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TMI Blog2020 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... ition is admitted - the date of admission of this petition is 03.06.2020. - C. P. ( I. B. ) No. 273/7/NCLT/AHM/2018 - - - Dated:- 3-6-2020 - Harihar Prakash Chaturvedi, Member (J) and Prasanta Kumar Mohanty, Member (T) For the Appellant : Arjun Sheth, Advocate , Solicitor For the Respondent : Vidhi Thakkar , Advocate led by Mihir Thakore , Senior Advocate ORDER Prasanta Kumar Mohanty, Member ( T ) 1. The present I.B. Petition is filed by the Financial Creditor Mass Infrastructure Private Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a Code ), seeking initiation of Corporate- Insolvency Resolution Process ( CIRP in Short) against the Corporate Debtor Company namely, Kunal Structure (India) Private Limited for the default committed by the Corporate Debtor in making repayment of the deposit of ₹ 92,40,600/- (Rupees Ninety-Two Lakhs Forty Thousand Six Hundred) given towards creation of FDR and ₹ 36,96,240/- (Rupees Thirty-Six Lakhs Ninety-Six Thousand Two Hundred Forty) towards Bank Guarantee). However, the amount claimed to be in default is ₹ 2,15,31,062/- (Rupees Two Crores Fifteen Lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said tenders, by paying the requisite amounts to the Corporate Debtor. It was also agreed between the Corporate Debtor and the Financial Creditor that interest would be paid by the Corporate Debtor to the Financial Creditor on such deposits, as the interest is being paid to the Corporate Debtor kept on the deposits held in its name with the bank. The said deposits are shown in its name of Corporate Debtor but the amount belongs to the Financial Creditor. Hence, it is shown in the Balance Sheet as liability and the said deposits are required to be returned by the Corporate Debtor to the Financial Creditor on completion of the work under the tenders. To record the aforesaid arrangement between the Corporate Debtor and the Financial Creditor in relation to the Case Tender, sub-contract dated 17.09.2012 was executed between the Corporate Debtor and the Financial Creditor. 6. Accordingly, it was agreed that Financial Creditor placed deposits to the tune of ₹ 4,06,92,240 (Rupees Four Crores Six Lakhs Ninety-Two Thousand Two Hundred and Forty only) qua all the said tenders with regard to the FDRs and issuance of the Bank Guarantees - 2.5% of the estimated cost of the project as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with interest. Hence the date of default in the present petition is taken as 10.10.2017. 10. It is stated that Corporate Debtor did not reply the notice issued by the Financial Creditor to the Corporate Debtor for return of the deposits mentioned hereinabove. Accordingly, the Financial Creditor issued another demand notice through its advocate, dated 16.11.2017 inter alia demanding repayment of the said deposits. 11. It is stated that the Corporate Debtor for the first time, sent reply through its advocate dated 04.12.2017 stating the Corporate Debtor had forfeited the said deposits on the ground that the Financial Creditor had not duly completed the work under the Contract. 12. It is submitted by the Financial Creditor that this is first time that Corporate Debtor has raised the issue of not completing the work under the contract vide its reply dated 04.12.2017. It is further submitted by the Financial Creditor that prior to this, never before has the Corporate Debtor raised any such concern to the Financial Creditor nor any notice has been issued by the Employer in terms of clause 4 of the Contract for noncompletion of any work. Hence the Financial Creditor is entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department as per the agreement after deducting 3.0% administrative Charges, Sub-let TDS, Commercial Tax, Cost of Material Supply and other exp made on behalf of MIPL . MIPL is not liable to take any loan/advance, without the prior consent of KSIPL except such facilities availed by them on their personal responsibility at their own risk and cost. KSIPL has agreed to give to MIPL all the benefits, of future price rise or/and of arbitration award; or/and of the amounts received in legal process; concerning to this work in full, however, with the same percentage deduction of 3.0% and at source income tax. MIPL agrees to pay amount for issuance of B.G. and F.D.R. for the security deposit. On completion of work, B.G. and F.D.R. amount should be returned to MIPL. Interest on F.D.R.s shall be paid to MIPL by KSIPL after making necessary deduction required by applicable taxation or other laws. This Agreement will be valid till and upto the time of completion of the Project and receipt of the final amount. This agreement, will automatically stand terminated itself as and when or after the receipt of the