2022 (2) TMI 1233 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - clubbing of two claims under different work orders for different amount - HELD THAT - It is clear to the Bench that and as admitted by Petitioner, that there are serious problems with the racking system installed by them and also admits that the system has not yet undergone a safety audit and, therefore, was a non-certified weak racking. The Petitioner itself requested IOCL not to use the system any further as the same has not been certified for safe use . The Bench also notes that both the work orders required 100% completion of the work as a pre-condition for payment. Admittedly, the project has not been completed and that is the reason that the Petitioner cannot claim the payment for such defective and incomplete work. The Bench also notes that demand notice was issued by the Petitioner on 23.10.2019. However, there are genuine pre-existing disputes much prior to the issuance of the demand notice. It is well settled that an applicant u/s 9 of the IBC is required to be dismissed if genuine dispute exists between the parties. In this Petition the Petitioner has clubbed the payments of two projects, one each at Bongaigaon and Haldia under two different work orders as part of a single Petition. This, as per the Bench, in terms of the clubbing of two claims under different work orders for different amount is not permissible. Petition dismissed.

Summary

Issues Involved:
1. Whether the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 is maintainable.
2. Whether there exists an operational debt due from the Respondent to the Petitioner.
3. Whether the fresh arrangement between the Petitioner and IOCL extinguished the Respondent's liability.
4. Whether the claims of the Petitioner are disputed.
5. Whether the demand notice issued by the Petitioner is defective.
6. Whether the Petitioner can club claims from different work orders in a single petition.

Issue-wise Detailed Analysis:

1. Maintainability of CIRP under Section 9 of IBC:
The Respondent argued that the application is not maintainable as there is no operational debt due from them. The Tribunal found that the Petitioner had entered into a fresh arrangement with IOCL and accepted payments directly from IOCL, thereby extinguishing the Respondent's liability. Hence, the CIRP under Section 9 was not maintainable.

2. Existence of Operational Debt:
The Petitioner claimed an operational debt of Rs.2,34,26,314/- plus interest. However, the Tribunal noted that the Petitioner had agreed to receive payments directly from IOCL, which took over the Respondent's liability. Therefore, the Tribunal concluded that there was no operational debt due from the Respondent.

3. Fresh Arrangement Between Petitioner and IOCL:
The Respondent contended that the Petitioner had entered into a new agreement with IOCL, which was acknowledged by IOCL's comfort letter dated 23.01.2018. The Tribunal found that the Petitioner had indeed accepted the new terms and sought payments directly from IOCL, thus extinguishing the Respondent's liability.

4. Disputed Claims:
The Respondent disputed the claims, stating that the Petitioner had been dealing directly with IOCL since January 2018 and that the work was incomplete and defective. The Tribunal noted that there were genuine pre-existing disputes regarding the quality of work and material, as evidenced by the correspondence and meeting minutes. Therefore, the claims were disputed.

5. Defective Demand Notice:
The Respondent argued that the demand notice was defective as it did not mention the date of default. The Tribunal found that the demand notice was indeed defective and that the claims were disputed, which warranted the dismissal of the petition.

6. Clubbing of Claims from Different Work Orders:
The Tribunal observed that the Petitioner had clubbed claims from two different work orders (Haldia and Bongaigaon projects) in a single petition. The Tribunal referred to the NCLAT's decision in International Road Dynamics South Asia Pvt. Ltd., which held that different claims arising from different agreements or work orders cannot be clubbed together. Therefore, the Tribunal found the petition defective on this ground as well.

Conclusion:
The Tribunal dismissed the Company Petition CP(IB)-982/(MB)/2020 filed by the Petitioner under Section 9 of the Insolvency and Bankruptcy Code, 2016, due to the existence of genuine disputes, the fresh arrangement with IOCL, the defective demand notice, and the improper clubbing of claims from different work orders.