TaxTMI 
TaxTMI 
2026 (5) TMI 277
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....the operational creditor. Appellant aggrieved by the said order has come up in this appeal. 2. Brief facts of the case necessary to be noticed for deciding the appeal are: i. The corporate debtor (erstwhile M/s. SB Electro Structural) and R-1 Daga Power Systems & Engineers Pvt. Ltd. entered into a Joint Venture/Consortium Agreement to submit a bid for supply erection installation testing and commissioning, engineering supply erection of 132KV D/C four conductors lines along with two similar work of Orissa Power Transmission Corporation Ltd. ('OPTCL') a Government of Orissa undertaking. ii. The corporate debtor and operational creditor submitted a bid, corporate debtor as lead member of consortium. Certain terms and conditions were also agreed between both the Joint Ventures/Consortium Members. iii. Letter of award dated 20.08.2018 was issued by OPTCL to the corporate debtor, Joint Venture with M/s. Daga Power Systems & Engineers Limited. The letter of award detailed the scope of work, total contract prize was Rs. 32,40,50,555/-. One of the works included in the scope of work was supply of all equipment and materials for the transmission lines. ....
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....of materials for the bill raised up to 04.06.2022, and out of which corporate debtor has paid amount of Rs. 9,86,39,711/- to R-1 and liability to the balance payment to R-1 is Rs. 1,52,26,153/-. xiii. Letter dated 01.03.2023 was written by R-1 to the OPTCL that R-1 has not received the payment towards the supply made by it. xiv. On 31.03.2023, notice under Section 8 was issued by the operational creditor, claiming principal amount of Rs. 3,19,92,738/- along with the interest totalling to Rs. 4,28,70,269/-. Notice dated 31.03.2023 was served, but no reply was sent by the corporate debtor. xv. On 23.05.2025, Section 9 application was filed by the operational creditor, claiming an amount of Rs. 4.28 crore as operational debt towards the principal and interest. Date of default was mentioned as 31.10.2021. Reply was filed by the corporate debtor. Corporate debtor pleaded that operational creditor was entitled for only 60% profit sharing. Date of default dated 31.10.2021 is erroneous subsequent to which Rs. 10,00,000/- each was paid on 02.06.2022 and 04.06.2022. Claim of interest was denied. xvi. Adjudicating authority heard the parties and by the impu....
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....1) of the Insolvency and Bankruptcy Code, 2016, upon the Corporate Debtor on 31.03.2023, which was delivered to the Corporate Debtor on 03.04.2023. However, the Corporate Debtor failed to furnish any reply to the said Statutory Demand Notice within the prescribed period of ten days as mandated under Section 8(2) of the Code." xvii. Aggrieved by the said order, appellant has come up in this appeal. 3. We have heard learned Sr. counsel Mr. Abhijeet Sinha appearing for the appellant and Mr. Suvashish Sengupta and Mr. Shovan Ghosh appearing for R-1 as well as Mr. Rhythm Buaria appearing for the Interim Resolution Professional (IRP). 4. Learned counsel for the appellant challenging the impugned order submits that operational creditor and corporate debtor were JV Partners, they were co-venturer and joint bidder and not a supplier of goods or provider of service to the corporate debtor. Under the JV Agreement relation between corporate debtor and operational creditor was profit sharing in the ratio of 40:60, 40% of corporate debtor and 60% of operational creditor. Both parties were to make contribution to the joint venture. Materials were supplied by operational creditor to....
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....debtor for 100% of basic price as per rate decided upon by the corporate debtor in the original Agreement. It was agreed that corporate debtor shall raise progressive supply bills to OPTCL and shall release to the operational creditor the full payment received from OPTCL with applicable GST. Operational creditor duly supplied goods to the corporate debtor as per specification and raised invoices from 30.04.2019 to 31.10.2021. Relationship between R-1 and corporate debtor as per Internal Agreement is reflected from invoices issued by operational creditor to corporate debtor where corporate debtor was mentioned as the buyer and the consignee was OPTCL. Corporate debtor has availed the GST Input Tax Credit by filing statutory returns. Operational creditor has disclosed in the GST return all the invoices raised to the corporate debtor. The corporate debtor has admitted its liability vide letter dated 21.10.2022, which was part of Section 9 application filed by the operational creditor. The appellant did not file the copy of letter dated 21.10.2022 in the appeal paper book. Letter dated 21.10.2022 was clear acknowledgement of liability of the corporate debtor towards operational credito....
