TaxTMI 
TaxTMI 
2022 (7) TMI 1278
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....ws: i. That the Corporate Debtor had issued a notice inviting Tender on 14.07.2014 for Civil Works in Mercure Hotel at Site No. C.P. 8, Oragadam, Survey No. 23P, 24P, 25P, Kachipuram District, Sriperambudur Taluk, Chennai. The Operational Creditor participated and won the bid. The Corporate Debtor issued a Letter of Intent on 17.10.2014 and the Operational Creditor accepted the same. ii. That the Operational Creditor entered into a Civil Work Agreement with the Corporate Debtor. Certain pertinent clauses of the Notice issued by the Corporate Debtor include: * Clause 3.1: the contractor (i.e; the Corporate Debtor herein) shall pay a sum of Rs. 10,32,70,048 (Rupees Ten Crore Thirty-Two Lakh Seventy Thousand and Forty-Eight) to the workers (i.e; Operational Creditors herein) in case of satisfactory work in the manner prescribed by Schedule II. The contractor shall not be liable to pay any additional amount over and above the Contract Price unless otherwise stated in the agreement. * Schedule II Clause l.ii. - Running Bill: The contractor shall submit the monthly running account bill for the work in the previous month. Ad hoc payment @50% of the bill....
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....ager (Retention Money) which amount shall be released as 1% cash retention to be released after one year from virtual completion and 4% against Bank Guarantee (2.5% valid till first 6 months and 1.5% valid for next 6 months). vii. That as per the EWD Agreement the Operational Creditor had raised RA Bills of Rs. 25,43,669 and as per the said agreement the Corporate Debtor was to retain 5% of the RA Bill amount raised. The Corporate Debtor retained Rs. 4,24,337 that was payable to the Operational Creditor after a period of one year from the date of Virtual Completion. viii. That on 12.09.2016 the Corporate Debtor had requested the Operational Creditor to perform certain additional works in the Project i.e. for IPS Flooring, Shahbad Stone Laying and also external plastering work. The Operational Creditor completed this work by 03.03.2017. ix. That the Operational Creditor had completed all the work and on 14.05.2016 issued a Virtual Completion Certificate along with handling over documents and manuals. This was admitted by the Corporate Debtor on the same day. A Practical Completion and Handling Over Certificate was issued on 03.03.2017 and the Operational C....
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....Corporate Debtor, the Operational Creditor issued a Demand Notice under S. 8 of Insolvency and Bankruptcy Code, 2016 on 23.10.2019 by speed post and courier to the registered office of the Corporate Debtor and further by way of email to the registered email address of the Corporate Debtor, but the Operational Creditor did not receive any reply from the Corporate Debtor to the said demand notice within 10 days. xxi. That the said behavior of the Corporate Debtor is extremely unethical and wrongful. The Corporate Debtor has grossly defaulted in making payment of the outstanding dues, amounting to INR 28,14,754/- (Rupees Twenty-Eight Lakh Fourteen Thousand Seven Hundred and Fifty-Four only) of the Operational Creditor and therefore, the Applicant has filed the present application under section 9 of the Insolvency and Bankruptcy Code, 2016 to initiate the Corporate Insolvency Resolution Process of the Respondent. xxii. That the corporate debtor has allegedly not disputed the factum of receipt of demand notice from the operational creditor. 2. In compliance of Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016, the Operational Creditor has filed affidavit d....
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.... 2016, and that it has suffered losses due to deficiency in services by the operational creditor and that thereby the Corporate Debtor has a counterclaim claim of INR 19.95 crores against the Operational Creditor. The Corporate Debtor mentions that issues regarding non-delivery or delay of supply were raised, however to no avail. Hence, the dispute. Further, the respondent company had to spend an additional cost of Rs. 68,45,000/- for renewal of its license, due to non-delivery of drawing. 6. The Corporate Debtor argued that during the period of 2014-17, various RA bills were raised by the Applicant towards the civil works and the external development works and the Company made regular payments from time to time after retaining 5% of the amount of each RA bill, in accordance with the provisions of the CWA and the EDWA, respectively. 7. The Corporate Debtor argues that, subsequently, the Applicant issued a letter dated 16 May, 2017, to the Company, thereby, demanding payment of a sum of INR 49,01,533 (Indian Rupees Forty-Nine-Lakh One Thousand Five Hundred and Thirty-Three Only) towards retention money. Thereafter, pending a reconciliation exercise, the Company, in good faith,....
