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2021 (9) TMI 1308 - Tri - Insolvency and BankruptcySeeking direction to Respondent No. 1 to pay the Invoices dated July 24, 2021 alongwith the contractual rate of interest till realization - seeking direction to Respondent No. 1 to ensure that the invoices which will be raised by the Applicant on behalf of RCRIPL for the services provided by RCRIPL to KMPCL are paid in full and in priority - HELD THAT -The Law is very clear that the supplier of goods or provider of service of the Corporate Debtor cannot stop such supply or stop to provide services, provided the RP has to make the payment of expenses for such procurement of services or supply of goods to keep the Corporate Debtor as a going concern. We do not wish to add anything more than what has been stated in the Law. The Respondent are directed to pay the Applicant the amount raised in the said the Invoice, in accordance with a binding contract which is in force, within a week so as to enable the Applicant to provide the rail services subject to due payment without interruption to keep both the Respondent as well as the Applicant as going concerns. It is also made clear that this Adjudicating Authority is not dwelling into the dispute regarding alleged exorbitant pricing as the same is arising out of the Agreement entered into between both the parties prior to CIRP. Application disposed off.
Issues Involved:
1. Payment of invoices by KMPCL to RCRIPL under the Transportation Agreement. 2. Validity and enforceability of the 2014 Transportation Agreement. 3. Obligation to pay for critical services under Section 14(2A) of the Insolvency and Bankruptcy Code, 2016. 4. Allegations of concealment of material facts and false statements by the Applicant. 5. Impact of non-payment on the going concern status of RCRIPL and KMPCL. Detailed Analysis: Issue 1: Payment of invoices by KMPCL to RCRIPL under the Transportation Agreement The Applicant, the Resolution Professional of RCRIPL, sought directions for KMPCL to pay invoices dated July 24, 2021, along with contractual interest. The invoices were raised for services provided under the Transportation Agreement, which obligates KMPCL to pay charges within 10 days from the bill date. The Applicant argued that KMPCL has been availing services without making payments, thus violating the terms of the agreement. Issue 2: Validity and enforceability of the 2014 Transportation Agreement The Applicant maintained that the 2014 Transportation Agreement, amended in March 2014, remains valid and enforceable. KMPCL, however, contended that the last invoice under this agreement was raised in September 2016, and since October 2016, a new arrangement required KMPCL to bear O&M charges instead of paying per the 2014 Agreement. KMPCL argued that the Applicant's claim was based on an outdated agreement, and the current commercial arrangement should be considered. Issue 3: Obligation to pay for critical services under Section 14(2A) of the Insolvency and Bankruptcy Code, 2016 The Applicant argued that the services provided by RCRIPL are critical for KMPCL's operations, thus falling under Section 14(2A) of the Code, which mandates payment for such services to keep the corporate debtor as a going concern. The Tribunal agreed, stating that the law requires the supplier of goods or services to be paid to maintain the corporate debtor's operations during the moratorium period. Issue 4: Allegations of concealment of material facts and false statements by the Applicant KMPCL accused the Applicant of concealing material facts and making false statements, particularly regarding the commercial understanding post-2016. KMPCL highlighted that no invoices were raised under the 2014 Agreement since September 2016, and payments were made directly to the O&M contractor per the 2016 arrangement. The Tribunal did not delve deeply into these allegations but focused on the enforceability of the current invoices. Issue 5: Impact of non-payment on the going concern status of RCRIPL and KMPCL The Applicant emphasized that non-payment by KMPCL would push RCRIPL into liquidation, affecting its going concern status and causing irreparable harm to stakeholders. KMPCL countered that paying the claimed amounts would similarly jeopardize its operations. The Tribunal acknowledged the critical nature of the services provided and directed KMPCL to pay the invoiced amounts to ensure both entities remain going concerns. Conclusion: The Tribunal ordered KMPCL to pay the amounts raised in the invoices dated July 24, 2021, within a week, emphasizing the importance of maintaining both RCRIPL and KMPCL as going concerns. The Tribunal did not address the dispute over alleged exorbitant pricing, focusing instead on the necessity of payment for critical services as mandated by the Insolvency and Bankruptcy Code, 2016. The application was disposed of accordingly.
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