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TMI Blog2024 (8) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... e project was not completed or commissioned. Since there were claims and counter claims leading into a dispute. These cannot be gone into by us under the framework of the Code. Respondent has also raised the issue of limitation and claims that petition is barred by limitation, as the statutory demand notice was issued on December 27, 2021, well beyond the prescribed period from the date of the last invoice. The issue of limitation was taken up by the Adjudicating Authority in its order dated 11.05.2022 in which it was noted that since the first default had occurred in April 2013 and the present application is filed on 23rd February 2022 and where as in terms of Article 137 of the limitation Act, the applicant is required to file an application within 3 years, when the right to apply accrues. Since the invoices had been raised from 2013 and the applicant claims that the amount was also defaulted in the year 2013. Therefore, the first date of the default was in the year 2013, when the payment of the invoices was due and not paid period. Hence the present application is barred by limitation and was dismissed. The Corporate Debtor had raised a plausible contention about a pre - existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerning the Design, Fabrication, Supply with Rope Drum Hoist and Counter Weight, etc. The Corporate Debtor also entered into another Sub-Contract Agreement (Erection Agreement) with the Appellant for the execution of part of the above works concerning to erection and commissioning of Vertical Lift Steel Gates of other Barrage ways of Bareilly Barrage H.M works i.e. transportation, erection Commissioning of Structural Steel Vertical Lift Gates with Rope Drum Hoist and Counter Weight etc. 4. The Appellant contends that it had fulfilled its contractual obligations by duly supplying the materials and completing the installation work as per the agreements. Invoices reflecting the agreed-upon charges were submitted to the Respondent. Despite partial payments, the Respondent failed to settle the invoices in full, resulting in a significant outstanding debt owed to the Appellant. 5. The Appellant initiated communication to address the outstanding payment. Emails were sent to the Respondent highlighting their own ledger entries that confirmed the outstanding amount. Meetings were also held to discuss the issue. On 11.05.2017 and 13.05.2017, two emails were sent by the Appellant to the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which we have already paid Rs. 20,89,14,223.00 i.e. excess payment of Rs. 2,12,35,200.00 has already been released to you. As such we request you to please refund our excess amount immediately. It is also mentioned that if there is any confusion, we may feel free to write to us so that meeting may be fixed according with all concerned. 7. The email dated 11.09.2018 raises an entirely baseless claim about an alleged excess payment made to the Appellant, which contradicts the Respondent's own previous admissions and ledger statements reflecting the outstanding debt owed to the Appellant. Along with the email the Respondent mentioned some random percentages against multiple heads, veracity of which is disputed by the Appellant. 8. On 17.09.2018, the Appellant responded to the email dated 11.09.2018 sent by the Corporate Debtor. The impugned order has relied upon emails dated 11.09.2018 and 17.09.2018 and erroneously proceeded with a finding that these constitute evidence of a pre-existing dispute. These emails are mere correspondences pertaining to the release of outstanding payments which were already admitted by the Respondent, devoid of any mention or allusion to a pre-existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.05.2022 before this Hon'ble Appellate Tribunal bearing Company Appeal (AT) (Insolvency) No. 911 of 2022, and this Hon'ble Appellate Tribunal was pleased to issue notice on the said Appeal vide Order dated 17.08.2022. The Respondent herein filed their reply dated 20.09.2022 to the Company Appeal (AT) (Insolvency) No. 911 of 2022. Vide order dated 26.09.2022, this Hon'ble Appellate Tribunal was pleased to allow the Appeal and revive the Section 9 Application filed by the Appellant and recorded that : We thus are of the view that reasons given by the Adjudicating Authority for rejecting the application Section 9 as barred by time are not sustainable. We set aside the order dated 11.05.2022 and revive the application under Section 9 before the Adjudicating Authority. 16. Upon revival of the Section 9 Petition, the Respondent filed their reply dated 13.10.2022 to the Section 9 Petition and the Appellant herein filed its Rejoinder dated 22.11.2022 to the said Reply filed by the Corporate Debtor. Additionally, it is imperative to mention that the Respondent has raised false and frivolous grounds in their reply in order to create the false narrative of a pre-existing disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioning of the project. It is undisputed that the Appellant did not complete the entire project, having only finished 11 out of 17 gates by July 2017, when they abandoned the site. 24. Consequently, the project was never fully completed or commissioned. In fact, the Department of Irrigation, U.P. Govt. subsequently identified defects in the project, further delaying its completion and commissioning. 25. The Appellant initiated insolvency proceedings against the Respondent by submitting allegedly false documents to the National Company Law Tribunal (NCLT). The Appellant claimed to have completed the entire work assigned by the Department of Irrigation and to have received full payment. However, this claim is contradicted by the fact that the Appellant abandoned the project in July, 2017 after completing only 11 steel gates. The Appellant also presented a purported letter indicating acceptance of the work and payment, which the Respondent alleges is forged. The Department of Irrigation has filed a criminal complaint against the Appellant based on this allegation. 