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....ntly executed the contract. Under the JV Agreement, parties share the responsibilities and obligations. The bid submitted by both operational creditor and corporate debtor was accepted and letter of award of work was issued on 20.08.2018 in the name of corporate debtor and operational creditor, in pursuance of which, after the award of work, a Contract Agreement dated 04.01.2019 was entered between M/s. SB Electro Structural predecessor in interest of the corporate debtor and M/s. Daga Power Systems & Engineers Private Limited. Clause 3 of the Agreement dated 04.01.2019 deals with the responsibilities of operational creditor and corporate debtor. Clause 3.1 dealt with the responsibility of the first party which require execution and erection and civil works. Clause 3.2 dealt with the responsibility of the operational creditor was to execute the supply component of the contract. Clause 3.2 of the Agreement is as follows: "3.2 RESPONSIBILITIES OF M/S. DAGAPOWER SYSTEM & ENGINEERS PVT. LT (SECOND PARTY): 3.2.1. Second Party shall execute the Supply Component of the contract with total responsibility as per the rate which will be mutually decided during placing purcha....
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....onent of the contract entered with OPTCL by Joint Venture Partnership of both parties as per original agreement dated 4th January 2019 entered by both parties with following Terms and Conditions: 2.1. The second party shall supply materials in quantity as per the Dispatch Instructions received from OPTCL and the first party shall be responsible for payments to the second party for total quantity supplied as per Dispatch Instructions. 2.2. The first party shall raise progressive supply bills for supplies against erection (20% on supplied materials/ equipment against erection) to OPTCL soon after erection of materials / equipment by the first party as per the rate of OPTCL price and terms of contract with OPTCL within reasonable time and the first party shall release to the second party the full payments received from OPTCL along with CGST plus OGST or IGST as the case may within 02 (Two) working days after receipt of progressive payments from OPTCL." 12. The above Addendum thus clearly recorded that second party has to supply materials to quantity as per Dispatch Instructions received from OPTCL and first party shall responsible for the payment to the second par....
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....D TO BE IN DEFAULT AND THE DATE ON WHICH THE DEFAULT OCCURRED (ATTACH THE WORKINGS FOR COMPUTATION OF DEFAULT IN TABULAR FORM) Principal Amount Due is Rs. 3,19,92,738/- from 30/10/2021. (Workings in tabular form sufficing the Operational Debt Separately Attached)" 15. All materials brought in Section 9 application makes it clear that the Section 9 claim was only related to towards the outstanding payment against the supplies made by the operational creditor. We had already noticed the agreement between the parties dated 04.01.2019 and first Addendum under which the supply component was to be performed by the operational creditor and operational creditor was to receive payments towards supply component after the said amount is received from OPTCL by corporate debtor. 16. The submission which has been raised by the applicant challenging the order on the ground that there being JV Agreement between the parties, there was no operational debt for filing an application under Section 9 needs to be considered. Further, appellant has submitted that profit was to be distributed between at the ratio of 60 to 40 between operational creditor and corporate debtor. There can be no dis....
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....gations contained in the agreement besides evidence of common participation/joint control in the management as well as sharing of profits and losses. When shared control of interest or enterprise and shared liability for profit and losses is so clearly manifested, it cannot be denied that both parties are implicit partners and co-adventurers in the Cathlab venture rather than one being a consumer and the other a service provider. From the material on record, facts and circumstances there arises no clear or unambiguous jural relationship between the two parties as one of Corporate Debtor and Operational Creditor. Rather both the Corporate Debtor and Respondent No. 1 are like the principal as well as the agent of the other party. This spirit is not only captured in the body of the agreement but also demonstrated in the actions and conduct of both parties in their role as "general profit sharing partners". Thus, for the above reasons, we are not inclined to agree with the contention of the Respondent No. 1 that the outstanding amount so claimed constitutes an operational debt under the IBC. As we hold that the claim is not in the nature of Operational debt, we need not go further to e....
