Chandigarh in (para 12) of its decision, that the petitioner agreed to the aforesaid terms, as per the agreement, a sum of Rs. 2 crores was acknowledged by him but in fact no such payment were made to him nor the respondent placed any record relating to transfer of such payment in favour of the petitioner. As the terms of such agreement have not been complied with, therefore, the petitioner has a right to fall back upon the ori....
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.... has been further alleged that the applicant has made an attempt to extort money from the company with such threat to winding up of the company which is clearly dishonest, vexatious and frivolous. Hence, the original contractee Isolux Corsan India Engineering and Construction Pvt. Ltd. (supra) (the corporate debtor before the NCLT, Chandigarh) also went to allege that even the original agreement (dated 08.07.2010) itself is vague, ambiguous and uncertain and is neither enforceable nor can be acted upon. As there reflect no subsequent understanding among the parties, hence, no claim based on such agreement dated 08.07.2010 could be made by him as he did not fulfil his obligation expected under the agreement. Therefore, no payment can be said to be due or payable to him by the original contractee. 26. In addition to the above, the Isolux Corsan India Engineering and Construction Pvt. Ltd. made further allegation that it has to suffer seriously on account of non-performance on the part of Mr. Dassani for which he is liable to compensate the company as the project was awarded to it on its own strength and hard work for which there is no contribution nor any assistance from the appli....
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....or otherwise as per u/ss 17 & 19 of the Contract Act. Hence, he is entitled to initiate such parallel proceeding before this Bench to enforce the subsequent agreement and seeking for initiation of CIRP proceedings in respect of respondent/present corporate debtor company. 31. We have already observed in preceding paras that in the present matter not only the applicant but equally the respondent/corporate debtor company in the present petition as well as in the petition before the Hon'ble Chandigarh Bench have made allegation, counter allegation against each other raising dispute on legality, enforceability and validity of such settlement agreement dated 15th March, 2016 along with an original service agreement dated 8th July, 2010. Therefore, by taking into consideration these allegations which appears to be disputed question of fact. We feel it is not proper for this court within scope of I & B Code to explore the truth behind such agreements as in our humble view such disputed facts need to be ascertained by issue involved therein can be dealt with only by a competent civil court. (In our view it is neither the aim nor object of the present I & B Code that an adjudicating ....
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....;ble Supreme Court in its another decision in the matter of S.P. Chengalvaraya Naidu v. Jagannath [1994] 1 SCC 1 further came to examine the purport and the meaning of "Fraud" and such the that "Fraud" amount to non-disclosure of relevant and material document with a view to obtain advantage and a decree obtained by fraud to be treated as nullity and can be questioned in collateral proceedings. The observation of the Hon'ble Apex Court made in para 5 of the judgment which is equally relevant and applicable to the present case may be reproduced herein below:- "We do not agree with the High Court that, "there is no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax-evaders, bank-loan-dodgers and other unscrupulous persons ....
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....o take from the employer the amount under the bills, for various reasons which may include discharge of his liability towards the banks, financial institutions and other persons. In such a situation, the public sector undertakings would have an upper hand. They would not ordinarily release the money unless a "No-Demand Certificate" is signed. Each case, therefore, is required to be considered on its own facts. 28. Further, necessitas non habet legem is an age-old maxim which means necessity knows no law. A person may sometimes have to succumb to the pressure of the other party to the bargain who is in the stronger position. 29. We may, however, hasten to add that such a case has to be made out and proved before the arbitrator for obtaining an award. 30. At this stage, the Court, however, will only be concerned with the question whether triable issues have been raised which are required to be determined by the arbitrators. 36. The appellant has in its letter dated 20.12.1990 used the term "without prejudice". It has explained the situation under which the amount under the "No- Demand Certificate" had to be signed. The question may have to he consi....
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....he present petition under the I & B Code before this Tribunal to initiate Corporate Insolvency Resolution Process against the respondent company because of the applicant himself in a parallel proceeding before a co-ordinate Bench of this Tribunal has very much disputed the contents of such agreement, free will and meeting of free minds before executing such deed and has already opted to revert back to his original contract i.e. service agreement dated 08.07.2010. Hence, in our view it is no longer open to him to fall back again seeking enforcement of the disputed agreement dated 15th March, 2016 for the purpose of initiation of the CIRP against the present corporate debtor as both of the parties to the present petition have made allegations, counter allegation against each other for making undue influence, coercion etc. Therefore, in our view, such issue needs to be agitated before a competent court of law and not before us under the I & B Code. Further, we are constrained to observe such the approach of the applicant in this petition, it is not improper, so, even then it cannot be said as fair to make parallel approach in both courts by keeping in dark with each other. Such action....
