9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (4) TMI 970 - AT - Insolvency and BankruptcyInitiation of CIRP - Maintainability of application filed u/s 9 of the Code - additional work got done, with the approval of MD of the Respondent, was not approved by the competent committee - Appellant has taken recourse to Arbitration under MSME Act - Respondent being a government company (PSU) is out of purview of the Code or not - debt of default was not correctly mentioned in the original petition - HELD THAT - The Impugned Order records that the Respondent doubted existence of letter dated 02.12.2016 and 05.12.2016 as these were not available in the files of the Respondent. It is strange to note that the same Impugned Order, observed in Para 3(vii) of the Impugned Order, where it has been mentioned that the Respondent has stated that a letter dated 11.01.2017 was issued to the claimant intimating that vide earlier letter dated 02.12.2016 and 05.12.2016 the representative of claimant has already been informed that revised BOQ for Kopaganj Project and Ghosi Project has been approved along with terms and conditions as per agreement - Clearly, both the statement recorded in the Impugned Order as submitted by the Respondent are contradictory. The fact is that the Respondent has accepted and communicated to the Appellant regarding acceptance of the revised BOQ and the same should have been dealt with by the Adjudicating Authority suitably. We feel that it will be travesty of justice, if the claims of the Operational Creditor like the Appellant herein are refuted and denied by Public Sector Undertakings like Respondent herein in such casual, catastrophic and unfortunate manner. Afterall it is the faith on such PSUs, Operational Creditors like the Appellant here in start the execution of the work immediately, sometimes even without for formal contract, based on LOI. Hence, the ground of alleged lack of proper approval by the committee of the Respondent and therefore, the Respondent is not bound to make the payment is just not acceptable and stand rejected in the strongest terms. Pre-existing dispute - HELD THAT - Without going into controversy of Arbitration Award under MSME Act, 2006 V/s the application filed under Section 9 of the Code, it is suffice to note that at the time of filing the application by the Appellant under Section 9 of the Code i.e., on 16.11.2019, there was no petition by the Appellant regarding any arbitration nor any award came in favour of the Appellant which was wrongly presumed to be pre-existing dispute by the Adjudicating Authority in the Impugned Order. On face of it, the assumptions and rational taken by the Adjudicating Authority in this regard on the aspect of pre-existing dispute it patently illegal and required to be treated accordingly. The Adjudicating Authority has jurisdiction to reject the application being incomplete but is also obligated that before such rejection has to give a notice to the Applicant to rectify the defects in his application within seven days of the date of receipt of such notice from the Adjudicating Authority - no notice seems to have been issued by the Adjudicating Authority to the Appellant. Once the date of the original application filed under Section 9 of the Code is treated as 26.11.2019, there is no question of any pre-existing dispute - the demand notice under Section 8 of the Code was issued on 03.09.2019 to the Respondent and no dispute was ever raised by the Respondent prior to issue of such demand notice. In fact, the Respondent chose not to reply to such demand notice. The impugned order is set aside - appeal allowed.
Issues Involved:
1. Ex-parte proceedings against the Respondent. 2. Initiation of Corporate Insolvency Resolution Process (CIRP) u/s 9 of the Insolvency & Bankruptcy Code, 2016. 3. Dispute over the outstanding payment and approval of revised Bill of Quantities (BOQ). 4. Pre-existing dispute and arbitration under MSME Act, 2006. 5. Government company's exemption from the Code. 6. Procedural defects in the application u/s 9 of the Code. Summary of Judgment: Ex-parte Proceedings: The Respondent did not participate in the proceedings, leading to ex-parte decisions against them. The matter was listed for ex-parte hearing on 08.04.2024, and the order was reserved on the same date. Initiation of CIRP u/s 9: The Appellant filed a petition u/s 9 of the Code for initiation of CIRP against the Respondent for an outstanding amount of Rs. 4,43,42,607/-. The Appellant claimed successful completion of projects and partial payment received, leaving an outstanding amount of Rs. 1,76,89,875/-. Dispute Over Outstanding Payment and BOQ Approval: The Appellant completed two projects with revised BOQs approved by the Respondent's officials. Despite completion certificates, the Respondent disputed the payment for additional work, claiming lack of proper sanction by the competent authority. Pre-existing Dispute and Arbitration: The Appellant initiated proceedings under the MSME Act, 2006, and received an arbitration award in their favor. The Adjudicating Authority incorrectly considered this as a pre-existing dispute. The Appellate Tribunal clarified that the arbitration under the MSME Act does not constitute a pre-existing dispute under the Code. Government Company's Exemption: The Respondent claimed exemption from the Code as a government company. However, the Tribunal rejected this argument, stating that the Respondent's internal approval processes cannot impair the Appellant's rights. Procedural Defects in Application: The Appellant admitted to errors in the original application regarding the date of default and outstanding amount. The Tribunal emphasized that procedural defects should be allowed to be rectified and should not prejudice the substantial rights of the creditor. The Tribunal referred to previous judgments supporting the rectification of procedural defects. Findings: The Tribunal found that the Adjudicating Authority erred in dismissing the application based on procedural defects and the alleged pre-existing dispute. The Tribunal set aside the Impugned Order, allowing the appeal and confirming the outstanding amount as Rs. 1,76,89,875/- with the correct date of default as 24.04.2018. The Tribunal emphasized that the Respondent's internal approval issues do not affect the Appellant's claims and rejected the Respondent's arguments regarding exemption and pre-existing disputes. The appeal was allowed, and the Impugned Order was set aside with no costs.
|
