2021 (7) TMI 672 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of privity of contract between the Operational Creditor and the Corporate Debtor or not - original work order was issued by Gammon India Limited but the actual work was done by the Operational Creditor in respect of project site of Gammon Infrastructure Projects Limited - some of the bills were also paid by the Gammon Infrastructure Projects Limited - existence of debt and dispute or not - reply to demand notice not sent - HELD THAT - It is very clear from the said work order that the work order has been issued and duly signed by the Gammon India Limited. The Operational Creditor also annexed copy of the order dated 22.03.2017 passed by this Tribunal in Company Scheme Petition No. 125/2017 jointly filed by Gammon India Limited and Gammon Engineers and Contractors Private Limited (Corporate Debtor) whereunder the scheme of transfer of Gammon India Limited as transferor company with Gammon Engineers and Contractors Private Limited as the transferee company was approved by this Tribunal under which all the assets and liabilities of the transferor company were taken over by the transferee company i.e. Corporate Debtor. Therefore, it is very clear from the above two documents that the Corporate Debtor being the transferee of Gammon India Limited cannot deny the unpaid bills of the Operational Creditor. Mere forwarding of the bills submitted by the Operational Creditor to Gammon Infrastructure Projects Limited by the Corporate Debtor does not absolve the Corporate Debtor from its liability. There was no dispute with regard to the debt and default in this case. The respondent has not sent any reply to the demand notice issued by the petitioner. This tribunal is of the considered opinion that the above company petition is liable to be admitted - Petition admitted - moratorium declared.

Summary

Issues:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on default in payment.
2. Dispute regarding liability for payment between the Operational Creditor and the Corporate Debtor.

Analysis:
1. The Operational Creditor filed a Company petition seeking to initiate CIRP against the Corporate Debtor for defaulting on a payment of ?94,23,410/-. The petition was filed under Sections 8 and 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor provided goods and services to the Corporate Debtor as per the work order issued, but the payment remained outstanding despite repeated reminders and a demand notice.

2. The Corporate Debtor contested the allegations, claiming that the work was done for another company, Gammon Infrastructure Projects Limited (GIPL), not directly by the Corporate Debtor. The Corporate Debtor argued that there was no privity of contract between them and the Operational Creditor for the specific work done, as evidenced by communications between GIPL and the Operational Creditor regarding payments and work direction. The Corporate Debtor asserted that it forwarded invoices to GIPL for payment and did not owe any amount directly to the Operational Creditor.

3. The Tribunal examined the documents provided, including the work order issued by Gammon India Limited and the approval of the transfer of assets and liabilities to the Corporate Debtor. The Tribunal found that the Corporate Debtor, as the transferee of Gammon India Limited, could not deny the unpaid bills of the Operational Creditor. The Tribunal concluded that the debt and default were established, rejecting the Corporate Debtor's contentions as legally unsustainable and an attempt to avoid liability.

4. Consequently, the Tribunal admitted the Company petition, ordering the initiation of CIRP against the Corporate Debtor. An Interim Resolution Professional (IRP) was appointed, and the Operational Creditor was directed to deposit an initial CIRP cost. The Tribunal imposed restrictions on legal actions against the Corporate Debtor, declared a moratorium period, and specified the management of the Corporate Debtor during the CIRP. The public announcement of the insolvency resolution process was mandated, and instructions were given for the communication of the order to relevant authorities.

This detailed analysis covers the issues involved in the legal judgment comprehensively, outlining the arguments presented by both parties and the Tribunal's findings leading to the decision to admit the Company petition and initiate the Corporate Insolvency Resolution Process against the Corporate Debtor.