TaxTMI 
TaxTMI 
2025 (4) TMI 70
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....pect to the operational debt. Submissions of the Appellant: 2. As contended by the Appellant- RAHEE JHAJHARIA E TO E JV (Rahee in short), the matter pertains to a railway contract awarded by the Respondent, in relation to its project located in Jaithari, Anuppur District, Madhya Pradesh. The Appellant had filed a petition under Section 9 of the IBC, 2016 for the recovery of an operational debt amounting to Rs. 16,08,00,000 (Rupees Sixteen Crores Eight Lakhs). The Appellant contends that there was indeed a privity of contract between the Appellant and the Respondent, the petition was wrongly dismissed. 3. It is contended by the Appellant that the Respondent-MBPMPL had created SPV for the project in the name of Hindustan Thermal - EPC (HTEPCCPL) Names used interchangeably: Hindustan Thermal - EPC or HTEPCCPL or Hindustan Thermal , which is another group company of the Moser Baer group. The Respondent and Hindustan Thermal - EPC are part of the same Moser Baer group. The Appellant highlights several key events and documents to substantiate the claim of privity of contract between the Appellant and Respondent and that the Respondent was the ultimate beneficiary of the proje....
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....e reminders. That the Respondent on 23.10.2018 replied to the said reminder sent by the Appellant and raised frivolous objections (Pg 863-885 of the present Appeal) 4. Basis above events and the documents, which were executed by the Respondent-Corporate Debtor-MB Power, it indicates that the Respondent was the beneficiary of the project. It not only actively participated in the execution of the contract and also issued various letters/communications. The AA has failed to take note of these events with respect to the Respondents' complicity in the work contract. The privity of contract thus exists between the Appellant-OC-Rahee and the Respondent. 5. The Appellant contends that the letter of intent issued on 21st April 2012, stated that the contract would be executed through its subsidiary/sister company. The said letter is at Page No. 1743 of the APB. The relevant portion states that: "The detailed order covering all the terms & conditions shall be issued to you shortly. The Order may be issued from any of our subsidiary/sister company." 6. Furthermore, the Letter of Award issued by Hindustan Thermal on 29.06.2012 acknowledges the ongoing relationship between the Appellant....
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....case of financial contract in a petition under Section 7 of the IBC, 2016, but such is not the case in case of operational debt. The Respondent-Corporate Debtor-MB Power is covered as per the definition of the Corporate Debtor in terms of Section 3(8) Section 3(8): "corporate debtor" means a corporate person who owes a debt to any person; of the Code which means a corporate person who owes or debt to any person. Further, in terms of Section 3(6) Section 3(6): "claim" means-- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured; of the IBC, 2016, the petition can also be filed in case of breach of a contract. 10. The Appellant submits that the AA's finding that by merely issuance of invoices by the Respondent for payments via Hindustan Thermal - EPC absolves the Respondent of liability was incorrect. The Respondent, being a part ....
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.... laid down that the corporate veil can be lifted in the cases related to the Code. The Appellant, submits that it's the Respondent who owes an amount of Rs.16.08 Cr. to the Appellant. If the Corporate Veil of Hindustan Thermal - EPC is pierced, it will be found that the Respondent is the ultimate beneficiary. 15. The Code is evolving on day to day basis. The AA cannot shut its eyes in such cases where the beneficiary of the project is evading the liabilities on technical grounds and whereas the beneficiary of the contract can definitely be liable for the payments to the creditor. Merely on technical issue, the beneficiary cannot be allowed to evade from its financial responsibility/obligation. 16. During the proceedings before the AA, the Appellant elucidated the structural dynamics of the Moser Bear Construction (P) Ltd. group. This structure, comprising of subsidiary companies, has been used by the Respondent group to obfuscate and evade their legitimate debts in default. 17. In the facts of the circumstances, the appellant prays to set aside the impugned order dated 29.05.2024. Submissions of the Respondent: 18. Basis the materials placed in the APB, we note the s....
