TaxTMI 
TaxTMI 
2020 (10) TMI 585
X X X X Extracts X X X X
X X X X Extracts X X X X
....engal, hereinafter referred to as the Corporate 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tor has been deducting amounts from the RA Bills on account 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... supply of materials which led to the slow progress in the CW system, despite time being the essence of 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 wor....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... only be adjudicated in a trial after leading evidence. viii. Payments could have only been released if reciprocal obligations were fulfilled 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 un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the completion of the project in May, 2018 to the entire satisfaction of the Corporate Debtor, the corporate debtor neither in the said Certificate nor even thereafter made any whisper 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 tim....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ACW and DMCW Piping work at the site. 13. As per the admitted facts, the project work was scheduled to complete by the Operational Creditor on 30.04.2015. The work on the other hand was completed on 31.05.2018 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 d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Creditor Submits that corporate debtor by issuing Completion Certificate admitted successful completion of the work by the operational creditor and thereby there arises no question of default from the side of the operational creditor and that the e-mail correspondence referred to on the side of the corporate debtor do not constitute pre existing dispute after the date of issuance of completion certificate. He further would submit that Annexure V to XIX are some of the e-mails issued by the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r terms & conditions will be as per GCC & SCC. For supply of mandatory/o & m Spares a) Ninety Percent (90%) value of spares supplied, along with applicable 100% taxes and duties for the consignment shall be paid against dispatch documents on pro-rata basis. b) Ten Percent (10%) of spares value along with insurance and octroi, as applicable, will be released on pro-rata basis that basis after submission of Material Receipt Certificate (MRC) issued by the Project Site Engineer after receipt and physical verification 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 ach....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has been completely stopped since 17th Aug. 2015. You are advised to immediately start the pipe laying job under Road crossing as per our discussion & MOM held at IPC(H)L Kolkata HO on 17th August, 2015. Regards D. Swain" "Aug 26,2015 Kind attn: Mr. G.J. Chaurasia, Project Manager, M/s. Raunak International Ltd. Dear Sir, In reference to [point no. 1 of MOM dated 17th August, 2015, M/s. Raunak International Ltd. had assured IPC(H) L that the existing agency M/s. Roy Construction will complete the work front that had already taken up by them and further course of action about M/s. Roy Construction (Sub-agency 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ance payment due & also he needs the gate pass for his plant machinery, tools & tackles etc. Kindly issue the gate pass by tomorrow morning then we will make his full & final payment taking No Dues Certificate from M/s. Roy Construction. We are hereby ensuring that no delay will be taken place on our heads, slightly cw under ground piping execution suffered due to continuous rain nothing else. Hence once again we are hereby requesting that kindly issue the gate pass of plant machinery, tools & tackles belongs to M/s. Roy Construction enabling us to engage the other agency without any hindrances. Thanks with best regards G.J. Chaurasia PM-RIL/IPCL Haldia Site. "Sept 3,2015 Debasis Swain To: [email protected] Kind attn.: Mr. Rajan Malhotra, CEO, M/s. Raunaq Intl. Ltd. Dear Sir, With reference to trailing e-mail 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 mobiliz....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, we are not legally bound to go into the merit of the dispute if any found in existence. Here in this case existence of disputes regarding the delay in completion of work prior to the date of issuance of demand notice stand proved. 23. The above said view is supported by the following decisions cited by the Ld. Sr. Counsel for the corporate debtor. The decisions are Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018) 1 SCC 353, Vinod Mittal vs. Rays Power Experts Private Limited & Another of the Hon'ble NCLAT, New Delhi in CA(AT)(Ins) No. 851 of 2019 and one another judgement of NCLT Kolkata Bench in CP(IB) No. 648/KB/2018 (MX Systems International Pvt. Ltd. vs. Mcnally Bharat Engineering Co. Ltd.). 24. The facts, in the Vinod Mittal case are quite similar to the facts in the instant case. In the said case, the Corporate Debtor issued a completion certificate and appreciated the work done within the stipulated deadline of 31st December, 2014. 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 b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said judgement which read as under:- " 51. It is clear, therefore, that once the Operational Creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the Operational Creditor or there is record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument on an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied 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....