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TMI Blog2020 (2) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... ent prepared and filed by the Corporate Debtor itself. At the cost of repetition, we again state that this statement takes into consideration all these disputes raised by the Corporate Debtor, hence, the amount payable by the Corporate Debtor remains in positive which is more than one lakh ultimately that too when we have considered the project as a whole against the claim of Operational Creditor of undisputed dues of supply portion only. We have also gone through the emails which have been taken into consideration while preparing this provisional statement. Hence, on the basis of material on record, it cannot be said that any other dispute remains to be considered. Apart from this, the fact which is crucial to note is that the Corporate Debtor has awarded new work orders to the Operational Creditor subsequently which means that all the disputes relating to this contract had been considered / resolved and this fact has remained undisputed. Further, Form C s have been issued as late as up to March 2018. We further make it clear that we have analysed the provisional statement with limited objective of admissibility of this application and this analysis cannot be considered as exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh High Court at Hyderabad (Division Bench) in the case of Electrosteel Flame Ltd. And Mittal Iron Foundry Pvt. Ltd. for the proposition that the issue of Form C constituted acknowledgement of debt, hence, not barred by limitation. It was also contended that Consultants for the same project was also aggrieved on account of non payment of his dues and for the same said creditor approached this Tribunal in CP No. 548/KB/2017 which was reserved for orders. In the meantime the Corporate Debtor settled the issue by making the payment hence the application was withdrawn. According to him, this fact was sufficient to indicate about the conduct of the Corporate Debtor. It was specifically pointed out that if the work done by the Operational Creditor was not up to the mark or in accordance with the scope of work, then, the Operational Creditor should not have been awarded two new contracts by the Corporate Debtor subsequently. It was also submitted that no claim or damages were claimed by the Corporate Debtor from the Operational Creditor for so called lapses. 4. The Ld. Counsel appearing on behalf of the Corporate Debtor firstly raised the issue of maintainability of this petition as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter 9.7.2016, copy of which is placed at page no. 1895/1906 of the paper book. It was also claimed that the Operational Creditor abandoned the project in between and work was not completed. 7. Thereafter, she emphasised the fact that the contract was a turnkey project, hence, there was no substance in the contention raised by the Operational Creditor that the project was segregated in parts. In support of her such claim she drew our attention to the copies of Purchase Orders filed along with the application. 8. The Ld. Counsel also pleaded that even a suit had been filed by Operational Creditor against the contractor appointed by the Operational Creditor who did not perform. It was specifically narrated that the Corporate Debtor was also made respondent / defendant therein. Thereafter, she drew our attention to the relevant paragraphs of the petition wherein allegations were made by the Operational Creditor against the party which were sufficient to indicate that there were lot of disputes between the parties which were admitted by the Operational Creditor itself. 9. In the rejoinder, the Ld. Sr. Counsel contended that petition had been filed by the proprietor of the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... serious consideration is that if this application is dismissed on this basis and if the Operational Creditor becomes insolvent, then it can be sued in the name of proprietorship firm by its creditor. In our view, this cannot be the intention of the legislature. We are further of the view that this economic legislation has been promulgated with a view to promote entrepreneurship and in our country majority of the Operational Creditors are Sole Proprietorship firms. Hence, if such category of persons is debarred from filing applications under section 7 and 9 for realisation of their dues, then it would be against the object of the Code IBC 2016. It is also a settled proposition of law that interpretation of all sections or provisions of law should be made in the context of such provisions. It is also worth noting that Letter Of Intent (LOIS) as well as purchase orders have been issued by the Corporate Debtor in the name of the Sole Proprietorship firm. Invoices have also been raised by the Operational Creditor in the same format. Part payments have also been made by the Corporate Debtor to the Sole Proprietorship firm. Thus, considering the legal position as discussed above and facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus, the dichotomy between the two has got its own relevance. 12. Having found the relevance of separate entity for sole proprietorship firm, now we have to look the into the Scheme of IBC 2016. It is not in dispute that IBC 2016 is a complete Code in itself, hence any general legal concept which is in contradiction to the provisions of IBC has not to be given weight due to scheme and specific provisions of IBC. In case of any contradiction it may give way to the provisions and scheme of IBC 2016 due to applicability of provisions of section 238 of IBC 2016. This leads us to look into the scheme / provisions of the IBC 2016. As per section 2, the provisions of IBC 2016 apply to different entities, which include both proprietary firms and individuals. Definition given to various terms in section 3 of IBC 2016 apply to the whole Code subject to condition that different meaning can be given to a term if the context otherwise requires i.e., the definition of a particular term meant to be applied to the particular situation can be different from meaning of a particular term given in the defining section if the context/situation so requires. Thus, definition of person given in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dly invoices have been raised in the name of the partnership firm, hence, on the strength of this fact alone, maintainability of the application can be held. Further based on the Doctrine of Substance over form no value can be attached to such contention. Further, apart from the provisions of section 238, we are also required to take into consideration the definition of the term claim given under section 3 (6) of IBC 2016 which includes claim on equitable grounds as well. It also provides that such claim may be legal or not. For the ready reference, the same is reproduced as under : (6) claim means- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured. (b) ... not relevant 14. Now, coming to the second contention that it was a composite contract for supply, erection and services including design and engineering. We have carefully gone through the letter of intent and purchase order issued by Corporate Debtor itself. In the letter of intent, breakup of amount for supply portion, contract portion and service portion (including design and engineering) has been given separately. