2020 (2) TMI 49 - Tri - Insolvency and Bankruptcy

Maintainability of petition - initiation of CIRP - Corporate Debtor defaulted in making repayment of debt - existence of debt and dispute or not - HELD THAT - There is an unpaid operational debt amounting to ₹ 24,74,085,/- plus interest @18% p.a.. Copy of the work order dated 19.08.2011 is attached as Annexure A1. Moreover, demand notice in Form No. 3 was also sent on 01.03.2018 stating that the amount due from the corporate debtor to the operational creditor is ₹ 37,72.979/- including interest. We have held above that the demand notice in form No.3 dated 01.03.2018 was properly delivered by the operational creditor and the reply has been examined above and found to be not acceptable. IRP is not proposed in Part III of Form No.5. Petition admitted - moratorium declared.

Issues Involved:
1. Jurisdiction and authority of the Tribunal.
2. Validity of the debt and its limitation period.
3. Defect liability period and its expiration.
4. Pre-existing dispute regarding the unpaid operational debt.
5. Claim of interest on the retention money.
6. Solvency of the Corporate Debtor.
7. Compliance with Section 9(3) of the Insolvency and Bankruptcy Code.
8. Admission of the application and initiation of the Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Jurisdiction and Authority of the Tribunal:
The Tribunal confirmed its jurisdiction over the matter as the registered office of the Corporate Debtor is located within its territorial limits. The application was duly signed and verified by the authorized director of the Operational Creditor.

2. Validity of the Debt and its Limitation Period:
The debt in question pertains to retention money amounting to ?24,74,085/- as per the final RA Bill No. 18. The Operational Creditor claimed the debt fell due on 21.07.2015, supported by an email acknowledging the rectification of concerns. The Tribunal rejected the Corporate Debtor's argument that the debt was barred by limitation, accepting the date of 21.07.2015 as the starting point for the debt's due date.

3. Defect Liability Period and its Expiration:
The Corporate Debtor contended that the defect liability period (DLP) had not expired as no defect liability certificate was requested. The Tribunal found that the DLP commenced on 31.03.2014 and ended on 01.04.2015, as per the virtual completion certificate and the terms of the contract. The email dated 21.07.2015 confirmed that all concerns were rectified, indicating the DLP had indeed expired.

4. Pre-existing Dispute Regarding the Unpaid Operational Debt:
The Corporate Debtor argued that there was a pre-existing dispute due to unresolved defects. However, the Tribunal noted that subsequent emails requesting work to be done as a "Special case request" did not constitute a dispute. The absence of evidence supporting the claimed expenditure for rectifications further weakened the Corporate Debtor's position.

5. Claim of Interest on the Retention Money:
The Corporate Debtor challenged the claim of 18% interest on the retention money, citing Clause 8.1.2 of the contract, which states no interest is payable on retention money. The Tribunal clarified that interest was claimed for the period after the DLP ended, making Clause 8.1.2 inapplicable.

6. Solvency of the Corporate Debtor:
The Corporate Debtor's solvency and asset value of ?33.72 crores were presented as reasons against initiating insolvency proceedings. The Tribunal emphasized that the conditions under Section 9 of the Code were met, making the Corporate Debtor's solvency irrelevant to the application's admission.

7. Compliance with Section 9(3) of the Insolvency and Bankruptcy Code:
The Corporate Debtor argued that the affidavit under Section 9(3) was not properly filed. The Tribunal accepted the Operational Creditor's rejoinder, which included a specific affidavit stating no notice of dispute was received regarding the unpaid operational debt.

8. Admission of the Application and Initiation of CIRP:
The Tribunal found the application complete and satisfied the conditions of Section 9(5)(i) of the Code. The petition was admitted, and the CIRP was initiated. A moratorium was declared, and Ms. Mandeep Gujral was appointed as the Interim Resolution Professional (IRP).

The Tribunal directed the IRP to take necessary actions, including public announcements, managing the Corporate Debtor's affairs, and constituting a committee of creditors. Regular progress reports were mandated to be submitted to the Tribunal.

Conclusion:
The Tribunal admitted the petition for initiating the CIRP against the Corporate Debtor, declared a moratorium, and appointed an IRP, thereby setting the process in motion for resolving the insolvency.

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