26. The Respondent raised a dispute regarding the work completed by the Appellant through a communication dated September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as unpaid when it is due and payable. Given the terms of the sub-contract agreement and the pre-existing dispute, the alleged debt is not due. Limitation Period: 31. The demand notice is barred by limitation due to the existence of a dispute raised before its issuance. The last invoice is dated 24.06.2017 whereas the statutory demand notice was issued dated 27.12.2021 by the OC which was duly replied on 07.01.2022. The present petition has been filed on 21.2.2022, and is therefore, clearly barred by limitation. Respondent places reliance on the judgement of Hon'ble Apex Court in Sagufa Ahmed Orts Vs. Upper Assam Polywood Products Pvt Ltd in [(2021)2 SCC 317]. This judgment clarified that the period of limitation and delay cannot be condoned by the extension granted in Suo Moto Writ Petition No. 3 of 2020. Operational Creditor is not entitled to the benefit of orders of the Hon'ble Apex Court in Suo Moto Writ Petition No.3 of 2020 which extended limitation only as reported in the subsequent judgment reported Sagufa Ahmed (supra). Appraisal: 32. Heard Ld. Counsels for the Appellant as well as the Ld. Counsel for the Respondent and perused the averments made in the appeal. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Respondent alleges that the Appellant abandoned the project in July 2017 after completing only 11 out of 17 gates, resulting in the reassignment of the remaining work to Hoisto-Structures and Equipment's Pvt Ltd. The Respondent had raised a dispute regarding the completed work on September 11, 2018, determining that the Appellant was overpaid by approximately Rs. 2,12,35,200 after verifying the work done. Further the Respondent challenges the authenticity of documents submitted by the Appellant, including a purported acceptance letter, alleging it to be forged. The Appellant s claim of a debt amounting to Rs. 5,92,95,098 is inconsistent with the fact that the Respondent paid Rs. 9,25,10,038 to a third party, viz, Hoisto-Structures and Equipment s Pvt Ltd, to complete the remaining work. 36. The main issue before us is whether there is a Pre-existing dispute with respect to the amount claimed to be due in the present appeal or not. 37. The Appellant s argument that the Respondent admitted the debt in communications dated July 11, 2017, and August 16, 2018, is based on ledger statements of invoices, not an admission of debt. Payments were to be made at various stages as per C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our last 3-4 meetings since April 2018, that our accounts shall be settled, after finalizing the market value of balance supplies to be made rest all the account is already settled and final. Now if you modifying the balance payment account as per your wish is not acceptable. We again request you to kindly give us a suitable date for meeting and finalize the account as per terms of contract and release our outstanding amount which is Rs. 5,92,95,098.00. We have been cooperating with your good self in best way possible and it was only on your assurance that our pending accounts shall be settled and payment shall be made at earliest. We did not interfere / object even when you foreclosed our erection contract and have given the balance of erection work to other contractor without our consent although our huge payment was pending for the work done till that time, and since then we have had 3-4 meetings and various discussion has been done, and it was decided in our last meeting in midaugust that in September 1st week your good self will finalize it, as you were busy with other tender work. We are hereby again attaching the balance account statement which is reconciled with your accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted in the previous paragraphs. 44. The Respondent's reply to the statutory demand notice dated January 7, 2022, further substantiates the existence of a pre-existing dispute. The Respondent highlighted issues such as alleged substandard material and incomplete work, which were not addressed by the Appellant satisfactorily. 45. If the issue on hand is examined from the perspective of the contractual obligations and payments, we note that the sub-contract agreements stipulated payment schedules contingent upon the completion and commissioning of the project. It is to be noted that sub-contract agreement at Clause 4.2 provides for date of completion of works to be 31.12.2013. Admittedly, from the material on record, it is clear that there has been delay in completion of the work. As the work was not completed in time, Respondent engaged someone else which is admitted by the Appellant in their email dated 17.09.2018. Furthermore, Clause 7.1 of the same sub-contract agreement provides for payment schedule which is as follows: 7.1 Payment Schedule a) 2% advance b) 83% within 30 days after supply of equipments. c) 7.5% within 30 days after fitting erection of equipment at site on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 9 as barred by time are not sustainable. We set aside the order dated 11.05.2022 and revive the application under Section 9 before the Adjudicating Authority. 12. Let the Respondent file the reply within three weeks from today. Replication if any by the Appellant may also be filed within two weeks thereafter. 13. The Section 9 application may be listed before the Adjudicating Authority after six weeks from today. 14. We make it clear that we are not expressing any opinion on merits of the case and all contentions of the parties are left open to be decided by the Adjudicating Authority. 15. The appeal is allowed accordingly. 48. The issue of the limitation was settled by this Tribunal in its earlier order as noted above and had not gone into the merits of the case. Now since the Adjudicating Authority has gone into the merits of the case and they find sufficient material evidence on record that there is a pre-existing dispute, only this aspect needs to be considered by us while deciding the fate of the appeal. 49. We find that the main ground basis which the Appeal cannot be accepted is existence of Pre-existing dispute which is not a moonshine which is noted in earlier part of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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