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2021 (5) TMI 609
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....tructed by the Rajasthan Vidyut Utpadan Nigam Ltd. ii. That pursuant to issuance of the said work orders, the applicant carried out the work as per the specifications of the work orders. iii. That during the course of the carrying out the work, the applicant kept raising Running Account Bills, which were prepared after the certification and verification of the quantity of the work at the site by the Corporate Debtor as well as the Rajasthan Vidyut Utpadan Nigam Ltd. and it was upon such certification and verification that the Running Account bills were passed by the Rajasthan Vidyut Utpadan Nigam Ltd. iv. That the corporate debtor only released ad hoc payment despite certification of the Running Account Bills. Thereafter, the work was completed and the Thermal Power Plant at Chhabra, Rajasthan was commissioned in the year 2015. v. That despite completion of the work, commission of the plant and after the lapse of the contractual one year period of defect liability and the raising of the Final Bill, the Corporate Debtor despite demands failed to make payment of the Bills, against which certain ad hoc payments were released. vi. That the C....
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....letters dated 26.04.2013, 29.04.2013, 04.09.2013, 11.04.2014 and 10.11.2014 thereby pointing various breaches and delays on the part of Zillion for which Indure is to be duly compensated. It was pointed out in all the said letters and emails that Indure will take remedial measures as per the Contract. The claims of Indure against Zillion are in excess of 25 crores. iv. That the slow progress at site is evident from the running bills submitted by Zillion, which shows that as on February 2011 (original completion period of the Unit 4) Zillion could only complete approximately 30% of the total work awarded to them. There were further deficiencies in providing services due to which the progress of work was slow and hampered several times. v. That as per clause 13 of the work order, Zillion was under obligation to submit steel reconciliation statement, which was admittedly not submitted till date despite several requests and reminders. As per the accounts maintained by Indure, Zillion has been issued 22,495 tonnes of steel out of which, Indure reserves its right of recovery of approximately 200 MT of steel amounting to more than one crore rupees. vi. That as p....
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.... all the claims as raised by the Petitioner are barred by law of limitation. xiii. That the deposit of TDS does not amount to any purported admission on the part of Indure. Under the tax laws and the accounting standards being followed in India and by Indure, TDS is deducted and deposited on receipt of an invoice. Deposit of TDS does not amount to admission of the invoice. The final TDS is adjusted either at the end of the financial year or at the time of finally closing a contract. xiv. That none of the statements & ledgers filed by the Petitioner match, inter se. The said ledgers and statements are frivolous and created only for the purpose of the present litigation. xv. That it is further submitted that contrary to the provisions of the Code and the Rules formulated thereunder, there has been no effective service of the demand notice on the Respondent. The Respondent has not been served with the demand notice dated 16 November 2017. The Petitioner despite having the email addresses of the Directors of the Respondent failed to serve the said demand notice on the email addresses of the Directors contrary to the provisions the Code. xvi. That the....
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...., also the said certificate is not in accordance with the provisions of the Code. xx. That the purported certificate of SBI at page 558-619 of the paper book is not a certificate at all and in fact, it is as simplicitor bank statement from 07.08.2012 to 19.08.2016. 4. The Petitioner/Operational Creditor has filed its rejoinder and has asserted the following contentions: i. That the respondent has not given any reply in terms of the provisions of section 8(2) of the Code to the Demand Notice dated 16.11.2017 issued by the applicant. The respondent had replied to the previous notice dated 13.09.2017 vide its reply dated 23.09.2017 which was also not in terms of the provisions of Section 8(2) of the Code. The respondent did not point out to the existence of a dispute and or record of the pendency of the suit or arbitration proceedings. Further, the work required to be executed under the contract was done successfully on 30.06.2014 and the Completion Certificate was issued on 16.04.2015 by the Rajasthan Vidyut Utpadan Nigam Ltd. (Govt. of Rajasthan), the end user for which the work was being carried out and thereafter, the respondent company never ever invoked the ....
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.... differential quantity bills and the same have been duly certified for payment by the respondent and TDS has been booked collectively on the amount including that of the said amount of the said invoices. vi. That the invoices have been duly sent along with the Demand Notice dated 13.09.2017 as well as along with the Demand Notice dated 16.11.2017. The postal receipt for dispatch of the Demand Notice dated 16.11.2017 shows its weight as 2900 grams (2.9 Kg) and Form 4 discloses the total number of pages of the entire Demand Notice as 548 pages. vii. That the Respondent/Corporate Debtor has failed to file any ledgers or statement of accounts or even the site measurement that the amount claimed or debt in default is not the correct figure or that the same is not made out. The Respondent/Corporate Debtor has not filed any balance sheet, Auditors Report or Directors' report for the relevant period from 2014 onwards to show that they have a booked claim for an amount of Rs. 25 crore as against the applicant. viii. That the contract/work order dated 17.08.2009 was initially awarded for only Unit 3, Stage I, Phase 2 of the Chhabra Thermal Power Plant and as pe....
