TaxTMI 
TaxTMI 
2020 (10) TMI 585
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....rate Debtor. The Operational Creditor has not proposed the name of any Resolution Professional. 2. It is submitted that the Operational Creditor is engaged in the business of execution of Turnkey jobs of LP Piping Work and is a pioneer in the field of LP Piping works. It is submitted that the Corporate Company had issued two letters of award dated 25.11.2014 for supply of complete LP Piping System Packages (First Part 3 X 150 MW TPP and also contract for "SERVICE OF COMPLETE LP PIPING SYSTEM PACKAGES (FIRST PART) FOR 3 X 150 MW TPP IPC (H) L HALDIA PROJECT". 3. It is submitted that from time to time, Corporate Debtor Company issued amendment to the Letter of Award for making minor amendments to the Letter of Award. The scope of work included total Lumpsum price for unloading, handling, intra site transportation, site storage, security of items, erection, internal painting, final painting, wrapping coating, back filling, sand filling testing & commissioning services of complete LP Piping system (CW & ACW, DM Transfer, DMCW and Condenser on line tube cleaning system), tanks with all accessories & fittings inclusive commissioning of IPC(H) L free issue material. The value of the con....
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.... of "Retention Money" which was payable after the completion of the project. Without doubt, admittedly, the Operational Creditor has completed their part of the contract and hence, the amount towards "Retention Money" is admittedly and undisputedly payable by the Corporate Debtor to the Operational Creditor. 6. It is stated that the Operational Creditor has successfully completed their part of the job to the entire satisfaction of the Corporate Debtor as early as February, 2018. Since the work has been completed to their entire satisfaction, therefore, there was no cause or concern or issue and hence, there had not been any letter or E-mail or correspondence from the side of the Corporate Debtor to the Operational Creditor pointing out any finger or issue or concern. It is submitted that towards the supply of goods and also for supply of services, the following admitted, unquestionable and undisputed amount is due and payable by the Corporate Debtor to the Operational Creditor Company:- A. Regular 31,65,374/- Retention: 1,28,77,256/- Total 1,60,42,630/- 7. Finally when the amount due was not paid, the Operational Creditor sent various reminders to the Corporate Debtor. A de....
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....f the contract. The Corporate Debtor sent an email dated 18.08.2015 and met with the Operational Creditor on two occasions i.e. on 17.08.2015 and 05.11.2015, to bring the issues of inadequate deployment of manpower to the notice of the Operational Creditor. iii. The Operational Creditor failed to supply materials for CW; ACW, DMCW, Tanks and DM Water Transfer system within 30.04.2015 as explicitly mandated by the contract. The Operational Creditor was urged to supply the CW, ACW, DMCW pipes and SS seamless pipes on 17.08.2015 and 05.11.2015 by the Corporate Debtor, further the Operational Creditor was requested via email dated 13.10.2015 to supply 1800 NB and 1200 NB CW pipe immediately in order to execute piping work at site. The Corporate Debtor further informed the Operational Creditor via e-mail dated 16.10.2015 that due to non-supply of materials, there had been an undue and inordinate delay in completion of the DM Water Storage Tank, CST, DMCW O/H Tank and that there has been an inordinate delay in releasing the front to BHEL and ABB for condenser and transformer work respectively due to failure of the Operational Creditor to supply the 1800 NB and 1200 NB CW pipe. The Oper....
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....filled by the Operational Creditor which includes giving and/or extension of performance bank guarantee as well as clearing of punch points, and only after defect liability period and the warranty period gets over. However, none of the criterion has been fulfilled. Thus, the Operational Creditor has no locus standi to ask for payment or to make any claims as per the terms and conditions of the contract. ix. The allegations and/or averments made in Part (I) to Part (V) of the purported Form V constituting pages 1 to 9 are denied. With regard to an unnumbered paragraph in part IV of the form 5, the Corporate Debtor denies and disputes that a sum of Rs. 1,60,42,630/- (Rupees One Crore Sixty Lakhs Forty Two Thousand Six Hundred and Thirty Only) is payable by the Corporate Debtor. x. The allegations and/or averments made in Paragraphs 1 to 10 at pages 10-15 of the Application are denied and disputed by the Corporate Debtor in their entirety. It is denied that the Corporate Debtor ever committed any default in its obligations under the contract as alleged or at all and states that it is the Operational Creditor who has committed multiple defaults/breaches of the Contract that have be....
