2020 (2) TMI 1127 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repayment of its debt - debt arose due to non-payment of consideration amount for providing services - existence of dispute or not - HELD THAT - The present petition deserves to be dismissed due to the following reasons a. It is evident that the operational creditor has surrendered the contract on 21.01.2013 and the same is not denied by it. b. It is also evident that as per the work order, all bills for the work undertaken under subcontract, dated 24.12.2010, by operational creditor are to be raised immediately and to be verified by 3rd party i.e., Project Management Consultant. This is not done in support of the present claim. c. The operational creditor has already taken back the bank guarantee for the amount of ₹ 4,66,25,000 for cancellation from the corporate debtor on 21.01.2013. This indicated the matter has come to an end between the parties on the said date. d. All the above facts also indicated no existence of debt. Further, prior dispute between the parties before filing of the present petition under Section 9 of I B Code, is also raised by corporate debtor in its letter, dated 23.05.2017, sent to the operational creditor in response to demand notice, dated 20.04.2017. e. The claim of petitioner is also barred by Limitation since application is filed under section 9 of I B Code, beyond three years from the date of alleged claim. f. Accordingly the present petition filed under Section 9 of I B Code, is hereby dismissed.

Issues Involved:
1. Default in payment by the corporate debtor.
2. Execution and completion of work under the subcontract.
3. Certification of bills by the Project Management Consultant (PMC).
4. Abandonment of the subcontract by the operational creditor.
5. Timeliness and limitation of the claim.
6. Existence of debt and prior dispute.

Detailed Analysis:

1. Default in Payment by the Corporate Debtor:
The petitioner, Terra Infra Development Limited, filed a petition against KMC Construction Limited for defaulting on a payment of ?4,95,53,552 as of 09.01.2016. The debt arose due to non-payment for services provided under a subcontract. The petitioner sought the initiation of the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code (IBC), 2016.

2. Execution and Completion of Work Under the Subcontract:
The petitioner entered into a subcontract on 24.12.2010 to construct part of the Vadakancherry-Thrissur section of NH-47 in Kerala. The project was to be completed by 23.12.2012. The petitioner mobilized resources and completed 2.88% of the work worth ?4,47,29,004, receiving ?3,12,00,000 until April 2013. The petitioner submitted 11 bills to the PMC for certification, but the project stalled due to various impediments, leading to the termination of the subcontract.

3. Certification of Bills by the Project Management Consultant (PMC):
The petitioner submitted a bill (IPC-12) for ?1,42,70,536 on 09.01.2016 for work done up to June 2012. The corporate debtor dismissed the PMC without an alternate arrangement, causing delays in bill certification. The petitioner claimed that the corporate debtor did not raise any dispute regarding the unpaid debt and failed to respond to the demand notice under Section 8 of the IBC, 2016.

4. Abandonment of the Subcontract by the Operational Creditor:
The corporate debtor contended that the petitioner abandoned the work without prior intimation and completed only 1.83% of the subcontracted work. The corporate debtor claimed to have paid ?3,23,06,700 against IPC bills 1 to 11. The petitioner allegedly surrendered the contract on 21.01.2013 and agreed not to claim any idle bills thereafter.

5. Timeliness and Limitation of the Claim:
The corporate debtor argued that the petitioner's claim was barred by limitation as the petition was filed beyond three years from the date of the alleged claim. The petitioner’s bill IPC-12, dated 09.01.2016, was submitted on 28.10.2017, which was more than three years after abandoning the work.

6. Existence of Debt and Prior Dispute:
The tribunal found no existence of debt as the petitioner had surrendered the contract and taken back the bank guarantee on 21.01.2013. The corporate debtor raised a prior dispute in its letter dated 23.05.2017, sent in response to the demand notice dated 20.04.2017. The tribunal concluded that the claim was barred by limitation and dismissed the petition under Section 9 of the IBC, 2016.

Conclusion:
The petition was dismissed due to the operational creditor's abandonment of the contract, failure to obtain necessary certifications, and the claim being barred by limitation. The tribunal found no existence of debt or ongoing dispute that would warrant the initiation of CIRP.

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