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TMI Blog2021 (2) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... bt does not hold any field. Frustration of contract by efflux of time - HELD THAT:- The EPC contract between the Appellant and Respondent still subsists and there is no such clause in the contract regarding frustration or termination by efflux of time, it is held that there is no merit in this point and accordingly, we negate this point issue also. From the perusal of the facts it is evident that the default has arisen out of EPC Contract, which itself is a continuing contract. Even from the Demand Notice dated 02.07.2018 in particulars of operational debt at column-1, the Respondent had clearly stated that the debt fell due on 24.12.2010 and the last payment made to the Respondent was on 25.02.2011 through RTGS. It is also mentioned that the debt continues to fall even today as the EPC contract between the Appellant and Respondent never terminated by either parties - the Adjudicating Authority had rightly admitted the Application of the Respondent which in our considered opinion does not require any interference in the instant Appeal. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 188 of 2020 - - - Dated:- 1-2-2021 - [Justice Venugopal M.] Member (Judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition is barred by limitation. Learned Adjudicating Authority dealt with the issues and found that the Application filed by the Respondent herein is not barred by limitation as contemplated under Article 137 of the Limitation Act and held that the debt owed by the Appellant herein is an operational debt. With the aforesaid findings, the Application filed by the Respondent herein under Section 9 of IBC was admitted. 5. The Appellant herein invited International Competitive Bids by publishing advertisement in newspaper on 13.12.2010 for setting up a 225 MW gas based combined cycle Power Station at Bikkavolu, East Godvari District, Andhra Pradesh. The Respondent being the lowest bidder, was awarded the contract for execution of the aforementioned project and a Letter of Award (LOA) was accordingly granted on 24.12.2010 for an amount of ₹ 827 Crores. 6. The said contract comprises of four EPC (Engineering Procurement and Construction) for offshore and onshore equipment supply for a value of ₹ 687 Crores, Civil Construction works amounting to ₹ 80 Crores, Engineering Custom clearance, erection testing and commissioning service at a cost of ₹ 57 crores a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vency) No. 188 of 2020 Page 6 of 14 Kind Attn: Mr. Rajshekhar Reddy (ED) Subject: Notice for suspension of the contract. Dear Sir, This is in reference to the our letter dated 15.02.2011 regarding initial advance payment, even after five months of continuous follow up with you, the balance payment of ₹ 32.55 crores have not been received against initial advance. Thus the 100% advance has not been received by SIPL and the contractual obligation as per clause 5.1 of the contract has not fulfilled by M/s KPR chemicals Limited. Therefore Sravnathi Infratech Private Limited hereby notifies to you that all the EPC activities for the KPR chemicals Ltd. (225 MW combined cycle power project) will be under suspension till the all the contractual obligation are fulfilled by you. Kindly acknowledge the receipt of this notice. Thanking you, Yours sincerely For Sravanthi Infratech Private Limited Wherefrom it is evident that the balance payment of ₹ 32.55 Crores was not paid by the Appellant. For the aforesaid reason the work on the project site was suspended till the contractual obligations are fulfilled. Respondent further subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after written notice thereof has been given to Owner by Supplier, then Supplier shall give ten days prior written notice thereof to Owner and the Financing Parties, and thereafter may stop all performance of Supplier s obligations hereunder until Supplier receives payment of all amounts then due plus reasonable suspension and resumption expenses. Owner shall be responsible for reimbursement of all costs incurred by Supplier as a result of the stoppage of Supplier s work. If Supplier s performance hereunder is suspended by Supplier pursuant to this Article 14.2, Owner will authorise a Scope Change Order making an equitable adjustment to the Scheduled Unit(s) Completion Date, Scheduled Facility Completion Date and the Contract Schedule and required reasonable adjustments to one or more of the Contract Price, the Terms of Payment and any relevant terms and conditions of this Agreement, as appropriate. If such suspension continues uninterrupted for at least four months, or if two or more suspensions exist for an aggregate of at least four months, Supplier may terminate this Agreement; provided that Supplier shall give the Financing Parties a further 60 days prior written notice, and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the status of the project was given in the said letter and requested the Central Electricity Authority to allocate 1.2 mmscmd of gas for 225 MW CCPP so that the project can be commissioned on schedule. 15. Further, the Respondent issued a Demand Notice dated 02.07.2018 to the Appellant under Section 8(1) of IBC (in Form-3 under Rule 5 of the IBC Application to Adjudicating Authority) Rules, 2016. The Appellant did not reply to this Notice nor raised any existence of dispute prior to the issuance of this Notice. 16. In answer to the plea of barred by limitation i.e., as per the amendment to the IBC incorporating Section 238A to the IBC applicability of the limitation to the Applications filed under IBC. It is seen from the correspondences between the parties and from the perusal of the clauses/articles as enumerated under the EPC contract that the contract has not been terminated by either parties and the contract still subsists. Therefore, the Adjudicating Authority rightly held that there is no termination of contract and the issue raised with regard to barred by limitation cannot be accepted. Therefore, we hold that the Application filed by the Respondent under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of contract from either of the parties, therefore, the contract still subsists and the claim is within limitation. CONCLUSION: 22. From the perusal of the facts it is evident that the default has arisen out of EPC Contract, which itself is a continuing contract. Even from the Demand Notice dated 02.07.2018 in particulars of operational debt at column-1, the Respondent had clearly stated that the debt fell due on 24.12.2010 and the last payment made to the Respondent was on 25.02.2011 through RTGS. It is also mentioned that the debt continues to fall even today as the EPC contract between the Appellant and Respondent never terminated by either parties. 23. We hold that the Adjudicating Authority had rightly admitted the Application of the Respondent which in our considered opinion does not require any interference in the instant Appeal. 24. From the facts and legal position, as explained above, the Appeal is devoid of any merit and liable to dismissed. Accordingly, the Appeal is dismissed. No order as to costs. [Justice Venugopal M.] Member (Judicial) And (Kanthi Narahari) Member(Technical) Pronounced by one Member of the Bench in terms of Rule 92(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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