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2024 (11) TMI 478 - AT - IBCRejection of Section 9 Application - debt has become due and payable or not - dispute over payment of outstanding dues between the Appellant and the Respondent - HELD THAT - There is no dispute between the Parties regarding the acceptance of bid of the Appellant for providing for e-Auction solutions. The Corporation has after Letter dated 08.02.2023 has again sent a same request to the Department on 14.02.2023 and 28.02.2023. It is clear that on basis of RFP between the Parties and Clause 3 of the Agreement Certification by the TPA was required for release of the quarterly bill. The Corporation on account of non-receipt of any Report or any Certification from TPA did not make any payment. The present is not a case where Corporation has defaulted in making payment to the Appellant. However, the payment could not be made in accordance with the RFP and Agreement between the Parties where payment was to be released after certification by TPA. The above indicates that there may be lapse of the Government of Goa in not appointing TPA so that TPA can verify the release of the quarterly payments to Appellant, but that cannot be a reason for put the Corporate Debtor in Insolvency by admitting Section 9 Application filed by the Appellant. On account of the lapse of Government of Goa in appointing TPA and non-payment of the dues of the Corporate Debtor, Appellant was free to avail the Clause 19 of the Agreement, but in the facts of the present case, when in spite of recommendation by Corporation to the DOIT to permit payment of 75% of the amount it is not the case that any sanction was granted by Department to pay the Appellant - the finding of the Adjudicating Authority agreed upon that no default can be said to have been committed by the Corporation so as to put it into Insolvency. When the RFP and Agreement provides a particular mode and manner of payment, non-payment by Appellant is a plausible contention raised by the Respondent in opposing Section 9 Application. There are no ground in the Appeal to interfere with the Order of the Adjudicating Authority rejecting Section 9 Application - present is a case which shows that Appellant has been put to prejudice on account of inaction in terms of the RFP and Agreement between the Parties. Appellant is still free to avail his remedy for payment of its outstanding dues in accordance with the Agreement between the Parties - appeal dismissed.
Issues:
- Rejection of Section 9 Application by the Adjudicating Authority - Dispute over payment of outstanding dues between the Appellant and the Respondent Analysis: 1. The Appellant, an Operational Creditor, filed an Appeal challenging the rejection of its Section 9 Application by the Adjudicating Authority. The dispute arose from an Agreement between the Parties for the implementation of an e-Tendering and e-Auction solution in the State of Goa. 2. The Adjudicating Authority rejected the Section 9 Application on the grounds that the debt had not become due and payable as per the terms of the Agreement. The Corporation had not appointed a Third-Party Auditor (TPA) to verify the invoices issued by the Appellant, leading to non-payment. 3. The Appellant argued that the Corporation had admitted the debt by proposing to release 75% of the outstanding payments. The Appellant contended that the Adjudicating Authority misinterpreted the Agreement clause regarding payment certification by the TPA. 4. The Respondent countered that under the Agreement, payment was subject to TPA certification, which had not been provided. The Corporation's recommendation to release payment was not accepted, and no default had been committed as per the Agreement terms. 5. The Tribunal noted that the Agreement required TPA certification for payment release, which had not been fulfilled due to the Government of Goa's failure to appoint a TPA. The Appellant had withdrawn a Writ Petition seeking outstanding dues, indicating a dispute over payment. 6. The Tribunal upheld the Adjudicating Authority's decision, stating that no default had been committed by the Corporation. The Appellant was advised to seek remedy for outstanding dues through the Agreement's dispute resolution process rather than Insolvency proceedings. 7. The Tribunal dismissed the Appeal but allowed the Appellant to pursue remedies for outstanding dues under the Agreement. It clarified that the observations made in the Order should not hinder the Appellant's pursuit of legal remedies for payment. Conclusion: The Tribunal upheld the rejection of the Section 9 Application, emphasizing the need for the Appellant to seek resolution for outstanding dues through the Agreement's dispute resolution process. The decision highlighted the importance of adhering to contractual terms and seeking appropriate remedies for payment disputes.
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