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....isper what to speak of raising any claim on account of alleged and purported (i) loss (ii) damages (ii) Compensation (iv) liquidated damages or any other recoveries, and had not sent letter, email, Notice in connection to this. iii) Operational creditor has furnished two Performances Bank Guarantees for a sum of Rs. 2,07,74,700-/and Rs. 47,75,300 issued by ICICI Bank, Connaught Place Branch, New Delhi in favor of the corporate debtor and which was valid upto 13.09.2018. iv) It is submitted that as per Corporate Debtor's own admission, the project was completed to their entire satisfaction on 31.05.2018 and Defect Liability period expired on 30.05.2019 therefore Corporate Debtor has released the performance Bank Guarantee Vide letter/email dated 17.082018. similarly, the Operation Creditor had also issued Corporate Guarantees also expired on 31.03.2019 and during validity of this corporate Guarantee, no claim or demand was made by Corporate Debtor. As none existed at any point of time.(copy of letter dated 17.08.2018 is attached and marked as ANNEXURE-l) v) That it is submitted that release of performance Guarantee by the Corporate Debtor itself establishes, confirms, admi....
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....2018 i.e. after about 3 years and 1 month from the date of agreed date of completion of the work. The project work was admittedly governed by conditions of contract pertinent to purchase orders and work orders given by the corporate debtor. The operational creditor submits that there had not been any letter or E-mail or correspondence from the side of the corporate debtor to the operational creditor, pointing out any issue or concern regarding the alleged dispute. The said contention is found not true but false. It has come out in evidence that there are exchange of correspondence pointing out the delay in regards supply of goods and supply of service to the corporate debtor. Learned Sr. Counsel appearing for the Operational Creditor mainly relied upon the completion certificate issued by the Corporate Debtor on 28/02/2019 for stressing his argument that the operational creditor has successfully completed their part of obligation to the entire satisfaction of the corporate debtor as early as February 2018. The completion certificate referred to by the Ld Sr. Counsel is reproduced hereunder. Date: 28.02.2019 TO WHOMSOEVER IT MAY CONCERN WORK COMPLETION CERTIFICATE This is c....
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....he corporate debtor admitting its liability and that there is no letter to show that there has been losses suffered by the Corporate Debtor on account of any loss and thus there is no question of liquidated damages payable to the Corporate Debtor and therefore this application is liable to be allowed. 16. In reply to the argument of the Operational Creditor, Learned Sr. Counsel for the Corporate Debtor submitted that his case is based on two contracts. It is submitted that section 9 by its very nature is not intended for this type of matters. The first contract is as regard supply and the second contract is as regard services. According to the Learned Counsel, the first contract was for supply of complete LP Piping system Package for the value of Rs. 20,97,47,000/-( Rupees Twenty Crore Ninety Seven Lakh Forty Seven Thousand ) whereas, the second contract is for services of complete LP Piping system Package of the value of Rs. 4,77,53,000/- (Four Crore Seventy Seven Lakh Fifty Three Thousand Only ). Out of this total amount Rs. 25,75,00,000/-(Twenty Five Crore Seventy Five Lakh only), according to the Learned Sr. Counsel, the Corporate Debtor has already paid Rs. 23,49,00,000/-( Tw....
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....tion of material at site. Note:- Other terms & conditions will be as per GCC & SCC 7. Warrantee Clause :- Equipment's are warranted for 12 months from date of commissioning and 18 months from date of last major supply, whichever is earlier. 8. Defect liability Period:- The defect liability period shall be 12 months from the date of taking over. The contractor shall be liable to rectify all defects in the works done by the Contractor under the Contract during the defects liability period. 9. Liquidated Damages for Delay in completion: In the event of delays attributable to the Contractor in achieving completion as per the contractual completion date, LD shall be applicable at 0.5 % contract price per week of delay, subject to maximum of 10% of the contract value". 18. The above said payment terms is part of Annexure-IV agreement entered into between Operational Creditor and Corporate Debtor. Referring to the above said terms and conditions, the Learned Sr. Counsel for the Corporate Debtor submits that sufficient materials are brought in to prove the existence of disputes before the date of issuance of demand notice and therefore in any events payment could only ha....
