9911796707
TMI Blog2024 (6) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... acts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious.' The observations of the Hon ble Supreme Court with regards to a pre-existing dispute qualifies a pre-existing dispute to be a defence which is not spurious, mere bluster, plainly frivolous or vexatious. Thus it enjoins an obligation upon the Adjudicating Authority to arrive at a prima facie satisfaction that a dispute indeed exists with regards to quality or price, which in common parlance and in matters of civil jurisdiction, would be regarded as a triable issue of fact. However, it does not call upon the Adjudicating Authority to venture into the appreciation of the merit of pre- existing dispute and embank upon the adjudication of rival contentions of parties. What was required to be observed was as to if from the material on record if there exist claims or counter claims in respect of amount to be paid and if the defence is not spurious or mere bluster. Even if no reply to the demand notice was given, it would have not precluded the corporate debtor to bring immediately before the Adjudicating Authority to establish a pre-existing dispute which would lead to rejection o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction mode; ii) on 20.08.2019 since Operational Creditor (OC in short) failed to complete the project, they appointed M/s Kapasi Infracon LLP the Corporate Debtor (CD in short) to complete the project as a sub-contractor under Operational Creditor vide agreement. Under this agreement, CD was entitled to get 96.5% of the net amount received from NHIDCL of from each R.A. Bill and the OC was to take the remaining 3.5% towards management fee. Agreement also contain a reciprocal clause that the CD may utilise OC s resources such as plant and machiney, equipment, manpower, engineers and other functional staff to complete the project and charges and rates for the same were also fixed. iii) from 12.11.2019 to 27.12.2019 there existed various pre- disputes since inception amongst the CD and OC and the same is revealed from their communication; iv) corporate debtor completed about 41.50% of the project work despite of hurdles, including cash flow issue created by OC by December, 2021; v) on 30.01.2022 a Principal agreement between a new entity i.e. Jalan Infrastructure LLP (JIL) and OC and subsequent Tripartite Agreement by both of them with CD was executed whereby JIL agreed to infuse fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre existing dispute between the parties as the Operational Creditor on 15.07.2022 had served a demand notice under Section 8 of IBC to Corporate Debtor and it was replied on 21.07.2022 raising a dispute and before serving a reply to the demand notice, CD had also served a notice to the Respondent on 20.07.2022 through its Advocate under Section 21 of the Arbitration and Conciliation Act, 1996. In this notice the CD had demanded losses suffered due to JIL not allowing to remove the plant and equipment and GDCL had also collected hire charges for machinery during the periods where no work could be carried out due to hindrances such as CAA protests, covid induced lockdowns and it was noticed that prior to sending of demand notice dated 15.7.2022 various letters dated 11.5.2021, 20.11.2021 and 22.12.2021 regarding payment of statutory tax, rental charges on plant and machinery equipment etc. were sent. The Ld. NCLT noted as per the clauses of agreement between the parties it was appellant who had to bear the expenses/charges of all the statutory taxes and fee, local and government authorities. The Ld. NCLT then proceeded to decide the issue of expenditure incurred on maintenance to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs are filed, and none have been filed so far. The period of limitation for filing such proceedings has admittedly not yet elapsed. Further, the appellant has withheld amounts that were due to the respondent under the NDA till the matter is resolved. Admittedly, the matter has never been resolved. Also, the respondent itself has not commenced any legal proceedings after the e-mail dated 30th January, 2015 except for the present insolvency application, which was filed almost 2 years after the said e-mail. All these circumstances go to show that it is right to have the matter tried out in the present case before the axe falls. 5. The above quoted observations of the Hon ble Supreme Court with regards to a pre-existing dispute qualifies a pre-existing dispute to be a defence which is not spurious, mere bluster, plainly frivolous or vexatious. Thus it enjoins an obligation upon the Adjudicating Authority to arrive at a prima facie satisfaction that a dispute indeed exists with regards to quality or price, which in common parlance and in matters of civil jurisdiction, would be regarded as a triable issue of fact. However, it does not call upon the Adjudicating Authority to venture into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard we may say that the Ld. Adjudicating Authority has erred in exercising jurisdiction to evaluate whether the defence set up by the Corporate Debtor was correct or not. 9. On perusal of the impugned order we find the Ld. Adjudicating Authority has split the entire transaction into two independent contracts between the parties to obligation. The Ld. Adjudicating Authority failed to note the final bill dated 21.06.2022 raised by the Corporate Debtor for the work performed was rather emailed to the Respondent/Operational Creditor on 15.7.2022 at 11.46 A.M i.e. prior to the issue of demand notice. It was only after receipt of the same, a Section 8 demand notice was issued in late night at 9.24 PM. Even a reply raising dispute against the final bill issued by the Corporate Debtor/Appellant was issued by the Respondent on the same day. The final bill dated 15.07.2022 issued by the Corporate Debtor/Appellant has not been noticed and considered by the Ld. Adjudicating Authority in its impugned order. The Learned Adjudicating Authority has raised the events beginning from the issuance of demand notice. Right from November, 2019, there were issues qua sight hinderances, attachment orders p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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