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TMI Blog2019 (10) TMI 1360X X X X Extracts X X X X X X X X Extracts X X X X ..... ion dismissed. - IA 204 of 2018 and IA No. 56/2019 in CP (IB) No. 111/07/HDB/2017 - - - Dated:- 15-10-2019 - Ratakonda Murali, Member (J) And Narender Kumar Bhola, Member (T) For the Appellant : T. Ravichandran, Advocate For the Liquidator : Shardul Amarchand Mangaldas Co. ORDER Ratakonda Murali, Member (J) 1. IA 204/2018 is filed by M/s. FL Smidth Private Limited (hereinafter referred to as the Applicant/Operational Creditor), under Section 60(5) of Insolvency Bankruptcy Code, 2016, R/w Rule 23 of the NCLT Rules, 2016 challenging the rejection of claim filed by Applicant before Interim Resolution Professional/Resolution Professional during CIRP. 2. When this Application was pending as no Resolution Plan was received for the Corporate Debtor Company, this Tribunal was pleased to pass an order of Liquidation against the Corporate Debtor Company. 3. The Applicant filed once again the claim before the Liquidator in pursuance of advertisement calling for filing of claims. The claim filed by Applicant was also rejected. Therefore, Applicant filed IA 56/2019 under Section 42 of IBC challenging the order of Liquidator in rejecting the claim. 4. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015. (3) It is the case of Applicant that the Letter of Credit to the tune of ₹ 73.602 crores ought to have been established by the Corporate Debtor on or before 31.12.2015 but it failed to do so. The delay on the part of the Corporate Debtor caused huge hardship and monetary loss to the Applicant. When Corporate Debtor failed to establish Letter of Credit, on their request, the end user TANGEDCO Ltd. established a Letter of Credit for ₹ 72,12,12,926/- on 30.12.2016 after a delay of nearly one year. (4) Pursuant to the contract, the Applicant/Operational Creditor placed various orders on sub suppliers and supplied materials to the tune of ₹ 32,34,00,000/- and raised 64 invoices. Out of ₹ 32,34,00,000/-, a sum of ₹ 28,74,56,465/- was paid after adjusting 10% advance of ₹ 3,23,40,000/- and the balance 10% i.e. ₹ 3,23,40,000/- is pending for payment against these supplies. (5) Though some of the goods such as fabricated panels and idlers were made ready by the Applicant for despatch but the Corporate Debtor did not take delivery under the pretext of seeking revised billing break up to reflect the implication of Goods and Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch but not actually delivered is not admissible as there is no invoice or any other document which establishes a liability on the part of the Corporate Debtor as on 27.08.2018 . It is the further case of Applicant that pursuant to the purchase order placed on the Applicant herein the it had performed its part of the Contract and obtained the 'material despatch clearance certificate' also, but the Respondent/Liquidator has not looked into this fact. (11) It is averred that the MDCC certificate issued by the Corporate Debtor itself goes to prove that the goods were already manufactured, and they are ready for despatch and that it is incorrect on the part of Respondent/Liquidator to reject the claim stating the claim is not admissible. (12) It is also submitted that with regard to the rejection of the other claim in respect of work-in-progress is also incorrect in as much as the Applicant herein has performed its part of the contract and that Respondent/Liquidator has no right to reject the claim more so, when a breach of contract is committed by the Corporate Debtor. 7. Resolution Professional/Liquidator filed reply. The objections raised in the reply in brief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 Not accepted Increase in Order Value due to GST 46,709,405 0 Not accepted. The amendment of the Order was not initialized. Advance Available with FLSmidth -61,940,000 Balance Ordering (Electrical Items) 72,091,790 0 Not accepted GST Implication on BI 8,504,353 0 Not accepted. Order amendment was not finalized. Erection contract 71,820,000 0 Not accepted Sub-total 71,09,63,751 -1,50,85,516 (2) It is further stated that the Application is not maintainable as he acted in accordance with the Insolvency and Bankruptcy Code, 2016 ( Code ) and the Insolvency and Bankruptcy Code of India (Liquidation Process) Regulations, 2016 ( Liquidation Regulations ). (3) It is contended that the allegations made by the Applicant pertaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor would only be able to admit such claims which are borne out by the terms of the contract entered into between the Corporate Debtor and a Creditor, or based on a statutory obligation of the Corporate Debtor, or as reflected in a decree of a court or Tribunal. The Liquidator cannot admit claims which require an adjudication by a competent authority for the claims to even crystallise. (9) It is contended that the claim for damages suffered by a creditor for the alleged non-performance of a contractual obligation would first need to be adjudicated upon by a civil court or arbitrator for the debt to even come into existence. The Supreme Court in the case of Union of India vs. Raman Iron Foundry AIR 1974 SC 1265 held as under: It is only when a claim for damages is adjudicated upon by a civil court or an arbitrator and the breach of the contract is established and the amount of damages ascertained and decreed that a debt due and payable comes into existence; till then it is nothing more than a mere right to sue for damages... The court further holds: Now the law is well settled that a claim for unliquidated damages does not give rise to a debt until the liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The amounts claimed as additional interest have not been admitted as there is no contractual obligation on the Corporate Debtor to pay such additional interest, nor is there a decree of a court awarding this amount of interest to the Applicant. (13) It is further contended that it is the Applicant that owes monies to the Corporate Debtor. Reliance is placed on the reply filed by behalf of the Resolution Professional of the Corporate Debtor in I.A. No. 204 of 2018 filed by the Appellant herein. It is submitted that in the said Reply the Resolution Professional has provided detailed computation on the basis of which it was clear that it is in fact the Appellant which is liable to pay an amount of ₹ 1,50,85,516/- to the Corporate Debtor. 8. Rejoinder is filed on behalf of the Applicant. Averments in the rejoinder in brief are as follows: (1) The Applicant has filed Rejoinder to the Reply of the Respondent and stated that there are no merits in the contention of the Liquidator in as much as the duties of the liquidator, his powers are well defined under the Insolvency and Bankruptcy Code. The Liquidator has adjudicatory power under Section 40 of the Code and it is im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded Corporate Debtor to issue Material Despatch Clearance Certificate (for brevity sake 'MDCC'). However, Corporate Debtor did not issue the same. It has reminded the Corporate Debtor time and again to furnish the same. Meanwhile, Resolution Professional illegally invoked the Bank Guarantee which is challenged by applicant by filing application before the Adjudicating Authority. The counsel contended applicant made claim before the liquidator for an amount of ₹ 31,70,87,930/-. The Respondent/Liquidator has rejected the claim on the following grounds: Claim against goods ready for dispatch but not actually delivered is not admissible as there is no invoice or any other document which establishes a liability on part of LITL as on August 27, 2018 in respect of the Order - Claim against Work in Progress not admissible - Claim against goods under manufacturing not admissible - GST not admissible as no tax invoice issued - Interest: Not admissible 11. The Counsel contended Liquidator has erroneously rejected the claim. The Liquidator ought to have decided the claim after verifying the same. Counsel contended Liquidator ought to have admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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