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....of M/s. Raunaq International Ltd) will be decided by M/s, Raunaq within 3 to 4 days. Further with reference to the trailing e-mail, it has been informed to you that M/s. Roy Construction is on strike since 17th Aug 2015 and now it is observed that no work is going on in any of the work front, bringing in the total work to a grinding halt. In reference to commitment against point no. 5 for completion of pipe laying under road crossing by 31st Aug 2015, no job has been taken up by M/s. Raunak till now. Again in reference to commitment against point no. 6 for start of UT of already laid CW pipeline from 25th Aug, 2015, no work has yet been started. You are advised to let us know your decision/action plan for deployment of agency/manpower and resources for CW pipeline job. Please note that the delay is to your account only. Regards D Swain" "From: Raunaq Ipcl Wed, Aug 26, 2015 Subject: Re: stoppage of work in CW Pipeline at 3x150 MW IPC (H) L Haldia site To: Debasis Swain Dear Sir, As discussed during the meeting at IPC(H) L, Kolkata office and subsequent discussion with your good self and also our sub contractor M/s. Roy Construction, they have decline to conti....
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....and MOM dated 17th Aug 2015, no work in CW pipe line has been taken up by your agency till date. Now, with exit of your earlier sub-vendor as per trailing e-mail, your team had committed to restart the CW pipeline job from 1st Sept 2015, with mobilization of either new sub-agency of your own team. However, it is regret to say that neither the ordering on your new sub-agency has been completed from your end nor your own team as per commitment given in MOM dated 17th August 2015 at our HO along with resources has moved into to Haldia Site till date for start of the job. This delay is not at all acceptable to IPC(H)L You are advised to take course correction action immediately to bring back the progress of work to meet the IPC(H)L project requirement. Regards D Swain" 20. The above referred e-mails disprove the submission on the side of the operational creditor that corporate debtor had not issued any letter or correspondence pointing out any issue regarding the completion of the work. When it was relied upon on the side of the corporate debtor the attempt on the side of the Learned Sr. Counsel for the Operational Creditor is that the above said emails were only sent by the....
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.... But later on, the Corporate Debtor had found that there were other pending works inclusive a bad quality of works done by the Operational Creditor to complete the Project, which were pending and were to be completed on 31st December, 2014. In the above said given facts, the Hon'ble Appellate Tribunal has held as follows (Para 11):- "Having gone through the matter and on considering record, there remains hardly any doubt that the earlier correspondence shows that between the parties there were disputes regarding installation of the projects as well as functioning of the same. Although the project had been commissioned for which Completion Certificate had been issued, still if disputes had arisen between the parties regarding the installation and functioning of the project, the Operational Creditor merely pointed out Certificate of Appreciation dated 19th April, 2015 issued and claims that once Completion Certificate had been issued, Corporate Debtor could not raise issues with regard to the quality of the work done. In fact, the record shows that there had been even a review meeting between Operational Creditor and Corporate Debtor and excerpts of which minutes have been plac....
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....atisfied that the defence is likely to succeed. 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". 26. Here in this case the operational creditor had issued demand notice on 4th June, 2019. To the said notice the corporate debtor had given notice of dispute by reply dated 20th June, 2019 as per section 9(5)(ii)(d) of the Code and proved existence of dispute prior to the date of issuance of the demand notice. E-mails issued by the corporate debtor dated 18.08.2015, 13.10.2015, 16.10.2015, 31.10.2015 and 05.11.2015 are some of the correspondence proving pre-existing dispute. In the view of the matter, we are unable to hold that Annexure V to XIX copies of e-mails given to the operational creditor by the corporate debtor relied upon by the Ld. Sr. Counsel for the operational creditor evidencing admission of liability by the corporate debtor. As per the terms of the contract, the delay on the side of the operational creditor give rise to a cause of action to the corporate debtor to claim....