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.... Bank Certificate clearly shows the total amount received by the Applicant from the Respondent and thus, clearly tallying with ledgers and statements of account that there is no payment of the unpaid operational debt. The Respondent has not shown by way of filing of any bank statements or ledgers or statement of account that the payment of the said unpaid operational debt has been made. 5. The Petitioner/Operational Creditor has filed its written submissions and submitted the following: i. The Bar of Section 11 IBC 2016 is not applicable to the present case as Section 11(b) of IBC 2016 provides that this application is maintainable. That on the date of filing of the application, the applicant was not undergoing CIRP. ii. The requirements for an order of admission U/S 9 (5) of the Code have been duly met as under: 1) The application is complete (Sec 9(5)(a)]: The application does not suffer from any formal or technical defect. 2) There is no payment of the unpaid debt [Sec 9(5)(a)]: Objection regarding Bank Certificate not being as per provisions of the Code is not tenable in view of the Mobilox case. A Bank certificate is not mandatory. The ba....
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....mination letter issued on 20.11.2014. No such termination letter(s) ever served on or received by Applicant nor proof of service attached nor have they been acted upon as applicant kept working and billing and receiving ad hoc on account payments from Corporate Debtor until 04.05.16, invoices raised until 23.06.2016 and till that time applicant working on site. No mention of termination in correspondence or reply to demand notice dated 23.09.2017. c. Recovery of 200 MT steel: Clause 13 of the work order provides for allowable irrecoverable wastage of steel of 1% of total work handled. Work handled as per Corporate Debtor was 22,495 MT, thus allowable irrecoverable wastage was 224MT and quantity reconciled jointly. Thus, as per contract it is no dispute or claim. d. Recoveries as per para 12 of objections: No quantification/raising of a liquidated claim for damages made till date in respect of the so called heads on which recovery sought. No invocation of arbitration clause or initiation of recovery proceeding still date. e. Fraudulent encashment of Bank guarantee after receipt of notice petition: As per Annual Report of the Principal - Rajasthan Rajya Vid....
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....of wages of the workers were being diverted for its gains by the applicant. Considering the circumstances, the Respondent herein terminated the contracts vide letter dated 20.11.2014. iii. That the present application is not maintainable as several breaches and delays can be attributed to the Applicant herein. As per the work order dated 17.08.2009, the applicant was to complete the work of Unit 3 by September 2010 and Unit 4 by February 2011 for, which the applicant failed to complete despite several extensions being granted by the Respondent. The works were admittedly not completed till 20.11.2014, when the termination notice was issued by the Respondent. iv. It is submitted that the Respondents had been proactively writing to the Applicant to fulfill their end of contract so as to proceed with the work orders, which were delayed numerous times due to no fault of the Respondents. In this regard several default, breach and risk and cost notices were issued by the Respondent to the Applicant. v. Furthermore, the disputes between the parties have also been referred under the dispute resolution mechanism to the Engineer for the Project vide communication da....
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..... It is a settled law that the limitation period for raising claims is to be computed from the date of accrual of cause of action. Right to sue for the purpose of computation of the period of limitation is to be taken from the date when such a right accrues in favour of the Petitioner i.e. the first time when the Petitioner could have approached the Court to recover its alleged dues. xiii. Admittedly the said date cannot be later than the issuance of termination of contract. Accordingly, the present claims are barred by limitation. The Petitioner in its rejoinder has allegedly claimed that the works were completed on 30.06.2014. In view of the same as well the right to sue arises in favour of the Petitioner to recover its dues. The present petition having been filed in December 2017 is barred by limitation. xiv. It is submitted that in terms of the Hon'ble Supreme Court's judgment in BK Educational Services Private Limited v. Parag Gupta and Associates, provisions of the Limitation Act, 1963 are applicable to applications filed by financial and operational creditors under Sections 7 and 9 of the Code. Therefore, in the light of the Apex Court's judgmen....
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.... certain disputes. (iii). The rejoinder of the reply to the demand notice was sent by the Operational Creditor on 05.10.2017 and reply dated 24.10.2017 to the rejoinder has also been received by the Operational Creditor from the Corporate Debtor. The second demand notice dated 16.11.2017 was delivered by the Operational Creditor (Page 700 of the petition) but the said demand notice was not replied by the Corporate Debtor. 10. The Operational Creditor claims that- (a). Since, no reply to the second demand notice dated 24.10.2017 was given by the Corporate Debtor, no dispute has been raised in terms of Section 8(2) of the IBC, 2016. (b). Since, the TDS has been deducted, it amounts to admission of the claim of the petitioner by the Corporate Debtor. (c). The Application is within time, because the final bill was raised on 11.04.2016. (d). No dispute is pending before the arbitrator. 11. The Corporate Debtor/Respondent claims that:- (a). Since the contract was terminated on 10.11.2014 and the present application is filed in December, 2017, the present application is barred by limitation. (b). Deduction of TDS does no....
