9911796707
TMI Blog2018 (8) TMI 1826X X X X Extracts X X X X X X X X Extracts X X X X ..... btor can from time-to-time adjust the liquidated damages from the amounts payable to the Operational Creditor - In view of the said clause, if the delay in completion of work is on account of the Operational Creditor, then the Corporate Debtor is entitled for liquidated damages. That means, in case of breach of the terms of the Work Order/ Contract is there on the part of the Operational Creditor, the Corporate Debtor is entitled for liquidated damages. The claim for damages, whether liquidated or unliquidated there is no existing obligation to pay any amount. It is held in various decisions no pecuniary liability in regard to the claim for damages arises till the Court adjudicate upon the claim for damages and holds that the other party has committed breach and incurred liability to compensate the claimant for the loss and then access what the liability is. In the instant case, the Competent Court has to decide whether the party that committed breach of contract is liable to pay damages and if so, to what amount - In the instant case, as can been scene from the following correspondence, the Corporate Debtor has been raising the issue of delay in completion of works even prior to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Project, Rajasthan vide work order No.3300002925, dated 19.08.2009. 3. It is stated by the Operational Creditor that as per clause 2.6 of the Work Order, dated 19.08.2009, the work has to be completed within 24 months from the date of commencement of the work i.e. from October 2009, but the work started on 23.10.2009 and therefore, the work had to be completed on or before 22.10.2011. 4. It is stated that as per the clause 2.D(b) of the Work Order, dated 19.08.2009, for Boiler, any activities specified in the order got delayed and carried out beyond the time schedule of the Contract, payment will be made after pro rata adjustments towards LD, if the delays are attributable to the Operational Creditor. 5. It is stated that the total contract price for the services to be rendered by the Operational Creditor to the Corporate Debtor was ₹ 38,00,17,035/- plus service tax applicable and the total tonnage of the work is estimated at 25,910 MT. 6. As per the clause 2.0 of the Work Order, the Operational Creditor was required to provide Bank Guarantee towards contract performance guarantee for an amount of ₹ 1,90,00,852/- being 5% of the contract value, which shall be valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor has to provide the following facilities to the Operational Creditor:- a. Supply of materials/ parts etc. b. Delays due to other reasons:- (i) The delay in readiness of Balance of Plant and other areas (especially coal handling system, etc.) and non-availability of coal were the main reasons for delay of trial run; (ii) Platen super heater coil burst due to operation fault. It took many days to rectify the same, causing delays; (iii) Cold Re-Heat piping got damaged during operation for no fault of the Operational Creditor. It took many months to rectify the same, which caused delays; (iv) Technical fault in other area like turbine delayed Trial run and Performance Guarantee test. c. Failure to provide work Fronts; d. Supply of Drawings and other Details; e. Failure to provide Crane; f. Failure to supply Power/ Uninterrupted Power; g. Problems due to local peoples and thefts. 12. According to the Operational Creditor, due to the reasons attributable to the Corporate Debtor, the project got delayed. The Operational Creditor wrote letter dated 16.06.2016 to the Corporate Debtor explaining the various reasons for the delay in completion of the work. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.03.2015 and the Corporate Debtor issued the Work Completion Certificate. 23. The Operational Creditor claimed the following amounts in this Petition:- Sl. No. Particulars Amount in Rs. 1. Final Bill- Boiler and ESP (S.O. No. 3300002925) (copy of the bills acknowledged by the Corporate Debtor and approved the release of payment) 2,35,20,413 2. Retention - Boiler and ESP (S.O. No.3300002925) (copy of the bills acknowledged by the Corporate Debtor and approved the release of payment) 2,68,22,327 3. Retention - Fuel oil piping & Auxiliary piping (S.O. No.3300008844) 7,01,724 4. Overrun Compensation (S.O.No.3300002925) 5,49,22,446 Total 10,59,66,910 24. It is stated that the Operational Creditor has given a Bank Guarantee to the Corporate Debtor to the tune of ₹ 2,31,81,437/- and it is valid up to April 2017, within which the Corporate Debtor if it has got any claim against the Operational Creditor can encash the Bank Guarantee. Although, there was no claim against the Operational Creditor, the Corporate Debtor wrote a letter to the Banker of the Operational Creditor requesting to extend or invoke or encash Bank Guarantee. 25. The Operational ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The Operational Creditor also intentionally not filed Affidavit of no dispute which is mandatory Under sec. 9(3)(b) of IB Code. 36. According to the Corporate Debtor, the claim made by the Petitioner is disputable one. The Corporate Debtor stated that the claim made by the Operational Creditor over an amount of ₹ 8,56,84,939/- is absolutely false. 37. The Corporate Debtor also stated that the Operational Creditor cannot claim interest of ₹ 5,30,94,661/-. 