2021 (12) TMI 191 - AT - Insolvency and Bankruptcy

Validity of commercial arrangement that was prevailing between the parties immediately before commencement of the CIRP of both the parties - Section 14(2A) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is decided not to go deep into the merits of the main Appeal and also not expressing any opinion about the merits of the matter, for the reason that this Tribunal cannot decide the contractual matters in a summary jurisdiction. However, taking into consideration, the paramount interest of the parties for the reason that both the Companies i.e. KSK Mahanadi and Raigarh Champa are under CIRP, the supplies are to be made by the Raigarh Champa to the KSK Mahanadi and in turn the KSK Mahanadi has to pay the charges for the supplies to keep both the companies as a going concern. This Tribunal is conscious of the decision of the Hon ble Supreme Court in re-Tata Consultancy Services 2021 (11) TMI 798 - SUPREME COURT where the Hon ble Supreme Court held that the NCLT and NCLAT cannot rewrite the terms of Contract Agreement. The Appellant is hereby directed to pay 50% of the outstanding due to the Resolution Professional of the 1st Respondent within one month from today - Appellant is hereby directed to pay 50% of the bills/invoices to be raised or raise by the Respondent No.1 periodically without fail - Appellant cannot ask for any adjustments of the amount already paid to the 1st Respondent. The matter is posted on 15.12.2021.

Summary

Issues:
1. Interpretation of commercial arrangements under Section 14(2A) of the Insolvency and Bankruptcy Code, 2016.
2. Dispute over payment for coal transportation services provided during CIRP.
3. Applicability of contractual terms post-commencement of CIRP.
4. Request for interim relief to protect the interests of the appellant.

Analysis:
1. The appeal was filed against the Adjudicating Authority's order directing the appellant to pay invoices for coal transportation services under a binding contract, without delving into the dispute over alleged exorbitant pricing. The appellant argued that the Authority re-wrote commercial terms instead of upholding pre-CIRP arrangements as per Section 14(2A) of the Code.

2. The appellant contended that the invoices raised by the respondent were based on a 2014 agreement, not enforced since 2016, leading to demands for payment exceeding the actual coal supply. The appellant, already undergoing CIRP, objected to making excessive payments and highlighted ongoing payments based on a 2016 arrangement.

3. Emphasizing Section 14(2A) of the Code, the appellant sought payment only for coal supplied during the moratorium period on a reasonable commercial basis. Despite paying invoices under protest, the appellant disputed the amount claimed by the respondent, citing discrepancies between actual supply and invoiced quantities.

4. The appellant requested interim orders akin to a previous case, citing the need to safeguard their interests during CIRP. The respondent opposed interim relief, arguing that granting such relief could prejudice the CIRP process, affecting potential resolution applicants' clarity on commercial arrangements between the parties.

5. The Tribunal refrained from delving into the main appeal's merits but directed the appellant to pay 50% of outstanding dues to the respondent's Resolution Professional within a month. Additionally, the appellant was instructed to pay 50% of future invoices periodically without seeking adjustments for amounts already paid, considering the paramount interests of both companies under CIRP.

This detailed analysis covers the interpretation of commercial agreements, disputes over payment obligations during CIRP, the relevance of contractual terms post-CIRP commencement, and the request for interim relief to protect the appellant's interests.