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TMI Blog2020 (9) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... , with the Registrar of Companies (RoC), Maharashtra, Mumbai. Its CIN is U70102MH2009PTC195720. Its registered office is at Flat No.103/C, Thosar House, Hanuman Cross Road No.1, Near Shivleela Hotel, Vile Parle (E), Mumbai 400 057, within the State of Maharashtra. Therefore, this Bench has jurisdiction to deal with this petition. 3. The present petition was filed before this Adjudicating Authority on the ground that the Corporate Debtor failed to make payment of a sum of Rs.94,64,770.00 (Rupees ninety-four lakh sixty-four thousand seven hundred and seventy only) as principal and Rs.68,66,919.00 (Rupees sixty-eight lakh sixty-six thousand nine hundred and nineteen only) as interest as on 22.08.2018, which is stated to be the date of default [page 5, Part IV-Particulars of Operational Debt]. 4. Mr Zaid Ansari, Learned Counsel, submitted that the case of the Operational Creditor is as follows: - (a) The Operational Creditor is engaged in the business of the construction of buildings. The Corporate Debtor hired the services of the Operational Creditor by a Work Order dated 25.05.2014 ("Work Order") for General Civil Works for a proposed residential building having stilt+6 upper flo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2015 (seven slab). Occupation certificate has been issued by Municipal Corporation of Greater Mumbai on 07.09.2016 (p.569 of the petition). Further, the Corporate Debtor has applied for vertical extension of this building, which points to the structural stability and quality of construction carried out by the Operational Creditor. (i) The Operational Creditor has handed over the project duly completed on 19.11.2015 after demobilising labour and equipment from the site; (j) The Corporate Debtor has been irregular in making payments to the Operational Creditor. The last part payment was made by the Corporate Debtor on 29.09.2015. 5. The Operational Creditor issued legal notice dated 29.03.2017 to the Corporate Debtor (pp 135-141 of the petition). There was no response to this legal notice. 6. Thereafter, the Operational Creditor issued Demand Notice dated 02.12.2017 under the IBC claiming a sum of Rs.1,94,62,148/- from the Corporate Debtor. The Demand Notice also included certain amounts claimed towards damages (pp.234-237 of the petition). This Demand Notice has been duly served on the Corporate Debtor on 04.12.2017. 7. The Corporate Debtor replied to this Demand Notice on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CP (IB) No.3753/2018 was filed. 13. The invoices have been placed at pp. 68-119 of the petition. Bank statements are also attached as Exhibit '10' at pp.117-135. The total debt due and payable to the Operational Creditor is Rs.1,63,31,689.00 (Rupees one crore sixty-three lakh thirty-one thousand six hundred and eighty-nine only), as mentioned at p.5 of the Petition. 14. Mr Nishit Dhruva, Learned Counsel appeared on behalf of the Corporate Debtor and made his submissions. 15. In its reply dated 02.03.2019, the Corporate Debtor has set up the following defence: - (a) The Corporate Debtor submitted that the Demand Notice dated 23.08.2018, issued by the Petitioner and received by the Corporate Debtor on 28.08.2018, is already disputed by the Corporate Debtor vide its 'Notice of Dispute'/reply dated 03.09.2018 which categorically states that the alleged claim of the Petitioner is not payable, and it is disputed. The Corporate Debtor further submitted that a 'dispute' was adequately raised by the Corporate Debtor and the present petition is liable to rejected ab initio under section 9(5)(ii)(d) of the Code (para 6 of the Affidavit in Reply on behalf of the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Creditor has extended the time unilaterally by merely informing to the Corporate Debtor without obtaining extension of time in writing from the Engineer-in-Charge violating Clause 23.02 of the Work Order. The Corporate Debtor have paid Rs.5,00,000/- as mutually agreed upon in the letter dated 15.09.2015 (At page 252/Vol-II) [para (iv) of the Written Submission on behalf of the Corporate Debtor at p.6]; (j) The Corporate Debtor states that on 08.03.2018 in the said petition, an Affidavit-in-Reply was filed (at page 287/Vol-II) on the grounds that the Petition was not maintainable, in view of the fact that full and final payment was already made to the Operational Creditor and that a dispute had already been raised. Further, the petition was not maintainable as damages are not covered under the provision of the IBC (At Page 454/Vol-II) [para (viii) of the Written Submissions on behalf of the Corporate Debtor at p.7]; (k) The Corporate Debtor further states that any claim for any purported 'additional work' is maintainable only as per Clause 20.02 of the said Work Order and only if (a) there is any deviation/revision in the drawings; (b) such estimate of claim is m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 10.04.2018; (g) The Operational Creditor did not comply with Guarantee certificate for anti-termite work as per clause 21.12 of the Work Order; (h) The Operational Creditor did not submit the report of the Engineer in charge as per clause 11 of the Work Order. (i) Insurance policy not taken as required under Clause 14 of the Work Order; (j) ESIC and PF obligation not complied with as required under Clause 16 of the Work Order. 