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2026 (2) TMI 740
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....a ('Adjudicating Authority') in Company Petition (IB) No 2/KB/2021. Shristi Infrastructure Development Corporation Limited, who is the Corporate Debtor, is the Respondent herein. 2. The Appellant submitted that on 25.04.2012, it entered into an agreement with the Respondent based on a letter of acceptance dated 07.02.2012, for executing balance civil works for piling, RCC basement, superstructure, and associated works for a Five Star Hotel in New Town at Rajarhat, with a contract value of Rs. 85,00,00,000/-. The Appellant contended that it accepted the work relying on the Respondent's assurances of timely payments, and that under Clause 60.11 of the General Conditions of Contract, the Respondent was obligated to pay the final bill within 75 days of submission. 3. The Appellant submitted that the work was successfully completed on 31.08.2015 within the stipulated extended time, to the satisfaction of the Respondent. The Appellant further submitted that it submitted the final bill for Rs. 3,61,18,255/- on 13.07.2016, and that the Respondent issued a completion certificate dated 07.11.2016, certifying completion on 31.08.2015 without any mention of delay or liquidated dam....
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....2020, the Adjudicating Authority's view of pre-existing disputes based on prior communications is unjust and untenable. The Appellant further contended that the Respondent's levy of liquidated damages four years after completion and issuance of the completion certificate is frivolous, illusory, and an afterthought to concoct a defense. 10. The Appellant submitted that the Adjudicating Authority failed to consider the acknowledgment of debt dated 19.06.2020 admitting Rs. 2,87,44,710/. The Appellant contended that this unilateral balance confirmation letter reflects the Respondent's own books and being undisputed, negates any pre-existing dispute; non-payment thereof suffices to allow the Section 9 petition. 11. Concluding its arguments, the Appellant request this Appellate Tribunal to set aside the Impugned order and to allow this appeal. 12. Per contra, the Respondent denied all the averments made by the Appellant as misleading and baseless. 13. The Respondent contended that it is settled law that a specific authorisation is required to initiate the Corporate Insolvency Resolution Process (CIRP) against the Respondent, and in absence of a specific authorisation,....
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....nt had expressly agreed that time was of the essence of the contract, and the Appellant was liable to pay Liquidated Damages to the Respondent in the event of failure or delay in completing the work within the timeframe fixed by the Contract. The Respondent submitted that this delay constituted a breach of the contractual terms, rendering the Appellant liable for liquidated damages as specified in the contract. 19. The Respondent submitted that the contract value was Rs. 95,98,44,943. The Respondent contended that it was contractually incumbent on the Appellant to rectify any and all defects or defect liabilities present in the works and structures during the Defect Liability Period following the completion of the works to the Respondent's satisfaction. The Respondent further submitted that the Appellant's failure to rectify such defects within a reasonable time necessitated the Respondent to take all necessary steps to have the defects rectified at the Appellant's cost and expense. 20. The Respondent submitted that it issued a conditional and limited completion certificate on 07.11.2016, purely out of commercial courtesy following repeated requests by the Appellant. The Resp....
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....only occur meaningfully after the Appellant submitted all required documents for verification by the Respondent and/or Currie & Brown (India) Ltd., the Defect Liability Period concluded, and rectification costs were fully assessed. The Respondent further submitted that the Defect Liability Period ran for 730 days from 31.08.2015, and the Appellant's failure to promptly comply with multiple email requests for documents and reconciliatory works, extending into July 2019, delayed the certification process. The Respondent contended that the Appellant failed to provide any document evidencing an Extension of Time until 31.08.2015, despite reliance on the conditional completion certificate dated 07.11.2016, as evidenced by email correspondence dated 18.04.2017, 03.08.2017, 10.08.2017, 21.08.2017, 24.02.2018, 11.06.2018, 22.06.2018, 23.07.2018, and 18.07.2019. 24. The Respondent submitted that the third-party costs assessor, Currie & Brown (India) Limited, deemed it appropriate to impose Liquidated Damages on the Appellant at a rate of 5% of the contract value, totaling Rs.4,79,92,247/- as documented in the final Certified Outstanding Payment (COP) document. The Respondent contended th....
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....nt or admission of liability for Rs. 2,87,44,710/- or any part thereof. The Respondent clarified that the said letter merely indicates a preliminary step for finalization of accounts, not a final statement admitting payment liability. The Respondent submitted that the Appellant never countersigned or confirmed the purported accounts, rendering them forged and fabricated, and incapable of constituting an acknowledgment. The Appellant was aware of the imposition of liquidated damages by Currie & Browne (India) Limited during 2018-2019, and the right to set off such damages remains intact. The mischaracterization of this letter indicates a fishing expedition by the Appellant for unjust enrichment, despite its knowledge of delays and lack of EoT documentation. 29. The Respondent submitted that the Appellant's purported "Final Bill" was submitted around 13th July 2016, before the Defect Liability Period ended, during which the Appellant failed to rectify defects, necessitating third-party intervention at the Respondent's cost. Certification was impossible until all documents were submitted, the period ended, and rectification costs were assessed. 30. The Respondent submits....