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by the Corporate Debtor. As regards to the nature of acknowledgement of debt in terms of explanation (a) of section 18 of Limitation Act, 1963, we reproduce the findings of the Tribunal in the case of Hari 0m Transport vs MSP Metallics Ltd. CP(IB) No. 116/KB/2019 Order dated 15.10.2019 wherein the Tribunal held as under : 8. It is not in dispute that the Operational Creditor has supplied material during the Financial Year 2014-15. It is also not in dispute that there were agreed deduction out of the bills raised by the Operational Creditor to the tune of ₹ 12,43,281/- resulting into impugned sum remaining unpaid. It is also noteworthy that thereafter there have been no supplies or payment by the respective parties. As far as Corporate Debtor is concerned the main plea is that the debt is barred by limitation. For this purpose, the e-mail dated 19th April, 2016 has been claimed as not a proper acknowledgement of debt under Section 18 of Limitation Act, 1963. It has been claimed so far the reason that the said e-mail was addressed to Baba Gora Transport and not to the Financial Creditor. On perusal of the records, it is noted that the said e-mail is, in fact, has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) above, it is clear that the claim of the Corporate Debtor is not valid because such explanation clearly states that a communication may be addressed to a person other than a person related to the property or right. The Corporate Debtor has also not been able to produce any record to show that such person was not authorised to send such e-mail. Though such claim has been made, the e-mail ID contains particulars of the Corporate Debtor, hence, it cannot be said that e-mail has not been sent for and on behalf of the Corporate Debtor. Another aspect which needs to be considered is that though said e-mail to statement of account has only sent and no otherfacts have been mentioned, hence, can it be said to be an acknowledgement of debt. This question again leads us to explanation (a) above wherein it has been stated that an acknowledgement may be sufficient though it omits to specify exact nature of property or right. Further, in case of Trinetra Electronics Ltd. Vs McNally Bharat Engineering Co. Ltd. In CP (1B) No. 1506/KB/2018 Order dated 16.10.2019, Tribunal held as under : 5. We have considered submissions made by both sides and have also perused the materials on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on entitled to the property or right; (b) The word signed means signed either personally or by an agent duly authorised in this behalf; and (c) An application for the execution of a decree or order, shall not be deemed to be an application in respect ofany property or right. From perusal of the explanation (a) to the said section it can sqfely be concluded that such letters constitute acknowledgement of debt by the corporate debtor, as it is not necessary that the letter should be written to the financial creditor only. It is further noteworthy that explanation (a) takes into its ambit the generatly accepted commercial practices of communication between the parties whereby acknowledgement of debt can be inferred as no specific format has been prescribed. 8. Having stated so, we also take into consideration the provision of Sec.238A of the Insolvency Bankruptcy Code, 2016 which is re-produced as under:- The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority cannot be constituted as an acknowledgment of debt then that would render such averment meaningless. Legally such averment bind party making them. Doctrine of estoppel applies without any restriction in commercially and tegally. Accordingly, we hold that such statement constitute acknowledgment. In this regard, we further take the assistance of the provision of explanation (a) of Sec. 18(1) of Limitation Act, 1963 wherein scope of acknowledgment has been given in a widest possible manner. It is also to be noted that writ petition was filed within a period of 3 years from the date of issue of recall notice and, hence, for this reason also provisions of Sec. 18 of the Limitation Act, 1963 are applicable. Even otherwise, in our considered view, such averments made before the Hon'ble High Court amount to promise within the meaning of provisions of Sec.25(3) of the Indian Contract Act, 1872 and, therefore, such promise is made after expiry of original limitation period also, the limitation period gets extended as condition of acknowledgement before expiration exists only under Sec. 18 of the Limitation Act, 1963. 21. From the perusal of the above judicial decisions, it may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor as ₹ 500 lakhs receivable from the Operational Creditor. If the boiler house extension and additional work are ignored, the amount recoverable from the Operational Creditor gets reduced to 63.13 lakhs. Further, if the amount retained for Performance Bank Guarantee is taken into consideration, then the amount payable to Operational Creditor works out at ₹ 610.23 lakhs (i.e., 673-63.13). As noted earlier, L.D. is applicable @ 5% amounting to ₹ 190.94 lakhs has already been deducted. Further, amount of ₹ 400.55 lakhs in respect of Purchase Orders issued at the risk and cost of the vendor have also been deducted. Thus, all recoveries for non performance / default has been considered and therefore, amount of Performance Bank Guarantee minus recovery i.e., 610.23 lakhs at least becomes payable by Corporate Debtor to the Operational Creditor. As an adjudicating authority in the proceedings, we are not suppose to do this kind of working, but to find out the genuineness of the claim of pre-existing dispute, and amount of outstanding debt, it was necessary in the facts and circumstances of the case, hence, it has been so analysed on the basis of the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 15. The public announcement referred to in clause (b) of sub-section (1) of Section 15 of Insolvency Bankruptcy Code, 2016 shall be made immediately. iv. Moratorium under Section 14 of the Insolvency Bankruptcy Code, 2016 prohibits the following: a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); d) The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. v. The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated, suspended, or int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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