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TMI Blog2019 (10) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... ing road from Km 69 to Km 81.3 on the Srinagar-Gumri road section of National Highway-1 in the State of Jammu and Kashmir and construction of a Z-Morh Tunnel including its approaches (approximately 6.5 km tunnel and 6 km approaches) (hereinafter, "Project"). The BRO was required to augment the said road by two-laning the same. 4. On 16th April, 2012, the BRO, through a Request for Qualification, invited bidders to submit their bids. One M/s. Soma Enterprise Private Limited (hereinafter, "M/s. Soma") was the successful bidder who was issued a letter of award on 12th March, 2013. The bidder - M/s. Soma, promoted a special purpose vehicle company called Srinagar Sonamarg Tunnelway Limited (hereinafter, "SSTL") to undertake the Project. 5. On 30th April, 2013, a Concession Agreement was entered into between BRO and SSTL. This Concession Agreement was subsequently transferred from BRO to the Defendant - National Highways & Infrastructure Development Corporation Limited (hereinafter, "NHIDC"), a fully owned company of MORTH, on 12th November, 2014. The Project was to be executed on a design, build, finance, operate and transfer annuity basis. Despite the transfer, the terms of the Conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atus of ITNL/SSTL, the Plaintiff wrote letters dated 12th February, 2012 and 18th March, 2019 to the Defendant, proposing to directly undertake the outstanding works in the Project. However, the same was not acceded to. 11. Accordingly, the Plaintiff has filed the present suit seeking payment of the admitted sum i.e., a sum of Rs. 89,73,570,038/- due towards the work executed on the Project which was to the knowledge of the Defendant. 12. Mr. A.K. Ganguli, ld. Senior Counsel appearing for the Plaintiff, submits that the Government has issued an office memorandum dated 9th March, 2019 (hereinafter, "memorandum") which intends to resolve such "stuck projects". According to him, in terms of the said memorandum, since the work was executed by the Plaintiff under the approval and supervision of the Defendant - NHIDC, the Plaintiff is entitled to recover the said amount from the Defendant, especially in view of the insolvency proceedings which are now pending against IL & FS and all its group companies. The submission is that the Defendant has enjoyed the benefit of a non-gratuitous act and even though there is no contract between the Plaintiff and the Defendant, the ultimate beneficia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther averred that the suit is barred by the provisions of the Insolvency and Bankruptcy Code, 2016 (hereinafter, "IBC"), as the admitted position is that the Plaintiff's contract is with ITNL and it can recover the money only from ITNL. The Plaintiff admits that IL & FS is under insolvency proceedings and the NCLAT vide order dated 15th October, 2018 has imposed a stay on the initiation of any legal proceedings against IL & FS or any of its subsidiaries, which includes ITNL. It is submitted that the Plaintiff, by not disclosing that it has already filed an application before the NCLAT, suppressed material facts. Thus, on these grounds, the Defendant seeks rejection of the plaint. On merits, however, the Defendant has not taken any stand. On behalf of the Defendant, Mr. Prasenjit Keswani, ld. counsel, submits that the Defendant cannot be forced to pay the Plaintiff. Stand of UOI 15. Considering that the Defendant has acknowledged on its website that the Plaintiff had undertaken work on the Project, this Court had issued notice to ld. ASG, Ms. Maninder Acharya, to take instructions on whether the Plaintiff would get benefit of the memorandum dated 9th March, 2019. The ld. ASG h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be maintained. In any case, privity being with the applicants, they are liable to be impleaded. 19. Mr. Ramji Srinivasan, ld. Sr. Counsel appearing for the applicants, submits that upon the value of work done being ascertained, the payments have to be received by the applicants and not directly by the Plaintiff. The Plaintiff cannot by-pass the insolvency proceedings by filing the present civil suit. Ld. Sr. Counsel thus submits that either the suit be dismissed and the Plaintiff be directed to approach the NCLAT or the applicants be impleaded. He relies upon the judgment of the Hon'ble Supreme Court in Essar Oil Ltd. v. Hindustan Shipyard Ltd., (2015) 10 SCC 642 to argue that since there is no privity of contract between the Plaintiff and the Defendant, the Plaintiff cannot hold up any payments which the applicants are entitled to receive. The only remedy available to the Plaintiff is to get itself impleaded in the insolvency proceedings pending against ITNL. 20. It is further contended that the work has been executed by the Plaintiff under the direct supervision of ITNL. In fact, the applicants assisted the Plaintiff in co-ordinating with various authorities and obtaining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (supra) and Mahanagar Telephone Nigam Ltd. v. Tata Communications Ltd., [Civil Appeal No. 1766/2019, decided on 27th February, 2019], Section 70 falls in that Chapter of the Indian Contract Act, 1872 which deals with relationships which resemble contracts. In that sense, the provision belongs to the category of quasi contracts and restitution. Such a remedy is unusual and cannot be permitted to be invoked in the present case as the conditions for such a claim to be made, as laid down by the Hon'ble Supreme Court in State of West Bengal v. B.K. Mondal & Sons, AIR 1962 SC 779, have not been satisfied. The Hon'ble Supreme Court, observed therein as under: "14. It is plain that three conditions must be satisfied before this section can be invoked. The first condition is that a person should lawfully do something for another person or deliver something to him. The second condition is that in doing the said thing or delivering the said thing he must not intend to act gratuitously; and the third is that the other person for whom something is done or to whom something is delivered must enjoy the benefit thereof. When these conditions are satisfied Section 70 imposes upon the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing or to whom he delivers something. All that Section 70 provides is that if the goods delivered are accepted or the work done is voluntarily enjoyed then the liability to pay compensation for the enjoyment of the said goods or the acceptance of the said work arises. Thus, where a claim for compensation is made by one person against another under Section 70, it is not on the basis of any subsisting contract between the parties, it is on the basis of the fact that something was done by the party for another and the said work so done has been voluntarily accepted by the other party. That broadly stated is the effect of the conditions prescribed by Section 70." 26. The first and foremost condition is that something should have been done by the Plaintiff to the Defendant or delivered by the Plaintiff to the Defendant. Here, the work is done and delivered by the Plaintiff not to the Defendant but under a contractual agreement, to ITNL, though in turn the work may have been delivered by ITNL to NHIDC, through SSTL. Thus, the fundamental condition under Section 70 is itself not satisfied. Even though NHIDC may have benefitted from the work executed by the Plaintiff, NHIDC cannot be for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E), Mumbai 400051 From, M/S. APCO-TITAN (JV) Registered office at: APCO House B-9, Vibhuti Khand, Gomti Hagar Lucknow, Uttar Pradesh 226016 Subject: Demand notice/invoice demanding payment in respect of unpaid operational debt due from IL & FS TRANSPORTATION NETWORKS LIMITED (the "EPC Contractor" for Construction of Z-Morh Tunnel including approaches on NH-1 but excluding E & M works (Sinatra-Sonamarg-Gumri Road) in the State of J & K, as per Agreement dated: 11.11.2015) under Section 8 of the Insolvency and Bankruptcy Code, 2016 Madam/Sir, In accordance with Section 8 of the Insolvency and Bankruptcy Code 2016, we, M/S. APCO-TITAN (JV), without foregoing and without prejudice to the legal rights and remedies available to us, hereby serve upon you the Demand Notice along with the documents attached herewith. 30. The Plaintiff had, prior to the filing of the present suit, in fact, filed an application before the NCLAT seeking impleadment. In the said application, the Plaintiff has admitted that its contract was with ITNL. Due to continuing defaults by ITNL, the Plaintiff had to suspend work. Immediate relief was sought by the Plaintiff with respect to the outstand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies. The interim order will continue until further orders and not be applicable to any petition under Article 226 of the Constitution of India before any Hon'ble High Court or under any jurisdiction of the Hon'ble Supreme Court." 32. It is not disputed that the above order continues to operate and apply even qua ITNL. The primary dispute and claim for recovery being against ITNL/SSTL, in view of the order dated 15th October, 2018 of the NCLAT, the present suit would not be maintainable. The claims of the Plaintiff would lie only against the parties with whom it has privity i.e., ITNL/SSTL. No direct claims would be maintainable against NHIDC. In view of the above, the Defendant's application under Order VII Rule 11 CPC is liable to be allowed. Ordered accordingly. The Plaintiff is, however, permitted to approach the NCLAT and avail of all legal remedies available to it in accordance with law. The Plaintiff is given a period of four weeks to approach the NCLAT. When the suit was initially listed, this court had passed the following order on 10th May, 2019: "3. The NHIDC has submitted before this court that as per the concessionaire agreement, no payments are be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount to be paid in the manner laid down in the concerned Concession Agreement. (iii) Stuck Projects awarded on Item rate basis: For the Item Rate Contracts qualifying as Stuck Projects: Authority to pay to the Contractor, as full and final settlement, towards prolongation cost and/or idling costs, an amount calculated according to the damages mechanism provided under the concerned contract document. (iv) General Recommendation For all the other projects not included within the purview of these Guiding Principles, the provisions of the respective Agreement (EPC/Concession/Item Rate), mutually binding between the Parties be applied and followed." 34. The above scheme does not take into consideration the fact situation as has arisen in the present case, wherein the main contractor is undergoing insolvency proceedings, is unable to pay the sub-contractor and there also appears to be no hope for the Plaintiff - sub-contractor to receive even the acknowledged amounts in the immediate future. 35. The Government ought to take a pragmatic view in such matters. The present case involves an infrastructure project, that too in the State of Jammu and Kashmir. The Plaintiff has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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