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Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + AT Insolvency and Bankruptcy - 2022 (1) TMI AT This

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2022 (1) TMI 1418 - AT - Insolvency and Bankruptcy


Issues Involved:
1. Existence of pre-existing disputes.
2. Delay in project completion and its implications.
3. Liquidated damages and retention money.
4. Validity of the Work Completion Certificate.
5. Reconciliation of accounts and excess payment claims.

Detailed Analysis:

Existence of Pre-Existing Disputes:
The core issue in this appeal was whether there were pre-existing disputes between the parties before the Appellant issued the statutory notice under Section 8 of the Insolvency and Bankruptcy Code (IBC). The Respondent presented multiple emails dated from 2015 to 2017 as evidence of these disputes. The Tribunal noted that these emails, which were exchanged long before the statutory notice, indicated ongoing issues. The Appellant did not deny these emails, thus confirming the existence of pre-existing disputes. The Tribunal concluded that the Adjudicating Authority was correct in rejecting the Section 9 application on this basis.

Delay in Project Completion and Its Implications:
The Appellant argued that the project delays were attributable to the Respondent's actions, such as delays in approvals, opening of Letters of Credit, and payment releases. However, the Respondent countered that the Appellant had delayed the project by over three years. The Tribunal observed that the Work Completion Certificate issued by the Respondent did not imply a waiver of rights to claim damages for delays. The Tribunal found that the delay was a significant factor and supported the existence of disputes.

Liquidated Damages and Retention Money:
The Respondent claimed entitlement to liquidated damages amounting to 10% of the contract value, citing clauses in the contracts. Additionally, the Respondent retained Rs. 1,28,75,065 as per the contract terms for unresolved punch points and lack of valid performance guarantees. The Tribunal noted that these claims were raised before the statutory notice and indicated genuine disputes over the amounts payable.

Validity of the Work Completion Certificate:
The Appellant relied on the Work Completion Certificate dated 28.02.2019, which certified the completion of work to the Respondent's satisfaction. However, the Respondent argued that this certificate did not negate their right to claim damages for delays and breaches. The Tribunal agreed with the Respondent, stating that the certificate did not preclude the existence of disputes, especially regarding project delays.

Reconciliation of Accounts and Excess Payment Claims:
The Respondent contended that they had paid the Appellant Rs. 23,49,00,000, which was over 91% of the contract value, and claimed an excess payment of Rs. 1,60,25,195. The Tribunal noted that the reconciliation of accounts indicated disputes over the amounts due and payable, further supporting the existence of pre-existing disputes.

Order:
The Tribunal affirmed the order of the Adjudicating Authority, finding no merit in the appeal. The application under Section 9 of the IBC was rightly rejected due to the pre-existing disputes. The appeal was dismissed with no order as to costs. The Tribunal directed the Registry to upload the judgment and send a copy to the Adjudicating Authority.

This detailed analysis preserves the legal terminology and significant phrases from the original text, ensuring a comprehensive understanding of the judgment.

 

 

 

 

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