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....long with Respondent ('Corporate Debtor') had executed Joint Development Agreement in the year 2012 for construction of structure and allotment to allottees. Both of them being parties to a joint venture project, we hold that the Appellant cannot claim to be 'Operational Creditor' as it does not relate to supply of goods nor service rendered by the Appellant. If joint venture under any service to the allottees and for that to pay service tax it does not mean that the parties of the joint venture will render service to each other." 21. The above judgement also clearly distinguishable and does not support the appellant in the facts of the present case. The obligation of each parties and the nature of contract was well known to both of the parties. Learned counsel for the respondent has placed much reliance on letter dated 21.10.2022, which was issued by the corporate debtor in response to a claim of operational debt made by operational creditor of Rs. 3.19 crore. Letter dated 25.07.2022, which was part of the Section 9 application and brought on record at page 316 of the appeal paper book. By the notice dated 25.07.2022, corporate debtor was called upon to pay amount of Rs. 3,19,9....
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..../s Daga Power Systems & Engineers Pvt. Ltd. is Rs. 1,52,26,153/- for supply of materials. The reimbursement of ITDS, GST-TDS, 08&OC etc. deducted by OPTCL will be checked and confirmed later. We are trying to arrange the funds and will be able to start paying you from Jan-2023 onwards. Thanking you Yours faithfully For M/s. A.S.B Energy Systems and Construction Pvt. Ltd. Amarendra Mahapatra, (Managing Director)" 22. Above letter is clear acknowledgement that operational creditor has made supply of materials to the OPTCL and the corporate debtor has received amount of Rs. 11,38,65,869/- from OPTCL towards supply of material and it has paid only Rs. 9,86,39,711/- to the operational creditor and balance liability of Rs. 1,52,26,153/- for supply of material is of the corporate debtor. The above letter clearly indicate that parties were well aware of their responsibilities, supply was to be made by the operational creditor and payment to the operational creditor was to be made by corporate debtor. Operational creditor although have received the from OPTCL towards supply of material but has not released the entire amount and liability was clearly acknowledge....
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....was subsequent to 24.03.2021. Application under Section 9, thus was not clearly barred by 10A. There is one more aspect of the matter which need to be considered. Section 10A prohibits initiation of any application for a default which is committed during a period 25.03.2020 to 24.03.2021. In Section 9 application, the date of default claimed by the appellant was only 31.10.2021 when default was claimed subsequent to 10A period, there is no question of it being barred by time. Furthermore, what is basis for prohibiting an application during the said period is the actual default. Raising of invoices for supply itself may not be default on the part of the corporate debtor. We have noticed above the relevant part of the Addendum between the parties, Agreement dated 04.01.2019 and Addendum dated 11.02.2020. Entitlement of the operational creditor to receive payment from corporate debtor arises when corporate debtor receives the payment against supply invoices from the OPTCL. Thus, the date of invoices is not relevant for finding any violation of Section 10A. There is neither any pleading nor any material to come to any conclusion that application under Section 9 filed by the operational....
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....undred and Forty Three Only) for supply of materials. (2) The principal balance is Rs.79,22,682/- (Rupees Seventy Nine Lac Twenty Two Thousand Six Hundred and Eighty Two Only) for civil works after adjustment of profit share. In this regard, M/s Daga Power Systems & Engineers Pvt. Ltd. has sent Demand Notice (Annexure - 4) to M/s. A.S.B. Energy Systems and Construction Pvt. Ltd. on 26 Jul 2022 for recovery of money but A.S.B. Energy Systems and Construction Pvt. Ltd. could not give any satisfactory response till date to the above said Demand Notice. We have requested M/s. A.S.B. Energy Systems and Construction Pvt. Ltd. several times through emails, telephonic message and by sending personal messenger to Mr. Amarendra Mohapatra, the appointed attorney and one of tis Director for release of the said outstanding payment, but M/s. A.S.B. Energy Systems and Construction Pvt. Ltd. has always been purposely delaying the same on one pretext or the other and so far have not paid even a single paisa out of the said outstanding undisputed amount. On 21 Oct 2022, M/s. A.S.B. Energy Systems and Construction Pvt. Ltd. gave us an undertaking letter no. ASBESCP....