TaxTMI 
TaxTMI 
2020 (10) TMI 590
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....aim dated 18.09.2018 in full in respect of both the Units of the Applicant; (ii) to direct the Liquidator to write to the Bank of America that all the claims of the Corporate Debtor or the Liquidator are withdrawn on the Guarantee No. GT012451/16 of Bank of America, Chennai Branch for Rs. 1,00,12,274/- issued by the Applicant to the Corporate Debtor and direct the Liquidator to issue NO OBJECTION CERTIFICATE to the Bank of America in cancelling the Guarantee No. GT012451/16 for Rs. 1,00,12,274/- from their outstanding Guarantees. 2. Brief averments made by the Applicant in the Application are described hereunder: A. M/s. IDBI Bank Limited had filed an application under Section 7 or the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process (CIRP). The Petition was admitted vide Order in CP(IB) No. 111/7/HDB/2017, dated 07.08.2017 and appointed Mr. Savan Godiawala as Liquidator. B. The Applicant alleged that the present Application is to be filed on or before 26.1.2018. Since the Applicant has to come from Chennai, accordingly, there is a delay of 7 days in filing the present Interlocutory Application. C. It is averred the Applicant....
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....o 30.11.2017 with a claim period up to 28.02.2018 and was extended up to July 2018 as per the Hon'ble Madras High Court's direction. After the submission of the Original Bank Guarantee, the Corporate Debtor paid a sum of Rs. 1,00,00,000/- as advance as set out in the LOA. It is also averred another unit of the Applicant, BIND also furnished through Bank of America an ABG bearing No. GT 111782/ 16, dated 27.01.2016 for Rs. 29,98,800/- and received an amount of Rs. 1,00,00,000/- as advance from the Corporate Debtor. G. It is averred after the amalgamation an amended and consolidated purchase order for supply of soft seated ball valves and butterfly valves dated 29.04.2016 amended on 23.12.2016 was issued to the Applicant by the Corporate Debtor. The total value of the amended Purchase Order is Rs. 4,41,22,250/- and the value of the supply of metal seated and soft seated Ball valves package remained at Rs. 3,33,74,248/-. As per clause 3.1 of the scope of supply under the terms and conditions of the amended consolidated purchase order contained a revised Last Date of Supply as "All the Materials shall be delivered at site before 30th June 2017. Clause 4 of terms and condition....
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....averred that aggrieved by the non-payment by the Corporate Debtor against the contract value in compliance of the terms of the contract of PO/LOA, the Applicant persuaded the Corporate Debtor to take delivery of the Valves to the extent of the Advance outstanding in exchange for the Original Bank Guarantees of both the units. After many follow ups, the Corporate Debtor agreed to return the Original Bank Guarantees who stipulated to deliver Valves worth about Rs. 1,50,04,682/- which amount is much more than the amount of Advance outstanding for return of the Original Bank Guarantee 'and further stipulated the Applicant to execute a Letter of Understanding. It is also averred the valves were of custom-built and could never be sold in the market, without any other option, the Applicant executed the Letter of Undertaking in good faith. The Applicant was awaiting the instructions for the dispatch of the valves in exchange for the Original Bank Guarantees. The Corporate Debtor unethically and dishonestly invoked the ABG GT012451 Dated 29.01.2016 for Rs. 1,00,12,274/-. The Applicant incurred huge amounts on the inventory towards direct and other indirect costs to convert them into Val....
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....e Valves which were already technically inspected and cleared for dispatch by the Corporate Debtor appointed Third Party Inspector. P. It is averred rejection of claims by the Resolution Professional of the Corporate Debtor had to be challenged by the Applicant in respect of their two units i.e., BVD, Chennai and BIND, Vadodara separately besides praying for the stay of the invocation of the Bank Guarantee by the Corporate Debtor or its Resolution Professional and return the Original Bank Guarantee by filing applications in IA 115 of 2018 and IA 193 of 2018 before the Hon'ble NCLT, Hyderabad. In the meantime, Hon'ble NCLT, Hyderabad passed an Order on 27.08.2018 in CP(IB)/ 111 /7/HDB/2017 for liquidation of the Corporate Debtor/M/s. Lanco Infratech Limited appointing Resolution Professional to be the Liquidator of the Corporate Debtor. It is averred the Applicant had filed two claims in relation to one for its Chennai Unit and one for its Vadodara Unit within the due dates by e-mail. Q. It is averred the forced Storage Costs on the valves that had to be stored at the respective plants despite having made them ready long ago as per the terms of the contract and non-payme....
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....n booklet. It is also averred in the list of Operational Creditors dated 05.12.2018, the Applicant could notice that the entire claims of both the units of the Applicant were summarily rejected by the Liquidator of the Corporate Debtor and admitted in full or in part of the claims of the Associate or the Group Companies of the Corporate Debtor sounds irrational and illogical. V. It is averred the Liquidator rejected the claims on a flimsy ground that the Applicant did not make delivery of the Valves and there were no outstanding invoices for considering the liability. W. It is averred the Liquidator failed to consider the basic fact that Invoice for the Sale of Goods shall be made only on the basis of the agreed terms and conditions of the contract. The Applicant cannot be put into so much Financial Loss unjustly just because no invoice was made. The liability of the Corporate Debtor started on the day it received the Proforma Invoices for the Valves that were manufactured and cleared by the 3rd party inspectors as per the terms of the contract of P.O/LOA. This very important fact of the case which was not considered by the Liquidator is not only unfortunate but also it is unju....
