TaxTMI 
TaxTMI 
2019 (6) TMI 461
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.... on the ground that there existed a dispute even before the issuance of demand notice and the said dispute had been brought to the notice of Operational Creditor by the Corporate Debtor in the form of reply notice. Aggrieved thereof the Appellant has filed the present appeal assailing the order dated 13th August, 2018 on the grounds that the impugned order was passed by the Adjudicating Authority ignoring the fact that the Corporate Debtor never raised the issue of delay and the consequent claim of liquidated damages during the course of fifteen revisions of the work orders extending the final completion date from time to time finally to 31st May, 2015 and that the Corporate Debtor could not agitate the claim of liquidated damages against the Operational Creditor after the release of two bank guarantees towards the performance guarantee. According to Appellant, the disputes raised by the Corporate Debtor are spurious, designed only to harass the Appellant. 2. Heard learned counsel for the parties and perused the record. 3. Initiation of Corporate Insolvency Resolution Process at the instance of an Operational Creditor is provided for under the provision engrafted in Section 9....
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....cceed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." 4. The undisputed facts leading to initiation of Corporate Insolvency Resolution Process may briefly be noticed. The Operational Creditor was awarded a contract for the collection of material from stores of the Corporate Debtor, loading, transportation to work site, unloading of materials, erection, testing, commissioning of steam generator comprising boiler with all necessary wherewithal's, etc. The work was awarded under Work Order dated 19th August, 2009 for execution of pre-assembly, erection, testing and commissioning of boiler and other plants in respect of 'Kalisindh Thermal Power Project, Rajasthan'. Delivery date was fixed for 31st October, 2009. This was followed by another Work Order dated 10th January, 2013 relating to erection, testing and commissioning of auxiliary steam piling and clear oil painting of the same project with completion date fixed as 30th July, 2013. According to the Operational Creditor, the C....
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....earned counsel for Appellant, while assailing the impugned order submitted that the Adjudicating Authority erred in passing the impugned order without considering whether the dispute regarding liquidated damages raised by the Corporate Debtor was an afterthought, spurious, hypothetical or illusory. It is further submitted that no liquidated damage for any revision has been imposed or quantified by the Corporate Debtor even once during fifteen revisions of the Work Order spanning 2009 to 2015. It is further submitted that the mandatory provision in Clause 2.6(c) for levy of liquidated damages has not been followed and the counter claim of the Respondent does not survive as a defense against the Operational Creditor's claim. It is further submitted that since completion certificate has been issued unconditionally on 5th March, 2015, claim on account of liquidated damages cannot lie. It is further submitted that the Corporate Debtor cannot be allowed to raise a mutually destructive plea in view of the fact that it has deposited TDS towards dues of Rs. 2,33,74,173/- to the Corporate Debtor. Thus, it is contended that the plea of pre-existing dispute is nothing but a fraud designed to f....
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....were going to decide the issues on merit. The Adjudicating Authority exercises a limited jurisdiction and cannot dwell upon the pros and cons of the claim or merits of dispute. The limited exercise required to be undertaken by the Adjudicating Authority extends only to sift the material for separating the grain from the chaff with a view to reject a palpably spurious defense. Likelihood of such defense succeeding or failing is not the concern of Adjudicating Authority. If the dispute exists in fact, is a pre-existing dispute and is not spurious, hypothetical or illusory, the Adjudicating Authority must reject the application. 8. Clause 2.6 (c) of Annexure-I of Work Order dated 19th August, 2009 at page 191 of the paper book provides that the time schedule shall not be liable for extension without levy of liquidated damages unless under the exceptional circumstances specified in the contract. It also provides that no compensation shall be payable for any time overrun of two months beyond the time schedule, if same is caused due to reasons attributable to the Corporate Debtor. Clause 2.7 provides for levy of liquidated damages in the event of delay in handing over of the unit. It ....