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TMI Blog2019 (2) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the CD. 3. It may be stated that M/s. Hillview Coals P. Ltd. is having its registered office at Kamalalaya Centre, 156A, Lenin Sarani, 2nd Floor, Room No. 214, Kolkata-700 013, West Bengal whereas the corporate debtor M/s. Super Infratech P. Ltd., is a company, incorporated under the Companies Act, 1956 having its registered office at T. R. Phookan Road, Dibrugarh, Assam. M/s. Hillview Coals P. Ltd., as per the statement, made in the articles of association is engaged in the business of construction work. 4. M/s. Super Infratech P. Ltd., had engaged M/s. Hillview Coals P. Ltd., to execute the work, specified in the agreement dated November 10, 2008, which has been marked as exhibit D to the application. It has been found from the materials on record that one Brahmaputra Cracker and Polymers Ltd. (in short, BCPL), a joint undertaking of the Government of India and Government of Assam had allotted M/s. Super Infratech P. Ltd. "the side grading works" in respect of BCPL complex at Lepetkata, Dibrugarh, Assam in the month of November, 2008 and such work was to be concluded within certain stipulated period. After obtaining the work order item No. C 006.16.000 MO2 from BCLP, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 in Form No. 4 as required under section 8(1) of the Code of 2016, which was served on the CD on March 9, 2018 calling upon the CD to make payment of the amount in default along with interest accrued thereon to the OC. According to the OC, the total amount due to the OC as per information in Part IV of the application was Rs. 4,48,90,155 (rupees four crores forty-eighty lakhs ninety-one thousand one hundred and fifty-five only). 10. However, till the date of filing of the present application, the OC has neither received any payment of the outstanding amount claimed nor did it bother to respond in any manner whatsoever to the demand notice, issued on it by the OC. Therefore, claiming an amount to the tune of Rs. 4,48,90,155.00 as debt, OC has initiated this proceeding under section 8 read with section 9 of the Code of 2016 seeking reliefs aforementioned. 11. In support of such contentions, the OC has submitted various documents including the bank statement to show that on the date of initiation of the application under consideration, an amount to the tune of Rs. 4,48,90,155.00 remained outstanding from the side of the CD, and therefore, there was clear default in repayment of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Co., for doing the leftover work which was earlier assigned to the OC. In that connection, an agreement was entered into between the said Ch. Sethpal Construction Co. and the CD on October 5, 2009. The said agreement has been annexed with the reply as annexure IV. 17. Since the OC did not complete the work as per agreement dated November 10, 2008, rather abandoned the same midway, the CD had to engage a different contractor to execute the left over work and in that process, the work, assigned to the CD could not be completed within the scheduled period-for which-time for completion of contracted work had to be extended and ultimately construction work could be concluded only on March 15, 2012, although under the original contract, the contract work was to be completed on or before March 16, 2010. 18. Copies of completion certificate issued by Engineers India Ltd. (EIL), the consultant of BCPL had been annexed with the counter affidavit as annexure V. Under the aforesaid circumstances, the CD was entitled to claim damages from the OC for the losses, it had suffered, because of non-completion of the work by the OC in time which, in turn, resulted in complete violation of the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voke the jurisdiction of this Authority although there are enough indisputable materials on record to show that there was a preexisting dispute regarding the debt aforementioned and same was there since long before the initiation of the present proceeding before this Authority. 23. Therefore, as required under the Code of 2016, the CD has urged this Authority to dismiss the proceeding in hand. In support of such contentions, my attention has been drawn to the decisions of the hon'ble Supreme Court rendered in the case of K. Kishan v. Vijay Nirman Co. P. Ltd. reported in [2018] 4 Comp Cas-OL 112 (SC) ; [2018] SCC Online SC 1013 (Civil Appeal No. 21824 of 2017 decided on August 14, 2018). 