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....n amount of Rs. 1,18,88,597/- to the Liquidator in relation to the contract entered into between the Corporate Debtor and the Applicant for supply of certain goods from Vadodara Unit of the Applicant. In relation to the Contract, the Applicant furnished an Advanced Bank Guarantee ABG GT111782/16 for an amount of Rs. 29,98,800/- and in terms of the Contract, the Corporate Debtor paid an amount of Rs. Rs. 29,98,800/- to the Applicant as advance payment. iii. It is averred the entire contents of the present Application are denied as false and misconceived, unless specifically admitted herein below as part of the present Reply and unless stated otherwise the present Reply may be treated as denial in seriatim of the entire contents of the Application. iv. It is averred the Respondent/Liquidator acted in accordance with the Insolvency and Bankruptcy Code, 2016 ("Code") and the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The provisions of the Code and Liquidation Regulations pertains to the verification and consolidation of claims by the Liquidator are described as under: Section "38. Consolidation of Claims: 1) The Liquidator shall receive or....
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....ll then it is nothing more than a mere right to sue for damages..." The Court further held that: "Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liability is adjudicated and damages assessed by a decree or order of a Court or other adjudicatory authority. When there is a breach of contract, the party who commits the breach does not so instant incur any pecuniary obligation, nor does the party complaining of the breach becomes entitled to a debt due from the other party. The only right which the party aggrieved by the breach of the contract has the right to sue for damages. That is not an actionable claim and this position is made amply clear by the amendment in Section 6(e) of the Transfer of Property Act, which provides that a mere right to sue for damages cannot be transferred". viii. It is averred the computation of the amounts claimed by the Applicant is not entirely clear. ix. It is averred the claim form and the documents submitted by the Applicant are duly verified and upon due consideration, the Liquidator has rejected the claim amounts by duly providing the following reasons: a) The Applicant having furnis....
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....igation is not payable in terms of the contract entered into between the applicant and the Corporate Debtor, h) It is averred as no amounts are due to be paid, the question of payment of interest does not arise. i) It is averred the Applicant has filed two claim forms. In the two claim forms, Liquidator has accorded common reasons for rejection of various claims made thereunder. x. It is averred if the bank guarantee furnished by the Applicant is not returned by the Corporate Debtor, the Corporate Debtor shall automatically be liable to pay the guaranteed amount to the Applicant. The bank guarantee is not yet encashed by the Corporate Debtor. xi. It is averred according to the books of accounts of the Corporate debtor, an amount of Rs. 1,12,09,752/- is owed by the Applicant to the Corporate Debtor. In view of this, the Liquidator is not in a position to return the bank guarantee furnished by the Applicant to the Corporate Debtor. xii. It is averred certain amounts were not admitted by the Liquidator which were admitted by the Resolution Professional during CIRP Process of the Corporate Debtor. During evaluation of claim during liquidation the dues of Chennai Unit and the ....
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....learned counsel contended that the applicant/company furnished Proforma Invoices to the Corporate Debtor from time to time towards 60% of the value of the valves. The learned counsel contended that the valves were made ready in both the units and they were also inspected by a third party-Inspecting Agency, viz. Tata Projects Limited. The learned counsel contended that the Corporate Debtor failed to take delivery though the valves were made ready for dispatch. On the other hand, the Corporate Debtor tried to invoke Bank Guarantee and the applicant moved the Hon'ble Madras High Court and obtained stay order. Subsequently, the application before the Hon'ble Madras High Court in OA No. 646 of 2017 was dismissed. The learned counsel contended that the Liquidator rejected the claim filed by the applicant. Consequently, the Liquidator tried to invoke the Bank Guarantee. The learned counsel contended that it is the Corporate Debtor who committed default for not lifting the valves manufactured by the applicant units. The learned counsel contended that the Liquidator has not carefully considered the evidence filed by the applicant and rejected the claim. This application is filed for....
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....support of the claim filed before the Liquidator. The liability of the Corporate Debtor will be decided only when supporting documents or invoices are filed. It is the case of the Liquidator that proforma invoices are not in the records of the Corporate Debtor. Then how the Liquidator can admit the claim of the applicant when there are no documents with the Corporate Debtor with reference to the alleged proforma invoice. There must be some proof before the Liquidator that such invoices were raised and filed with the Corporate Debtor. 9. It is an admitted case of the applicant that goods were not dispatched to the Corporate Debtor. The goods were allegedly made ready and were lying with the units of the applicant. The specific case of the applicant is that the Corporate Debtor failed to lift the goods prepared according to the specification which was also inspected by the Inspecting Agency. There must be some evidence before the Liquidator. All necessary documents are to be filed with the Liquidator by the applicant by which the Liquidator would be able to decide the liability of the Corporate Debtor towards the applicant. 10. The applicant is contending that there is a breach of ....