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TaxTMI 
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TaxTMI 
2021 (12) TMI 187
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....ate, Ganpat Rao Marg, Lower Parel, Mumbai - 400013. Brief Facts of the case: 3. On 5th February, 2016, the Corporate Debtor, through its Architects M/s. Parelkar-Ovalekar-Paria (Architects and Interior Designers) floated a Tender Notice and invited Tenders from interested contractors who were willing to take up the work as quoted in the Tender Notice. The Operational Creditor submitted its tender and the said tender was approved and selected by the Corporate Debtor. 4. On 20th December, 2017, the Articles of Agreement were executed between the Croporate Debtor and the Operational Creditor. 5. After completion of construction work, the Operational Creditor used to raise and issue its Bills/Invoices on the Corporate Debtor stating therein the information of the work completed and by giving specification. Thereafter, the Architect of the Corporate Debtor aftger due verification of the work completed, used to issue their letter to the Corporate Debtor to release the amounts due under the Bll/Invoices and total 9(Nine) invoices were issued and out which 8(eight) were cleared. 6. On 11th June 2019 Bill/Invoice for a sum of Rs. 28,14,197/- (Rupees Twenty-Eight Lakhs Fourteen Thousand....
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.... conditions (page 75 to 88 of the petition) and appendix (pages 889 to 93 of the Petition) of the tender document was to be read and construed as forming part of the Articles of Agreement dated 20th December 2017. ii) The relevant clause are 21, 32 and 34. Page 889 of appendix is also relevant- Clause 21-Certificate of virtual Completion and defects liability period: - The work shall no be considered as completed until the Architect has certified in writing that they have been virtually completed. The defect lability period shall commence from date of such Certificate. Clause 32- Certificate and Payment: - The Contractor shall be paid by the Employer from time to time instalments under Interim Certificates to be issued by the Architects to the Contractor on account of the work executed when in the opinion of the Architect, work to the value named in the Appendix as value of work for Interim Certificates (or less at the reasonable discretion of the Architect) has been executed in accordance with this contract, subject, however, to a retention of the percentage of such value named in the appendix hereto as retention percentage for Interim Certificates, until the total amount r....
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....ate of payment shall be issued by Architect if the Contractor fails to insure the work and keep them insured till the issue of Virtual Completion Certificate. Payments upon the Architects Certificate shall be made within the period named in the Appendix as Period of honoring Certificates have been delivered to the Employer. Clause 34- Matter of be finally Determined by Architect: - The opinion, direction, certificate (except for payment) with respect to all or any of the matter Clause 2(a) and 2(b), 4, 7, 12, 19, 28 (a, b, c, d, f) hereof which matters are herein referred to as the excepted matters shall be conclusive and binding on the parties hereto and shall be without appeal. Any other decision, opinion, direction, certificate or valuation of the 4 Architect or any refusal by the Architect to give of the same shall be subject to the right to the Arbitration and review under clause 35 hereof in the same way in all respects (including the provision as to opening the reference) as it were the decision of the Architect. iii) After completion fo construction work, the Operational Creditor used to raise an issue its bill/invoices on the petitioner. As per clause 32 of the spe....
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....ed in the present Petition. The Petitioner has chosen to not complete the work as agreed under the contract and is clandestinely using the Insolvency & Bankruptcy Code as a tool to extort money from the Corporate Debtor. It is trite law that the Insolvency & Bankruptcy Code should not be used as an instrument to recover proceeds but as a genuine legislation to assist entities which have financially defaulted by helping them restructure their debts. The Petitioner is using the IBC Code to try and leverage upon the fear of placing this Company under CIRP with an intention to recover monies which it itself knows that it will not be able to recover till the defects in the construction are suitably cured. The Petitioner is misusing the Code to arm twist this Respondent to recover disputed claims. iv. The correspondence and the submissions as well as the additional compilation tendered by the Petitioner makes it amply clear that the Respondent had genuinely and bonafidely raised disputes as regards the quality of work which dispute remained pending even on the date of filing Petition, therefore, the Petition ought to be dismissed. 14. it is submitted that the Petitioner has not appr....
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....ate is wholly inconceivable. 16. The Construction Completion Certificate on the basis of which the Petitioners rely itself mentions a defect liability period which starts from 1st May, 2019 and continued till 30th April, 2020 and uses the words "virtually completed" which in itself shows that there was a further completion liability and defect clause pending. (See Exhibit "B" at page 32 of the Petition.) 17. It is submitted that Clause 11 read with Clause 21 of the General Instructions to the Tender Contract make it amply clear that there was no interest liability during the defect liability period, however, the Petitioners have incorrectly imposed interest at the rate of 8% only with an intention to increase the receivable amounts. 18. It is further submitted that Exhibit "D" at page 34 of the Petition makes it amply clear that the TDS payable to the Petitioners have been recorded and the Petitioners are willing to pay the said amount upon satisfactory work being carried out as per the terms of the tender and there is no intention to not pay monies to the Petitioner, however, these monies shall be paid only when the disputes between the parties are amicably resolved. 19. The R....
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....e truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." (Emphasis supplied) 22. In Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407 : (2018) 1 SCC (Civ) 356 : 2017 SCC On Line SC 1025 at page 438 The Apex Court held as under : "29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing-i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. (Emphasis supplied) 23. During the course of arguments, the Counsel for the Petitioners tried to r....