TaxTMI 
TaxTMI 
2021 (12) TMI 44
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....er Plant at Chhabra Rajasthan. During the course of carrying out the work, the Appellant kept on raising Running Account Bills. Certain payments were released by the Corporate Debtor till 2016. There has been correspondence between the parties. During the continuance of work by the Appellant, letters were sent by the Corporate Debtor in 2013-14 pointing out various breaches and delays on the part of the Appellant. Ultimately, by letter dated 20th November, 2014, issued by the Corporate Debtor to the Appellant, the contract of the Appellant was terminated. The Appellant after writing several letters to the Corporate Debtor for payment of his bills, issued a Demand Notice under Section 8 of the IB Code dated 13.09.2017 demanding an amount of Rs. 8,34,18,876/- (Rupees eight crores thirty four lakhs eighteen thousand eight hundred and seventy six only) with accumulated interest of Rs. 2,41,38,406/- (Rupees two crores firty one lacs thirty eight thousand four hundred and six only). The Corporate Debtor immediately replied to the Demand Notice vide letter dated 23.09.2017. In its reply, the Corporate Debtor stated that contract and claim of the Appellant are in dispute. The reply notice ....
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.... the pendency of the suit or arbitration proceedings filed before the receipt of such notice. In the present case, the Demand Notice was issued on 13.09.2017, which was replied by letter dated 23.09.2017. The reply dated 23.09.2017 is on the record where the Corporate Debtor has specifically stated that disputes have already arisen between the parties, which has to be resolved as per dispute resolution process as contemplated by Clause 16 of the Work Order. The details of various claims, which were raised by the Corporate Debtor against the Appellant have been enumerated in reply notice. 8. Section 9 Application filed by the Appellant was also replied by the Corporate Debtor and in the reply, letters raising different disputes were specifically mentioned and brought on record by the Corporate Debtor. The letters dated 02.06.2010, 07.06.2010, 28.04.2012, emails dated 29.04.2013, 11.10.2013, 15.10.2013, 17.10.2013, 05.11.2013 and 11.04.2014 were referred. Letter dated 10.11.2014 was also relied. Ultimately, the contract of the Appellant was terminated by the Corporate Debtor vide letter dated 20.11.2014, which was also filed along with the reply. 9. What is the dispute, which i....
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....we have already incurred substantial losses due to your continuous defaults and interruptions in execution of the work at site and such losses also stand recoverable from the available securities including Security Deposit Bank Guarantee." 11. The Corporate Debtor in his reply to notice dated 23.09.2017 as well as in his reply to Section 9 Application, has given details of claims, which was to be made by the Appellant. It is useful to refer to paragraph 9 to 13 and 17, which are to the following effect: "9. As per clause 13 of the work order, Zillion was under an obligation to submit steel reconciliation statement which has admittedly not been submitted by Zillion till date despite several requests and reminders. As per the accounts maintained by Indure, zillion has been issued 22,495 tonnes steel out of which Indure reserves its right of recovery of approx. 200 MT steel from Zillion amounting to more than one crore rupees. 10. As per contractual provisions, settled industry practice and based on regular dealings between Indure and Zillion, the final bills and payments are processed by Indure at its Head Office by their Authorised Representatives after taking i....
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....the contract shall be decided by the engineer whose decision shall be final and binding on the parties. Prior to the initiation of and/or arbitration proceedings permitted by the contract to resolve disputes between them, in the event a dispute arises between you and us regarding the application or interpretation of this contract (a "Dispute"). Our Project Incharge and your representative shall use their best efforts in good faith to reach a reasonable and equitable resolution of the matter. If our Project Incharge and your representative are unable to resolve the matter within 30 days, either party by written notice may refer the matter for resolution by good faith negotiation between their respective senior officers with decision making power and who shall not have had substantive involvement in the matters involved in the dispute, unless the parties otherwise agree." 12. The Appellant's case is that his running bills were verified at the Site Office of the Corporate Debtor. It is the case of the Respondent that bills are finalized ultimately at the Head Office of the Corporate Debtor and final bills of the Appellant have not been verified as yet, due to various issue....
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....17". 20. We notice that there are several emails exchanged between the parties regarding the termination of contract letter dated 20.11.2014 and dispute being raised regarding the quality of the work and the violation of the terms and conditions of the contract by the Corporate Debtor, which compelled the Corporate Debtor to cancel the contract." 14. The Adjudicating Authority has also referred to the termination of the contract by letter dated 20th November, 2014 and relied on the letter terminating the contract of the Appellant, contents of which letter we have already extracted above. Dispute is natural consequence of termination of the contract between the parties. The bills have been claimed by the Appellant arising out of the said contract. 15. There is overwhelming material on record to come to the conclusion that there was dispute between the parties since prior to issuance of Demand Notice on 13.09.2017. The learned Counsel for the Appellant has placed much reliance on Certificate dated 16.04.2015 issued by Rajya Vidyut Utpadan Nigam Ltd. The certificate mentions that Appellant has carried out erection work conveying System vide supplementary work order thro....