17. We have heard the arguments of both sides at length and perused the documents placed on record. 18. The issues that arise for determination in the present Company Petition are the following: - (a) Whether the invocation of the arbitration clause between the withdrawal of the first petition vide order dated 13.03.2018 and the issue of the second demand notice dated 23.08.2018 to the Corporate Debtor should be treated as "pre-existing dispute" within the meaning of section 5(6) of the IBC; (b) If the answer to the above is "No" then whether there is a debt due and payable by the Corporate Debtor in favour of the Operational Creditor; and (c) Whether there is a default of the Operational Debt due and payable by the Corporate Debtor in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arbitration clause by the Corporate Debtor between 13.03.2018 (when the first Company Petition bearing CP (IB) No.1823/2017 was dismissed as withdrawn with liberty), and 23.08.2018 (when the second demand notice came to be issued by the Operational Creditor to the Corporate Debtor), is of no consequence and cannot be treated as "pre-existing dispute" within the meaning of section 5(6) of the IBC. Issue No.2: Whether there is a debt due and payable by the Corporate Debtor in favour of the Operational Creditor 24. The Corporate Debtor has argued that any claim for any purported 'additional work' is maintainable only as per Clause 20.02 of the said Work Order and only if - (a) there is any deviation/revision in the drawings; (b) such estimate of claim is mutually agreed upon in advance; and (c) invoicing (with necessary proof of costs) is made at cost of actual material and labour+15%. As for the purported additional work claimed by the Operational Creditor, there was no deviation or revision in drawings and there was no mutual understanding as to such Claims between the parties. Further, the invoicing was not made as per requisite manner nor have the costs of material and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rk, and those reasons are attributable completely to the Operational Creditor. The Corporate Debtor has incurred costs and suffered losses since it could not claim input credit of service tax and also had to pay interest to its financiers to the tune of Rs.1.30 crore on 31.03.2015, Rs.2.04 crore on 31.03.2016 and Rs.2.34 crore on 31.03.2017, and also had to pay higher rent and other expenses. 28. The claim of the Corporate Debtor as to losses suffered, is not supported by any material on record. Further, even if the Corporate Debtor has a counter-claim, the same should be properly adjudicated by a proper judicial forum before it can be claimed against the Operational Creditor. Therefore, this argument does not commend itself to us and we reject the same. 29. The Learned Counsel for the Operational Creditor has specifically pointed out during the course of arguments, and also drawn our attention to the specific averment in the Rejoinder to the effect that apart from invoking the arbitration clause on the same day when the 1st Company Petition bearing CP (IB) No.1823/2017, no legal remedies have been pursued by the Corporate Debtor to this date against the Operational Creditor. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact in the notice and agreement dated September 25, 2015 arrived at between yourself and us whereby you were paid in full for the additional work carried out by you, but you have yet again failed and neglected complete the entire work even after been paid in full for the same (sic)." 