TaxTMI 
TaxTMI 
2020 (10) TMI 222
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....a part of the claim submitted by the Appellant against M/s. East Coast Energy Pvt. Ltd., (the Corporate Debtor herein) amounting to Rs. 24,01,63,511/- towards idle charges as a part of termination payment due under the contract between the parties and to direct the Liquidator to admit the claim of the Appellant in its entirety. 2. The brief facts of the case as submitted by Appellant are as follows: 2.1. That this Adjudicating Authority admitted the Company Application filed under section 7 of the IB Code, 2016 vide its order dated 03.04.2018 in CP (IB) No. 23/7/HDB/2018 for initiating the Corporate. Insolvency Resolution Process (CIRP) against the Corporate Debtor (M/s. East Coast Energy Pvt. Ltd.) and appointed Mr. Devendra Prasad as Interim Resolution Professional (IRP) who was later confirmed as the Resolution Professional (RP). 2.2. That since no resolution plan was forthcoming for the Corporate Debtor, Financial Creditor (PFC) filed an application before this Adjudicating Authority seeking liquidation of the Corporate Debtor. This Adjudicating Authority vide its order dated 22.04.2019, ordered for liquidation and appointed Respondent herein as a Liquidato....
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....aff, workers, suppliers, sub-contractors et al. The liabilities of Appellant increased manifold due to the default in payment by the Corporate Debtor and due to the sudden halt of work on the project. 2.9. That the Appellant wrote several letters to the Corporate Debtor highlighting the financial difficulties being caused to Appellant due to non-payment of outstanding PPCs and the accruing idle charges. Appellant consistently wrote letters on 13.08.2015, 18.09.2015, 12.12.2015 and 25.01.2016 along with several reminder emails dated 19.08.2015, 15.10.2015 and 23.01.2016 requesting the Corporate Debtor to release the outstanding payments in terms of the Contract. Though the Corporate Debtor did not challenge/object to the PPCs or the above said reminder letters/emails received from Appellant, it however, did not respond to a single letter or email and thus defaulted in making payments. 2.10. That aggrieved by such breach of terms of the contract by Corporate Debtor, the Appellant herein issued a contractual notice dated 26.01.2016 under clause 15.2 of the Contract claiming payment of all outstanding PPCs and idle charges. Having not received any response from East C....
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.... 42 of the IB Code, 2016 and implying thereby that he was not J open to revisit his decision. Reiterating the above, the counsel for the Appellant prayed to allow the instant Application. 3. The counsel for the Respondent/Liquidator filed counter stating as under:- 3.1 That there are no reasonable costs (or for that matter idle charges) payable under the construction contract dated 30.01.2010 executed between the Corporate Debtor and Navayuga Engineering. Company Pvt. Ltd. (Operational Creditor/Applicant herein), since Operational Creditor had never issued any notice of termination and failed to adhere to the process under Article 15.2 of the Contract, specified for termination of the Contract and did not submit any proof for the occurrence of the idle charges as a reimbursement cost to the Corporate Debtor as mandated under Article 15.7.1 of the Contract. 3.2 That the termination of the Contract was not proper and the charge including idle charges arising from such defective termination cannot be considered as termination charges under Article 15.7 of the Contract. 3.3 That the charges which have been claimed by Operational Creditor originate becau....
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....d and accepted the claim to the extent of Rs. 72,34,46,700/- in accordance with the Code and rejected the claim relating to idle charges amounting to Rs. 24,01,63,513/-, since the Operational Creditor did not provide any invoice in relation to the idle charges amounting to Rs. 24,01,63,513/- nor submitted its financial accounts giving the reason; I that idle charge are 'uncertain revenues' and claimed that these idle charges are not required to be recorded in the financial statement of Operational Creditor. Reiterating the above contentions, the counsel for the Respondent/Liquidator prayed to reject the instant Application. 4. Heard both the sides and perused the records. 5. The claim of the applicant has arisen out of the contract and amended contract entered into between the applicant and the Corporate Debtor on 30.01.2010 and 4.10.2013 respectively. It is also a fact on record that the amount claimed relates to the period between 01.06.2015 and 30.11.2015 covered under Progressive Payment Certificates (PPCs) 46 to 51. It is also not in dispute that the applicant herein has written several letters dated 13.8.2015, 18.9.2015, 12.12.2015 and 25.01.2016 and reminder....
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....ch amounts as the CCW-1 Contractor has already received on account of Works performed (the "Termination Payment"); provided that CCW-1 Contractor shall be entitled to submit a progress payment invoice for and receive payment for, all Works performed through the date of receipt of such notice of termination, which invoice shall be treated as a normal progress payment invoice pursuant to Article 4.2.1 hereof. If, at the date of such termination, CCW-1 Contractor has purchased, prepared, or fabricated off the Facility Site any item for subsequent incorporation at the Facility Site, and if CCW-1 Contractor delivers such item or that portion of such item prepared or fabricated to the Facility Site or to such other place as the Owner shall reasonably direct, the price of such item and the reasonable costs of delivery thereof shall be included in the Termination Payment. CCW-1 Contractor's right to the Termination Payment is subject to the condition precedent that CCW-1 Contractor shall execute and deliver all such papers as Owner may reasonably require for the purpose of assigning to and vesting in Owner all rights, title and interests of CCW-1 Contractor in and to all Subcontracts r....
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....the whole or any part of the claim. 12. The liquidator ought to have offered an opportunity to the applicant herein to produce enough documentary evidence to verify the claim preferred by the applicant herein. Instead, the liquidator has proceeded to interpret the nature of the claim made under 'idle charges' and classified it as 'consequential damages' under Article 9 of the contract between the parties and not part of Cost incurred by the Applicant under Article 15.7 and took a stand that no liability arises for payment of 'consequential damages' in terms of Article 9.2 and 9.6 of the Contract. 13. In the absence of any material to show that the Corporate Debtor during the period between the date on which the last PPC was raised and the date of admission of CIRP, had either disputed or objected to the amounts claimed including the "idle charges" as part of termination payments under Article 15.7 or opted for any other legal recourse available against such claim, the Liquidator ought not to have rejected the claim under the caption 'idle; charges' on the basis of his own interpretation of the such claim to be of nature of 'consequential da....