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....plicant addressed an email dated 19 March, 2018, thereby malafidely stating that the floor polishing issues as highlighted by the Corporate Debtor, were allegedly not due to any fault of the Applicant and attempted to blame the Company for the same. The Operational Creditor also stated that the said issues could be resolved by re-polishing the floor with proper technique at INR 25 per sq ft plus CIST. The Corporate Debtor argues that such correspondence itself shows that there was a dispute between the parties with respect to the works carried out by the Operational Creditor and thus the Application is liable to be dismissed on this ground alone. 14. The Corporate Debtor responded to the aforesaid email on 29 March, 2018, thereby, clearly informing the Operational Creditor that on perusal of item wise descriptions provided by the Operational Creditor it was clear that the same explicitly included polishing of the floor stone as well. The Corporate Debtor further state that the floor stone had not been polished and only grinding was done which had left marks on the floor. Thus, the Corporate Debtor questioned the Operational Creditor's proposal for charging additional amounts....
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....of INR 16,43,685/- (Indian Rupees Sixteen Lakh Forty-Three Thousand Six Hundred and Eighty-Five Only) would be released to the Operational Creditor only once the remaining work with respect to the polishing of the floor stone was completed by the Applicant. 21. That the Operational Creditor failed to finish the polishing work of the floor stone, the Corporate Debtor again mailed the Operational Creditor on 12 November, 2018, thereby, inter alia, reiterating its earlier request for completion of the work. The Corporate Debtor further clearly informed the Applicant that it would clear the balance payments once the work was completed by the Operational Creditor. However, the aforesaid work remains incomplete even as on date. 22. The Corporate Debtor relied on Hon'ble Supreme Court's decision in Mobilox Innovations Private Limited PS. Kirusa Software Private Limited (2018) 1 SCC 353, wherein it was held that "once the Applicant has filed an application, which was otherwise complete, the Adjudicating Authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the Applicant or there was a record of dispute in the information util....
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....s Court in Mobilox Innovations (P) Lad v. Kirusa Software (P) Ltd., the IBC is not intended to be a substitute to a recovery forum." Reliance was further placed on Transmission Corpn. of AP. Ltd. v. Equipment Conductors & Cables Ltd. case, wherein this Court followed its earlier judgment in Mobilox Innovations (P) Ltd. and observed, "In a recent judgment of this Court in Mobilox Innovations (P) Lad. v. Kirusa Software (P) Ltd., this Court has categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked....". 26. It is the counter-argument of the Operational Creditor that the argument of the Corporate Debtor that the Application filed by the Operational Creditor is not maintainable is a result of erroneous interpretation of the notification dated 24.03.2020 issued by the Ministry of Corporate Affairs. The Operational Creditor argues that the notification dated 24.03.2020 cannot as a matter of law operate retrospectively. Even Section 4 of the Code does not empower the Central Government to change the minimum amount of default with retrospective eff....
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....e adjudicating authority must reject the application under Section 9(5)(ii)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties..." 31. The Operational Creditor argues that the Corporate Debtor did not send any notice of Dispute to the Operational Creditor. On the other hand, the debt was admitted in writing. 32. Under the Civil Works Agreement dated 25 November, 2014, the Civil Works stood completed on 14.05.2016. Further, the Corporate Debtor acknowledged with a handwritten notation on the letter dated 16.05.2017 that the work had been completed. It was also acknowledged that the retention money under the agreement would be returned to the Operational Creditor after one year of the date of virtual completion (This was as per Schedule II of the Civil Works Agreement dated 25 November 2014). 33. After the issuance of the completion certificate and the efflux of one year thereafter - whi....