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.... the Adjudicating Authority has gone through the aspect of liquidated damages and concluded that the issue of liquidated damages cannot be dealt under summary trial under the Code. The relevant para of the Adjudicating Authority on issue of liquidated damages, reads as under :- "39.***Thus, we are of the considered opinion that the veracity of statement that there has been deduction on account of Liquidated Damages as per the terms of the contract executed between the parties cannot be tried by this Adjudicating Authority as the I&B Code only contemplates a summary proceeding." (Emphasis Supplied) 37. Since, the Adjudicating Authority has held that liquidated damages issue cannot be decided in summary proceedings which seems logical. We do not find any error in the Impugned Order on this issue. 38. Now we will take up the issue regarding pre-existing disputes between the parties prior to issue of demand notice under Section 8 of the Code on 26.09.2020. We observe that dispute is not mere denial and dispute should be in accordance with the Section 5(6) of the Code. 39. At this stage, we would like to observe that in the Section 7 (5)(a) of the Code the word 'may....
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....s business by putting it into corporate insolvency resolution process when the "debt" and "default" is established." (Emphasis Supplied) 41. We note that in para 41 to 43 (not reproduced above), the Adjudicating Authority has referred to the judgment passed by the Hon'ble Supreme Court of India in the matter of Innoventive Industries Ltd. vs. ICICI Bank and Ors. [(2018) 1 SCC 407]; Umesh Saraf vs. Tech India Engineers Pvt. Ltd. [MANU/NL/0385/2020];and one judgment passed by this Appellate Tribunal which Adjudicating Authority has referred in their impugned order passed in M/s Kuntal Construction Pvt. Ltd. vs. M/s Bharat Hotels Ltd. [(2020) ibclaw.in 69 NCLAT] justifying that the pre-existing dispute of any nature are not required to be adjudicated by the Adjudicating Authority. The Adjudicating Authority is only required to satisfy himself whether pre-existing dispute existed or not. 42. As noted earlier that demand notice under Section 8 of the Code was issued on 26.09.2020, which was replied by the Respondent on 08.10.2020. In the reply the Respondent stated that there are several disputes prior to the receipt of the demand notice dated 26.09.2020. 43. At this stage, ....
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.... completion certificate issued by the Respondent and its implications. Although once, pre-existing dispute issue is decided in favour of the Corporate Debtor, then there is no need to go into any further as Section 9 application cannot be admitted. 48. We note that the Respondent has taken several caveats while issuing the completion certificate. The completion certificate reads as under:- 49. From above, it is seen that the completion certificate was issued subject to Appellant abiding to all the contractual obligations emanated from the work order including but not limited to renewal of bank guarantee, payment of settlement of subject contractors, composition of claims, rectification of defect liabilities other litigations. It is also important to note that the caveat regarding DLP has categorically stated that the Appellant is bound to rectify all the defect liabilities to Respondent's satisfaction within DLP, failing which of such defects will be removed by the Respondent at the cost and expenses of the Appellant to be paid on demand. We note that an independent cost accessor, namely, (Currie & Browne (India) Limited) (who has no relationship with the Corporate Debtor) ha....
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....hereby provides an indicative list of correspondence via which the following corresponding defects in the said works performed/prima facie completed by ACIL had been duly and diligently communicated to ACIL :- Sl. No Dates of E-mail sent by SIDCL to ACIL (along with trailing response, if any) ACIL communicated Defect in the said Works performed by by corresponding E- mail Rem arks 1. 25.09.2013,21.09.2013,1 8.09.2013, Housekeeping, deshuttering and rectification at various locations Tower 1 & 2 NT area 2. 13.10.2015, 07.10.2015, 06.10.2015, 06.10.2015 (Along with photographs) Leakage in LBF Engineering Area, basement submerged in water (water seepage in Engineering Rooms in Lower Basement) 3. 14.05.2015, 10.09.2014, 10.09.2014. Improperly done "outside brick wall pointing". 4. 03. 05. 2016 26. 04. 2016 - TARY LONE GUPTA Entire pool area undulated RCC work done by other agencies with Sl. No Dates of E-mail sent by SIDCL to ACIL (along with trailing response, if any) ACIL communicated Defect in the said Works performed by by corresponding E- mail 03. 05. 2016 26. 04. 2016 - TARY LONE GUPTA TELOFRER LONE KOUSEK FORANISRA....
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....8 Pole -40 4, xe 9; OST, T .: + 33 4020 2020/4015 4646 8. : el1 33 4020 2099 REGN. 9OPP ON Shrisli Infrastructure Development Corporation Lin Gu Corporate Oflies : D-2, 36 Floor, Sole tugistered Office : Plat No. X- 1, 2 & Fre Copy Document 4 SHRISTI 29.12.2015 hindrances silicone at periphery of windows ; no masonry gang employed by ACIL in Tl windows side gap filling. DE 24.08.2017 19.08.2017 27.07.2017 18.01.2017 22.08.2016 22.08.2016 22.08.2016 09.08.2016 06.072016 15.06.2016 10.06.2016 06.06.2016 06.06.2016 06.06.2016 06.06.2016 03.06.2016 03.06.2016 01.06.2016 01.06.2016 Failure of expansion joint - Banquet area, UBR etc; water leakage damaged camera of SIDCL; water leakage at UB BOH Chocolate Room that damages the False Ceiling: leakage observed at LB BOH cafeteria area; water leakage from 204 floor meeting room, LB BOH service lobby 24, HK office etc leading to damage of false ceiling, 01.06.2016 21.05.2016 lights and detectors, water leakage observed through true ceiling at liquor store, water leakage in various other 20.06.2016 17.05.2016 14.05.2016 14.05.2016 DE TO KOLKATA , W. TARY Page | 12 tructure Development ....