whole amount of the payment from the Employer and/or the conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Govt. B. In the instant case also, this Adjudicating Authority has observed that whereas the Employer is Superintending Engineer, Narmada Project Heard Works Circle, Kevadia Colony acting for and on behalf of Sardar Sarovar Narmada Nigam Ltd., has given the Contract to Kunal Structure (India) Pvt. Ltd. 16. Considering the papers and documents filed by the Petitioner and the Respondent, arguments from both sides and the observations made in Points No. 15.1 to 15.6, this Adjudicating Authority is satisfied that, (a) The Corporate Debtor has availed the loan/credit facility from the Petitioner for payment to the Employer - Sardar Sarovar Narmada nigam Ltd, the amounts towards issuance of bank guarantee and creation of fixed deposit receipt (FDR) in favour of the Employer for the execution of the works under the Case Tender. (b) Existence of debt above Rs. One Lac; (c) Debt is due; (d) Default has occurred on 10.10.2017 (e) Petition had been filed on 06.06.2018 which is within the limitation period; (f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsultation with any financial sector regulator. IV. The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process. 19. The IRP is hereby advised to adhere the time limit as stipulated for completion of the Corporate Insolvency Resolution Process ( CIRP in short) and perform the duties as specified Under Section 18, 20, 21 of I.B Code. Further, the personnel of the Corporate Debtor are advised to extend co-operation to Interim Resolution Professional as required Under Section 19 of IB Code. In order to have a Resolution Plan Viable, Feasible and implementation Successful, in the era of Minimum Cost of funds based Lending Rate ( MCLR in short)/ Repo Linked Interest Rate and Competitive market condition, the Resolution Applicant/ Committee Of Creditors (COC) may explore, while finalizing the Resolution Plan for the Corporate-Debtor, the possibility of loading maximum interest at the Applicant Bank's Base Rate (BR) or BR+1% from the date of default to the date of implementation of MCLR and further from the date of implementation of MCLR till the date of approval of the Resolution Plan interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s security for completion of satisfactory work by the petitioner under the sub-contract agreement. Hence, it is neither independent nor separate transaction from the operational debts and operational dues and for work done by the petitioner. Thus, such amount can be claimed only under Section 9 of the I.B. Code. Hence, it is not maintainable under Section 7 of the I.B. Code before this Adjudicating Authority. 24. In addition to the above, as per the record, the subcontract agreement was entered and executed between the parties on 12.09.2012 while the work completion certificate / RA final bill was issued by the office of the Executive Engineer on 31.05.2015. Hence, the cause of action would arose/ date of default would commence from 30.04.2015 and not from the date of issuance of so called demand notice in the year 2017. Because, it is settled legal position that there is no mandatory requirement for issuance of statutory demand notice for a petition to be filed under Section 7 in the I.B. Code. While the present I.B. petition is filed on 06.06.2018. Hence, it is time barred under Article 137 of the Limitation Act and in the light of landmark decision of Hon'ble Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nforcement procedures. The alarming result of an operational debt contained in an arbitral award for a small amount of say, two lakhs of rupees, cannot possibly jeopardize an otherwise solvent company worth several crores of rupees. Such a company would be well within its rights to state that it is challenging the Arbitral Award passed against it, and the mere factum of challenge would be sufficient to state that it disputes the Award. Such a case would clearly come within para 38 of Mobilox Innovations (supra), being a case of a pre-existing ongoing dispute between the parties. The Code cannot be used in terrorem to extract this sum of money of Rs. two lakhs even though it may not be finally payable as adjudication proceedings in respect thereto are still pending. We repeat that the object of the Code, at least insofar as operational creditors are concerned, is to put the insolvency process against a corporate debtor only in clear cases where a real dispute between the parties as to the debt owed does not exist. 26. There by placing reliance on the aforesaid decision, the present I.B. Petition fails since there being pre-existing dispute and it is also hit by limitation. Hen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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