TaxTMI 
TaxTMI 
2021 (9) TMI 581
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.... the Government of Himachal Pradesh. (ii) The shares of the HSPL are held in the following pattern; (a) By the Operational Creditor - 94.92% (b) NCC Limited - 0.08% (c) IL & FS Energy Development Company Ltd. - 5% (iii) Subsequent to the same, HSPL has commenced the work relating to the project by entering into the contracts with several contractors between the year 2007 and 2010. (iv) In or around the year end 2011, when the Corporate Debtor was exploring the possibility of making further investment in power generation in India and was in touch with the various institutions, M/s. IL&FS approached the Corporate Debtor with a proposal to invest in the project. At that point of time, HSPL had run out of funds and the Corporate Debtor was cash-constrained to inject more funds into HSPL. and the project. However, since the project was only months away from completion and there were at least four different contractors working on the project, the Corporate Debtor felt that if it were to acquire the project on 'as is where is' basis, it would have to invest considerable time and effort to learn about the project and complete it. (v) Pursuant to the discussions being ....
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....withheld amount of Rs. 24 crore, while continuing to withhold the balance amount of Rs. 9 crore. (vii) Subsequently, the Supplementary Implementation Agreement was entered into between the Government of Himachal Pradesh and HSPL on 23.05.2016 which accorded permission for the transfer of balance shares to HSPL, in and by which, it was alleged by the Operational Creditor that a sum of Rs. 9 crore was withheld by the Corporate Debtor, which has become due payable to the Operational Creditor. (viii) In the meantime, on 31.12.2014, arbitration proceedings were invoked jointly by the Corporate Debtor and HSPL as Claimants against the Operational Creditor and NCC Limited, on account of several alleged breaches by the Operational Creditor & NCC Limited. In the said arbitration proceedings, the Corporate Debtor and HSPL have claimed an amount of Rs. 132.648 crore towards Cost Overrun and an amount of Rs. 217.827 crore towards loss of profits. In the said arbitration proceedings, the Operational Creditor has filed a counterclaim against the Corporate Debtor in respect of an amount of Rs. 9 crore which was held by the Respondent under the terms of the amended SPA. The said claim of Rs. 9....
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.... TAQA on account of breaches committed by NCCIHL. A claim for damages is not a claim for an ascertained sum due and damages claimed become payable only when the claim is adjudicated by a competent court or arbitral tribunal. The claim by TAQA for damages is separately considered earlier in this award. The sum of INR 9 crores (which was a part of INR 24 crores) was withheld pending permission from GoHP for transfer of the entire shareholding of NCCIHL in HSPL to TAQA. It is not in dispute that such permission has been received and there is now no impediment for release of the said INR 9 crores by TAQA to NCCIHL. Therefore, the said counterclaim (g) for payment of the withheld part of the sale consideration INR 9 crores is allowed and TAQA is directed to release the said amount to NCCIHL." 3. From the facts narrated above, it is clear that in an Arbitration proceedings initiated by the Corporate Debtor, the Operational Creditor herein has filed a Counter claim which was allowed by the Arbitral Tribunal in its award dated 24.01.2019 in and by which a sum of Rs. 9 Crore is required to be paid by the Corporate Debtor to the Operational Creditor. Under the said circumstances, the presen....
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....iled only to pressurize and arm-twist the Corporate Debtor to gain an undue advantage in an ongoing dispute between the parties. It was submitted that the claim amount by the Operational Creditor admittedly forms part of the consideration for the transfer of shares from the Operational Creditor to the Corporate Debtor and there are serious and substantial dispute existing between the parties which have arisen subsequent to the Arbitral award and these disputes are in existence even before the issuance of the Demand Notice. The disputes as per the Learned Senior Counsel for the Corporate Debtor, which exist between the parties are summarized herein below; (a) The claim amount forms part of the consideration agreed to be paid by the Respondent in terms of SPA between the Petitioner, the Respondent and HSPL (b) The share transfer was admittedly not completed as agreed between the parties and the Petitioner has committed egregious breaches of not only the original SPA but also a subsequent agreement between parties pertaining to the share transfer. (c) The Petitioner's breach pre-dates the Demand notice and the said breach was called out by the Respondent and HSPL also prior ....