34. There is an inherent contradiction in the stand taken by the Corporate Debtor. While on the one hand, the Corporate Debtor has taken the stand that the "additional work" carried out by the Operational Creditor was well within the scope of work as enumerated in Clause 1.0.1- Scope of Work of the Work Order, on the other hand in the reply dated 13.12.2017 to the first demand notice to the Corporate Debtor has taken the stand that the Operational Creditor has been paid in full for the additional work carried out by it. If indeed the Corporate Debtor believe that the scope of work included everything except those excluded under clause 1.02 of the Work Order, then there was no need to take the stand in the reply dated 13.12.2017 that the Operational Creditor was paid in full for the additional work carried out. 35. Looking at the documents placed on record it appears to us that the drawings in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this letter dated 16.11.2015 (at p.259, Vol.II of the Petition) to be indicative of "abandonment" of the project. However, even if this argument is assumed to be true, the Corporate Debtor has not written a single letter or email objecting to such "abandonment." The work order stood from 25.05.2014 till its completion and site being handed over on 19.11.2015. There was ample time and opportunity on the part of the Corporate Debtor to cancel the work order in case the work was deemed to be substandard. This was not done. Even after demobilisation by the Operational Creditor from the work site, this aspect of "abandonment" has never ever been raised by the Corporate Debtor with the Operational Creditor. Further, it is also observed from the records that the site was duly handed over by the Operational Creditor to the Corporate Debtor on 19.11.2015 with due notice. Therefore, it is difficult for us to hold that there was any "deemed abandonment" of the project by the Operational Creditor. Issue No.3: Whether there is a default of the Operational Debt due and payable by the Corporate Debtor in favour of the Operational Creditor. 39. In the first demand notice dated 02.12.2017, the Op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court dated 21.09.2017 in Mobilox Innovations Private Limited vs Kirusa Software Private Limited does not help the cause of the Corporate Debtor. 44. The Learned Counsel for the Corporate Debtor has, apart from the judgment in Mobilox, relied on the following judgments: - (a) Judgment dated 14.08.2018 passed by the Hon'ble Supreme Court in K Kishan vs Vijay Nirman Company Private Limited, for the proposition that an application under section 8 must be rejected if notice of a dispute has been received by the operational creditor. However, that was a case where the petition under section 9 of the IBC came to be filed on 14.07.2017 after the filing of a petition under section 34 of the Arbitration & Conciliation Act, 1996. Therefore, the ratio of that judgment is clearly not applicable to the facts of the present case. (b) Judgment dated 01.02.2018 passed by the National Company Law Tribunal, Mumbai Bench, in CP (IB) No.1297/2017 in the matter of Swastic Enterprises vs. Gammon India Limited, for the proposition that where the principal amount of debt has admittedly been paid and duly accepted by the Petitioner and the claim of interest remained unsubstantiated in the absence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court. (f) Judgment dated 28.04.2017 in CP (IB) No.43/2017 by the NCLT Principal Bench, in the matter of Eviro International Corporation vs. Gold Plus Glass Industry Limited, and Judgment dated 02.03.2017 in CP (IB) No.3/2017 by the NCLT Principal Bench, in the matter of Philips India Limited vs. Goodwill Hospital and Research Centre Limited, regarding "dispute." Again, the facts of those matters are not in pari materia with the present case, and so the ratio of those judgments do not apply. 45. The application made by the Operational Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. 46. The Operational Creditor has proposed the name of Mr Jitendra Kumar Yadav [Reg. No.IBBI/IPA-003/IP-00022/2017-18/ 10169], as the Interim Resolution Professional of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor under section 33 of the IBC, as the case may be. (e) Public announcement of the CIRP shall be made immediately as specified under section 13 of the IBC read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (f) Mr Jitendra Kumar Yadav [Reg. No.IBBI/IPA-003/IP-00022/2017-18/10169], having address at No.11, Singh House (2nd Floor), No.23, Ambalal Doshi Marg, Beside BSE Building, Fort, Mumbai 400001 [email: [email protected], Mobile: +91 9699024004], is hereby appointed as Interim Resolution Professional (IRP) of the Corporate Debtor to carry out the functions as per the IBC. The fee payable to IRP or, as the case may be, the RP shall be compliant with such Regulations, Circulars and Directions as may be issued by the Insolvency & Bankruptcy Board of India (IBBI). The IRP/RP shall carry out his functions as contemplated under sections 15, 17, 18, 19, 20 and 21 of the IBC. The IRP/RP shall file periodical progress reports with this Adjudicating Authority. (g) During the CIRP Period, the management of the Corporate Debtor shall vest in the IRP or, as the case may be, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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