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TMI Blog2021 (3) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... pted delayed payments of certain instalments without raising a demur or objection, his conduct led the Respondent to believe that some delay in payment was acceptable to the Appellant which would prima facie imply that time was not of essence in the Settlement Agreement. Thus, time was not of essence in the Settlement. Whether any compensation should accrue to the Appellant or not is not a matter for adjudication in this appeal. Also whether Section 62 of the Contract Act, 1872 will apply in the present case, which would change the contract to a new one is not relevant in the present appeal. If the Appellant has any grievance on this account, he could certainly approach the appropriate forum for redressal on this issue which relates to the enforcement of the Settlement Agreement and whether it will be substituted by a new one, if it so wishes. The Settlement Agreement, as has been operated by both the parties, does not show that time was of essence in it - appeal dismissed. - Company Appeal (AT) (Ins) 872 of 2020 - - - Dated:- 17-3-2021 - ( Justice Bansi Lal Bhat ) Acting Chairperson , ( Dr. Ashok Kumar Mishra) Member( Technical ) And ( Dr. Alok Srivastava ) Member ( Tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded in Clauses 8 to 12 of the Settlement. This Settlement was accepted by both the parties and entered into on 11.01.2018. As the case had by then escalated upto the Hon ble Supreme Court in Civil Appeal No.778 of 2018, the Hon ble Supreme Court took a copy of the Settlement dated 11.01.2018 on record by using its powers under Article 142 of the Constitution of India and set aside the order passed by the Adjudicating Authority. Under the Settlement, the Corporate Debtor undertook to pay in thirty seven instalments, each of an amount of ₹ 10,00,000/-(Rupees Ten Lakh Only), on or before 21st day of every month for the next 37 months starting from January 2018 (the first instalment to be paid on or before 15 January 2018) as full and final settlement of the operational debt. 5. The Appellant has claimed that the timeline of payment of instalments that was agreed by both the parties was the essence of the contract , as mentioned in Clause 8 of the Settlement with further stipulation that the Corporate Debtor would not seek any extension in these timelines. It has been further claimed by the Operational Creditor that the Corporate Debtor failed to make many payments on their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in SLP(C) No.1502 of 2018 (Civil Appeal No. 778 of 2018) and hence it is binding on both the parties. He has further stated that while the total dues payable by the Respondent was ₹ 8,82,11,723/- as on 9.8.2017, he had agreed to receive as reduced dues a sum of ₹ 3,70,00,000/- as full and final settlement, at the request of the Respondent and by way of concession. Clause 6 of the Settlement (page 104 of Appeal) includes a table, which gives details of the instalments of payment alongwith their due dates. He has further argued that according to Clause 8 of the settlement, the timelines mentioned in Clause 6 is the essence of the Settlement Agreement, wherein the Corporate Debtor has agreed not to seek any extension in timelines from the Operational Creditor for payment. Clause 9 of the Settlement Agreement states that in the event the Corporate Debtor fails to make payment of any instalment on its due date all the aforesaid concession agreed and granted to the Corporate Debtor shall automatically and ipso facto be withdrawn and extinguished. Further Clause 10 of the Settlement Agreement states that in the event of any default by the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted payment of instalments till April, 2019. In such a situation, the Respondent s Ld. Counsel has urged, alleged delays in payment of instalments for the months of January, 2018 to July, 2018 could not be taken as default, particularly in view of the provisions of Section 55 of the Indian Contract Act, 1872. He has cited judgments in the cases of General Manager, Northern Railway and Anr. Vs. Sarvesh Chopra and State of Andhra Pradesh vs. M/s. Associated Engineering Enterprises, Hyderabad to claim that once the Respondent continued to accept payments without retaining any rights under the terms of settlement, no right was reserved by the Appellant in that regard. He has also cited the judgment of Hon ble Supreme Court of India in B.L. Sreedharan Ors. Vs. K.M. Munireddy (Dead) and ors.in support of his argument that both the parties had agreed to substitute a new contract or alter it and hence the original contract need not be performed. He has, with reference to Section 62 of the Indian Contract Act, 1872, claimed that through their conduct of accepting payments on different dates than what was specified in the Settlement, both the parties had agreed to substitute a new contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rual of amounts in bank account of Appellant from January, 2018 to July, 2018, where after the post dated cheques were returned and payments were effected from August, 2018 till January, 2019 through RTGS and from February, 2019 through NEFT. These delays range from zero day to 22 days. It is also seen that payments were made for each instalment for 5 months starting from February, 2018 to May, 2018 and July, 2018 in small tranches, all totaling upto ₹ 10 lakhs for each month. Interestingly the column showing the dates of depositing of cheques in the bank has been left blank. 12. To get clarification on the dates on which the cheques were presented in the bank for realization we look at the Affidavit submitted by the Respondent with Certificate of Confirmation of Payments from its bank, the State Bank of India (Diary No. 25161 dated 3.2.2021). The Certificate for confirmation of payment from State Bank of India, SME NS Road Branch (15197) 9, Brabourne Road, Kolkata-700001 dated 19.1.2021 is for payments made to Maldar Barrels Pvt. Ltd. totaling ₹ 3.70 crores. An advance copy of this Affidavit was directed to be provided to the Applicant by this Tribunal. Additionally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unilateral act, extend the time of performance of his own accord and for his own benefit and that the consent of the promisor is necessary. It has also been held in this judgment, that the act of extension of time for performance has to be proved by the oral evidence or evidence of contact. 16. The Hon ble Apex Court s judgment in Hind Construction Contractors vs. State of Maharashtra (AIR 1979 SC 720) does point to a similar situation as in the instant case, wherein even though the construction work was to be completed within 12 months from commencement, time did not remain of essence because - (i) There was power to grant an extension of time on reasonable grounds by the Respondent on an application by the Appellant; and (ii) There was a provision to recover penalty/compensation from the Appellant at the specified rates during the time the work remains unfinished. The ratio in this judgment also favors the cause of the Respondent as Clause 10 of the Settlement Agreement provides that in the event of any default by the Corporate Debtor in failing to make payment of any instalment on its due date to the Operational Creditor, the Corporate Debtor agrees and undertakes to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a conclusion that prima facie, time was not of essence in the Settlement. Whether any compensation should accrue to the Appellant or not is not a matter for adjudication in this appeal. Also whether Section 62 of the Contract Act, 1872 will apply in the present case, which would change the contract to a new one is not relevant in the present appeal. If the Appellant has any grievance on this account, he could certainly approach the appropriate forum for redressal on this issue which relates to the enforcement of the Settlement Agreement and whether it will be substituted by a new one, if it so wishes. 20. In the light of the above discussion, we come to the unambiguous conclusion that the Appellant has not been able to make out a clear-cut case in his favor. The Settlement Agreement, as has been operated by both the parties, does not show that time was of essence in it. Moreover, the Corporate Debtor has paid the full and final settlement amount by January 2021 to the Operational Creditor. Therefore the term of the Settlement Agreement that provides for reinstatement or fresh filing of the application for initiating Corporate Insolvency Resolution Process for the Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X
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