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....ed u/s 9 of the I & B Code. 38. Notwithstanding the above stated ruling has been distinguished by the Hon'ble Chandigarh Bench of the NCLT in the similar case of Mr. Himalay Dassani by taking a different view, the relevant portion of the Hon'ble NCLT, Chandigarh's decision is reproduced herein below:- "The matter of by following the Hon'ble Principal Bench of NCLT decision in "CA No.(IB)07/PB/2017 and CA No.(IB)08/PB/2017 titled M/s One Coast Plaster v. M/s Ambience Private Limited and M/s Shivam Construction Company v. M/s Ambience Private Limited" and observed and held as such: View of the facts of that case, raising of the issue about quality of the work in the reply to the notice under section 8 of the Code was considered a notice of dispute disentitling the applicant for an order of admission and therefore, the application was rejected. Before discussing the above contention, it would be appropriate to refer to the definition of term "'dispute" as defined in Section 5(6) of the Code, which reads as under: "dispute" includes a dispute or arbitration proceedings relating to- (a) The existence of the amount of de....
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....w the claim is raised for Rs. 84 crores. It is stated that on the basis of Final Settlement Agreement, the respondent has obligation to pay. It is further alleged that the Final Settlement Agreement is void and nonest on the ground of alleged fraud and misrepresentation. The respondent even stated in the reply that it signed the alleged Final Settlement Agreement as the petitioner exercised coercion, undue influence by threatening them to cause harm to the business of the respondent, There was exchange of communication between the parties relating to the dispute even before the Final Settlement Agreement was entered. The respondent has sent reply dated 02.03.2016 (at page 45 of the paper book) in response to the notice dated 02.02.2016 sent by the petitioner. It would be relevant to refer to para nos.5 and 6 of the said reply, which reads as under: "5. Without prejudice to the above, it is stated that pursuant to the execution of said agreement, your Client did not provide the services as agreed to our Client and failed to discharge his obligations under the agreement. It is reiterated that it was our Client management and representatives, who took upon themselves....
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....e intention of the legislature to rule out the frivolous defence. It was further contended that if the plea of fraud and coercion is raised, that is a triable issue, which need not be discussed in the summary procedure prescribed under the Code. We are, however, of the view that in view of the case set up by the petition, the petition is liable to be rejected. The petitioner himself has stated against column No.1 of the IV of Form 5 at serial number (d) that the Corporate Debtor had fraudulently induced the applicant to enter into a. Final Settlement and Consultancy Agreement dated 15.03.2016, without having intention to honour the obligation. If the petitioner himself has raised the issue of fraud and inducement and there is also a counter defence by the respondent with regard to the fraud and coercion, it would be the fittest case to categorically hold that there is a 'dispute' between the parties, which would disentitle the petitioner for an order of admission. It is pertinent to mention that the Final Settlement Agreement does not provide that in case SEUPPTCL fails to make the payment of Rs. 38 crores, the petitioner would be entitled to fall back upon the ori....
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....l 1/PB/20I7 dated 08.05.2017), and by further, placing reliance on the decision of Hon'ble Supreme Court in the matter of R.N. Gosain (supra), on the doctrine of "Approbate & Reprobate" and further, in the matter of S.P. Chengalvarya Naidu (supra) and in the matter of Chairman and MP, NTPC Ltd. (supra) and Hon'ble Punjab & Haryana High Court in the matter of Dalbir Singh Alias Vir Singh (supra), further by following decision of the Principal Bench, NCLT in the matter of One Coat Plaster (supra). (2) A perusal of records of this case goes to show that the petitioner has sought to trigger CIRP proceeding against the corporate debtor company on the strength of a final settlements & consultancy agreement dated 15th March, 2017 entered between him and the corporate debtor company, while in contra to this, he has pleaded in his another IB petition before the Hon'ble NCLT, Chandigarh by taking inconsistence and contradictory plea with the present application, that the corporate debtor fraudulently induce him to sign and enter into a final settlement & consultancy agreement dated 15th March, 2017 which is not acceptable to him and he reverted back to his original claim....