24. The OC has, however, denied the claim made in the counter affidavit/ reply stating that the OC has a genuine claim for an amount of Rs. 1,80,83,328.50 (without interest) as on March 19, 2018 (as per demand notice) and in order to defeat such a genuine claim, the CD has raised such spurious plea just to defeat the proceeding initiated before this Authority by the OC seeking initiation of corporate insolvency resolution process (in short "CIRP") for occurrence of default in the payment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat this being so, there can be no dispute regarding the same. We are afraid that we are unable to agree. As was correctly pointed out by Mr. Banerji, counter claims for amounts far exceeding this were rejected by the learned arbitral tribunal, which rejection is also the subject-matter of challenge in a petition under section 34 of the Act. It is important to note that unlike counter claim Nos. 1 and 2, which were rejected by the arbitral tribunal for lack of evidence, counter claim No. 3 which amounts to Rs. 19,88,20,475 was rejected on the basis of a price adjustment clause on merits. Therefore, it is difficult to say at this stage of the proceedings, that no dispute would exist between the parties. Our recent judgment in Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd. [2017] 205 Comp Cas 324 (SC) ; [2018] 1 SCC 353 throws considerable light on the issue at hand. While referring to the legislative history of the Code, this court referred to the Legislative Guide on Insolvency Law of the United Nations Commission on International Trade Law. One of the things the Legislative Guide spoke about was whether the debt is subject to a legitimate dispute or set-off, in an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(5) of the Act (paragraph 34). In paragraph 38, this court cautioned (page 366 of 205 Comp Cas) : 'We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties.' Finally, the law was summed up as follows (page 373 of 205 Comp Cas) : 'It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under section 9(5)(ii)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. Dibrugarh-786 001. Assam. Dear Sir, Sub. : Advocate's Notice My Client : M/s. Hill View Coals (P.) Ltd. (A Company registered under the Companies Act, 1956) having regd. Office at 53/1 Burtolla Street, Kolkata-700007 and also at Suit No. : 206, 2nd floor, Beltola, Guwahati-781028, Assam. Under instructions from my client and on his behalf I am to state as follows :- In accordance with deed of agreement executed between you and my client as on 10th day of November, 2008 and 2nd January, 2010 my client had done a sub-contract work for site grading work at Lepetkata, BCPL complex under M/s. Super Infratech Pte. Ltd. and completed the work in time frame in March 2010 but still Rs. 1,80,83328.50 (rupees one crore eighty lakhs eighty-three thousand three hundred twenty-eight and paise fifty) is outstanding which you have most unjustly been refraining yourself from making said payment together with 18 per cent. per annum interest by which you are indebted to my said client through you also dispatched TDS Certificates without said payments. You, acknowledged your liability by offering last payment vide cheque No. 29040, dated June 24, 2011 received from SI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... my above named client. My above named client has never acknowledged any liability towards your client at any point of time. Rather, I have instructions from my client that there is substantial amount receivable from your client on account of delay in completion of the work as well us other excess payments made to your client. I, therefore, request you to refrain your client from making any vague and baseless demands of money from my above named client and kindly advise your client accordingly. Thanking you, Yours faithfully, Sd/(Arunangshu Dhar) Advocate." 30. A very careful perusal of those two pleaders notice leaves no manner of doubt that way back in 2012, the CD stoutly denied having any liability to pay off any amount to the OC for the work, done on its behalf. Such revelations clearly evince that a dispute between the CD and OC did exist in respect of the debt under consideration. Such conclusion of mine gets strengthened more and more when one considers the letter dated January 1, 2013 from the CD, addressed to OC (annexure-IX) as well as the letter dated January 21, 2013 from OC addressed to CD (annexure X to the counter affidavit) alongside the pleaders notice da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instead of approaching the civil court of appropriate jurisdiction, had approached this authority seeking initiation of CIRP against the CD. Such conduct on the part of operational creditor, in my opinion, needs to be deprecated. 35. Mr. Gaggar, CA appearing for the OC further submits that the prayer seeking dismissal of the proceeding under consideration, so made from the side of the CD, needs to be rejected for another very valid reason. In that connection, my attention has been drawn to section 8, more particularly, section 8(2)(a) of the Code. For ready reference, the same is reproduced below : "8. (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational creditor- (a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute." 36. In the present case, the CD admittedly did not respond to the demand notice dated March 9, 2018, at any point of time, much less its responding to such notice within a period of 10 days from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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