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....xt of IBC. It was contended that Section 5(6) of IBC, 2016 defines the term "dispute" and as per the said definition, there is no distinction between an international and domestic arbitration proceedings and consequently no distinction can be drawn between the awards rendered through international and domestic arbitration proceedings. Further, it was submitted that as per the provisions of IBC, 2016 it is immaterial if such arbitration proceedings were held under Part I or Part II of the Arbitration and Conciliation Act, 1996 as amended. In this context, it was also submitted that IBC, 2016 has specifically provided for an order of an Arbitral Tribunal adjudication on the default as being such a record of default and by placing reliance upon the Judgment of the Supreme Court in the matter of K. Kishan -Vs- Vijay Nirman Company Pvt. Ltd.; 2019(1) CTC 484, it was submitted that only if a challenge was pending against an award, the same could not be treated as non-est and the IBC proceedings as in the present case, commenced on the award per se. In order to buttress his arguments, the Learned Senior Counsel for the Operational Creditor has pressed into service the following judgments ....
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....oth the parties and perused the records including the pleadings and the written submission placed on record. From the elaborate submissions made by the Learned Senior Counsel for both the parties, the following issues arise for consideration before this Adjudicating Authority in order to render a finding in the present Application; i. Whether the "debt" of the Petitioner qualify to be an "operational debt" in terms of Section 5(21) of IBC, 2016 and as such the Petitioner would qualify to be an "Operational Creditor" in respect of the Corporate Debtor under the provisions of the IBC, 2016; ii. Whether there is any dispute exists between the parties that exist before the issuance of the Demand Notice by the Operational Creditor; iii. Whether the Award passed by the Arbitral Tribunal, which is a foreign Award has become legal enforceable in India and if so what would be the consequences? Issue No. (i) 13. In relation to Issue No. i, it is necessary to refer to the of the term 'operational debt' and 'operational creditor' as defined under Section 5(20) and (21) of IBC, 2016; (20) "operational creditor" means a person to whom an operational debt is owed and inc....
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.... claim money from the Corporate Debtor emanates from a SPA dated 19.09.2012, pursuant to which the Corporate Debtor had acquired the shares from the Operational Creditor. The transaction as transpired between the parties could have been treated as an 'operational debt' had it occurred in the 'ordinary course of business' of trading in shares by one seller and another purchaser, in which context the expression 'shares' would partake the characteristics of 'goods' as envisaged under the Sale of Goods Act, 1930. However, it is not so in the present case and the parties to the present proceedings are governed by a 'Share Purchase Agreement', and non - adherence/violation of the said terms and conditions envisaged thereunder, cannot be, under any circumstances, be treated as a claim in respect of the 'provision of goods' as defined under Section 5(21) of IBC, 2016. Thus, for the aforestated reasons, we are of the considered view that the alleged 'debt' as claimed by the Operational Creditor in the present Application does not fall within the definition of the expression 'operational debt' as defined under Section 5(21) of t....
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....ally agreed to be transferred to TAQA India under the SPA) be transferred to Greenko only pursuant to the CAP. TAQA India also stated that if the terms of the CAP were not adhered to, then TAQA India would be entitled to seek return of the Bank Guarantees that had been provided by NCCIHL. 11. As noted hereinabove, in order to implement the CAP, and proceed with the transfer of the Subsequent Sale Shares and other securities to Greenko, the Project Lenders required that NCCIHL and NCC Limited confirm and undertake that NCCIHL and NCC Limited will make no further claims against HSPPL. By way of a letter dated 30 May 2017 to the lenders and HSPPL, NCCIHL made this confirmation and undertaking, part of which is reproduced below: "...(d) All liabilities of the Company in relation to NCCIHL remain the subject matter of an arbitration being conducted under SIAC Rules before the arbitral tribunal comprising of (i) Mr. Justice R.V. Raveendran, (ii) Mr. Justice A.K Patnaik and (iii) Mr. L.V. Sreerangaraju, with its seat in Singapore. NCC Limited and NCCIHL hereby confirm that they do not have and will not make, any other claims against the Company other than those set out in (c) and (d....
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....his Reply as Annexure B. Further, as a party to the said Interpleader Suit NCCIHL is already in possession of the relevant documents on the record therein." 20. Perusal of the aforesaid reply which was given by the Corporate Debtor, would prove the fact that certain civil suits were filed by the parties before the Hon'ble High Court of Bombay even before the issuance of the Demand Notice. In any case, it is evident from the documents placed on record that there is pre-existing dispute between the parties. The Supreme Court in the matter of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited; held that the 'existence of dispute' and/or the suit or arbitration proceeding must be preexisting "33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e. on non-payment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjud....
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....(1) Enforcement of a foreign award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the court proof that- (a) the parties to the agreement referred to in section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or (b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or (c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration: Provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or (d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the a....