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....ch amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be [Section 8(1)]. Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute [Section 8(2)(a)J. What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the demand notice or invoice, as the case may be." 20. The Hon'ble Supreme Court clearly held that the dispute must exist before the receipt of the Demand Notice or Invoices as the case may be. Further, in the matter of "Innovative Industries Ltd. Vs. ICICI Bank and Anr." - (2018)1 SCC 407, in paragraph 29 held which reads as under: "29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occ....
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....- 431) was already before the Adjudicating Authority and it had also noticed the same, the Adjudicating Authority should have found preexisting dispute and the Section 9 Application should have been rejected. Only by observing that the Respondent -Corporate Debtor have not come forward to dispute the Application would not be sufficient to initiate CIRP, if the record already showed existence of dispute." .... And in the matter of "Mr. Gajendra Parihar Vs. M/s. Devi Industrial Engineers & Anr." in Company Appeal(AT)(Insolvency) No. 1370 of 2019 this Bench dated 18.03.2020 was of the view that existence of dispute prior to the issuance of Demand Notice, the Application under Section 9 IBC is not maintainable and once there is existence of such dispute, the Operational Creditor gets out of the clutches of the Code. CONCLUSION: 22. Having gone through the records and the law laid down by the Hon'ble Supreme Court and the precedents of this Tribunal, we are of the considered view that the correspondences i.e., e-mail/letters show that there is existence of disputes prior to issuance of Demand Notice. 23. Exchange of e-mails/correspondence....
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....fter appearance, the Corporate Debtor has filed the reply and annexed the emails exchanged between the parties (From Page 16 to 39 of the reply). On perusal of these emails, we notice that the issues of terms and conditions of the agreement were raised by the Corporate Debtor and several requests were made on behalf of the Corporate Debtor to complete the work by deputing more manpower. When the Operational Creditor failed to complete the work within the contracted period, ultimately vide letter dated 14.09.2014, the last warning was given to the Operational Creditor to restart the work immediately and ensure completion of the pending work within 14 days failing which work order Shall be terminated. Accordingly, vide letter dated 20.11.2014 (Page 38 of the reply) the Corporate Debtor had terminated the contract with immediate effect as per clause no. 15 of the work order read with clause no. 39 of GCC. It was also mentioned in that letter that the balance work shall be executed at the operational creditor's risk and the cost and excess payment in executing the balance work shall be recovered from the securities available to the Corporate Debtor under the contract. It was also m....
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....;" 23. A bare perusal of the aforesaid provision shows that the dispute includes a suit or arbitration proceedings relating to the existence of the amount of debt, quality of goods or service. Here as per emails exchanged between the parties, we have seen that the Corporate Debtor has raised the issues of quality of service rendered by the Operational Creditor and also the amount of debt raised by the Operational Creditor. 24. In terms of the clause 39.00 of terms and conditions of the agreement, at page 57 of the written submissions filed by the Corporate Debtor, we notice that the matter had been referred to the Superintendent Engineer for Arbitration and this was done prior to the issuance of the second demand notice. 25. For the reasons discussed above, we are of the considered view that the documents placed by the Corporate Debtor on record have established that there was a pre-existing dispute between the parties regarding the quality of the goods as well as the amount of debt and the matter had already been referred as per Clause 39.00 of the agreement (Page 57 of the Written Submissions filed on 27.03.2021) for Arbitration. Hence, we are of the considered view that....
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.... the Trial Court may have erred as the settled position is that deduction of TDS does not constitute an admission of liability. The Trial Court may be wrong in holding that the TDS certificate by itself constitutes an admission of liability. This is not so, inasmuch as the TDS can be deducted even on the expectation of estimated liability. Independently of the TDS certificate, the liability of the Defendant is quite clear. The Supreme Court in Commissioner of Income Tax v. Gujarat Fluoro Chemicals (2012) 13 SCC 731 categorically held that "both advance tax as well as TDS are based on estimation of income by the assessee." The Bombay High Court as well, in S.P. Brothers v. Biren Ramesh Kadakla (2009) 1 Bom CR 453 has held that "the issuance of TDS certificates does not amount to an acknowledgement of defendant within the meaning of Section 25 of the Indian Evidence Act.......The TDS certificate is primarily to acknowledge the deduction of tax at source." The Judgement dated 27th November, 2012 in Bigdot Advertising & Communications Pvt. Ltd. v. Union of India [CS(OS) No. 226/2000] was dealing with the question of the person who is liable once the TDS certificate is issued. It is not....