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....ppellant and the appellant has also wrongly described itself as the Operational Creditor of the answering respondent. There exists no such relationship of the Debtor- creditor between the Appellant and the Corporate Debtor. 22. The Appellant has placed on record forged and fabricated ledger account as regards the Corporate Debtor. Same invoice number as well as cheque number for identical amount cannot be for two separate companies i.e. Corporate Debtor and Hindustan Thermal - EPC. Neither any invoices were raised in the name of the CD nor any payment has been made by the CD against any of the invoices as stated in the ledger account annexed as Annexure A-2 deals with the company name "Moser Baer power (MP) Limited" (Moser Baer). As per records of the Registrar of Companies, there is no such company existing by the said name and the CD is a distinct entity as compared to the said name. 23. The Appellant does not fall in the category of OC of the CD as per the definition provided under Section 5(20) r/w 3(23) of the Code. The Appellant is a Special Purpose Vehicle (SPV) and SPV is an association of the person and does not fall within the definition of the OC as provided in the....
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.... issued LC for material, held meetings with the Appellant during entire execution of project, issued completion certificate, asked for reconciliation of payment, arranged material for projects and funded entire project and was ultimately beneficiary of the assets and it was the Appellant, who was acting as per the instruction of the Respondent-MB Power. 31. Per contra the Respondent-MB Power in the proceedings before the NCLT had filed a Reply in which the following grounds were taken to controvert the Section 9 Petition were taken: a) There was no Privity of Contract between the Appellant and the Respondent. b) The Appellant has referred to a false and fabricated ledger. c) The Appellant has no locus to file the Petition against the Respondent. d) The Appellant is not eligible to file Petition under Section 9 of the Code. 32. From the materials on record, we delve deeply in the case and find that initially the Appellant had sent Form 3 Demand Notice Under section 8(2) of the Code to the Hindustan Thermal - EPC on 05.11.2018 for 92 invoices. Vehemently denying, Hindustan Thermal - EPC sent a Reply to the Demand Notice to the Appellant on 14....
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....y also reflects payment by HT EPCCPL. Thus no case can be made out against Our Client in absence of any debtor-creditor relationship between the parties herein. 4. It is most respectfully submitted that there is no privity of contract between our Client and your Client. It is submitted that our Client has neither issued any purchase order to your Client nor has your Client ever raised any invoice upon our Client for the alleged payment of its outstanding dues. Therefore, issuance of the Demand Notice under reply to our Client is nothing but a sham exercise of your Client to illegally enrich itself at the hands of our Client. It is submitted that not just your Client is trying to abuse the process of law but has also not informed you the above facts and has got the instant Notice under reply issued by you by distorting the original facts which is in grave violation of law." ...... 7. It is also submitted without prejudice that to the limited knowledge of our client there is in fact "existence of dispute" between your Client and/HTEPCCPL and it is only because there is an existence of dispute between your Client and HT EPCCPL that you have manifest....
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....note the relevant paras 13 to 15 which are as below: "..... 13. Considering the above, the issue here is whether the application filed under section 9 of the Code against the respondent is maintainable or not. We find that the invoices were raised by the applicant in the name of group concern of the respondent i.e. Hindustan Thermal for an amount of Rs. 105,62,05,167/ out of which Hindustan Thermal made the majority payment leaving the outstanding amount to Rs. 16,08,00,632/-. Here, since the invoices were raised by the applicant against Hindustan Thermal, the payment (major) were received by the applicant from Hindustan Thermal and even the Work Order was received by the applicant from Hindustan Thermal, then we fail to understand as to for what reason the applicant has filed the present application against the respondent instead of filing the same against Hindustan Thermal even after sending the demand notice under section 8 of the Code. Merely because the respondent tried to reconcile or settle between the applicant & Hindustan Thermal or merely because the work completion was signed by the respondent being the owner of the project does not entitle the responde....