38. It is stated by the Corporate Debtor that the Petitioner completed 5398 MT as on 31.10.2011 as against the stipulated quantity of 5670 MT. The balance quantity of 272 MT was completed with a huge delay of two years from the deadline fixed for such completion. 39. The Operational Creditor is aware that the works and supply related to Structurals are very vital for completion of the work and any delay would have cascading adverse impact on the other portions of the Boiler works. 40. The Commercial Operation Declared for the Boiler was achieved only on 04.08.2014, which was well beyond the scheduled delivery date. 41. The Corporate Debtor vide emails dated 31.08.2014, 12.03.2015 and 31.08.2014 called upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 49. The Corporate Debtor by email, dated 01.10.2012, listed out the works, which were stopped abruptly by the Petitioner, since wages to the workmen were not paid. It amounts to violation of Sub-Clause (c) of Clause No.D of the Service Order, which states as hereunder:- "Notwithstanding the dues and payments to be received from BGRESL or otherwise, the Contractor shall be liable to make payment of wages and statutory remittances etc. to their staff and labour employed as per statutory requirements." 50. The Corporate Debtor vide emails, dated 13.12.2015, 09.05.2013, 14.02.2014 and 24.05.2014, made repeated requests to complete the execution of the work. 51. It is stated by the Corporate Debtor that the due amount claimed is not crystallized and there is a dispute regarding the claim amount. 52. The Corporate Debtor is a listed Company with the paid-up capital of more than ₹ 72.16 crores and turn over of around ₹ 3,448 crores and has a strong balance sheet with a profit of nearly ₹ 44 crores. 53. The Corporate Debtor is also having an order book of nearly ₹ 7000 crores. It is stated by the Corporate Debtor that the Petitioner is a defaulter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of contract and it effected the cash flow of the Operational Creditor. 60. According to the Operational Creditor, he is entitled to receive ORC from January 2012. According to the Corporate Debtor, the Operational Creditor is not entitled for ORC. 61. The Operational Creditor is relying upon a letter, dated 11.12.2014, issued by the Corporate Debtor to the Operational Creditor, wherein it is stated Overstay Compensation beyond the contract period is under consideration. 62. A reading of the entire letter goes to show that the Overstay Compensation is only under consideration of the Corporate Debtor and it is linked upon with the assessment of delays in completion of works. 63. Therefore, the letter, dated 11.12.2014, given by the Corporate Debtor eannot be taken as admission of payment of Overstay Compensation. 64. Learned Counsel appearing for the Petitioner relied upon the following deeisions:- (i) J.G. Engineering (P.) Ltd. v. Union of India (MANU/SC/0527/2011). (ii) State of Karnataka v. Shree Rameshwara Rice Mills, AIR 1987 SC 1359. (iii) Greenhills Exports (Private) Limited v. Coffee Board, [2001] 34 SCL 717 (Kar.). (iv) Union of India (UOI) v. Raman Iron Foundr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in completion of work. 74. Letter, dated 31.08.2014, written by the Corporate Debtor to the Operational Creditor regarding completion of Unit # 1 pending work. The following are the pending works of Unit # 1: (i) Cutting & grinding of temporary structure welded on the boiler structure. (ii) Pending work/ defects observed trial operation & completion of punch point in boiler area. (iii) Final painting of Unit # 1 Boiler structure. (iv) Cutting, grinding of temporary structure & final painting of auxiliary structure from Boiler to ESP area. (v) Cutting, grinding of temporary structure & final painting of auxiliary structure from ESP area to ID fan. (vi) Cutting, grinding of temporary structure & final painting of auxiliary structure from ID fan to Chimney. (vii) Cutting, grinding of temporary structure & final painting of ESP structural part. (viii) Painting of condensate piping. (ix) Painting of coal piping. (x) Painting of cold air & primary air duct. (xi) Painting of oil piping. (xii) Erection & commissioning of ID fan hoist. (xiii) Erection & commissioning of FD & Pedastal fan hoist. (xiv) Erection & commissioning of Air pre-heater hoist. (xv) Ere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 regarding stoppage of work for 6 days due to wages not received by the workmen. 81. Letter dated 14.02.2014 about not engaging the manpower to complete the structural works. 82. Letter dated 24.05.2014 addressed by the Corporate Debtor to the Operational Creditor regarding inability of the Operational Creditor to engage the manpower for completion of work. 83. Letter dated 11.10.2017 addressed by the Corporate Debtor to the Operational Creditor regarding employing less number of manpower. 84. The above said correspondence clearly goes to show that there is a dispute regarding the delay in completion of work. The issuance of Work Completion Certificate by the Corporate Debtor is by no means a ground to say there was no delay in completion of work. 85. Admittedly, by both parties, there is delay in completion of work but one party is accusing the other party for the delays. 86. Therefore, there is existence of a dispute between the Operational Creditor and the Corporate Debtor regarding the breach of terms of Contract and the damages. 87. The Overrun Compensation has to be quantified and crystallizcd by the Corporate Debtor but the Corporate Debtor did not do so. Even, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
