Airtech Airconditioners vs Parnika Commercial And Estates ...

[Arising out of the Impugned Order dated 18.12.2023 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi Bench in C.P. (IB) No. 126/ND/2023] In the matter of: M/s Airtech Airconditioning Through Mr. Arshad Shah, Proprietor Ashiana Building, adjoining Daryacha Building, Hauz Khas Village, New Delhi- 110016 .... Appellant Versus

Parnika Commercial & Estate Private Limited Having its Registered Office at: D-64, 6TH Floor Himalaya House, 23 KG Marg New Delhi - 11 0001 .... Respondent Present:

For Appellant : Mr. Vipul Ganda, Ms. Avnika Mishra, Ms. Nitu Barik and Mr. Gyanesh Tiwary, Advocates.

For Respondent : Mr. Bhupesh Narula, Advocate.

JUDGMENT

(Hybrid Mode)

Per: Barun Mitra, Member (Technical)

The present appeal filed under Section 61 of Insolvency and Bankruptcy

Code 2016 ('IBC' in short) by the Appellant arises out of the Order dated

18.12.2023 (hereinafter referred to as 'Impugned Order') passed by the

Adjudicating Authority (National Company Law Tribunal, New Delhi Bench-III)

in C.P. (IB) No. 126/ND/2023. By the impugned order, the Adjudicating Authority has dismissed Section 9 application filed by the Appellant-M/s Airtech

Airconditioners. Aggrieved by the impugned order, the present appeal has been

preferred by the Appellant.

2. To summarily capture the factual matrix of the matter, we notice that the

Appellant-M/s Airtech Airconditioners-Operational Creditor was engaged by

Corporate Debtor-M/s Parnika Commercial & Estate Private Limited to provide

Heating, Ventilation and Air Conditioning services for three of its projects. These

three projects were located at Vanijya Bhawan, New Delhi; DRDO, Delhi and IIT,

Mumbai. Separate work orders had been issued for these projects for which

separate invoices had been raised as running account bills by the Appellant.

Since payments were not forthcoming, the Appellant on 21.10.2022 had issued

a demand notice under Section 8 for an amount of Rs 8.23 Cr. and interest

thereon @18%. In response to the Section 8 demand notice, the Respondent-

Corporate Debtor replied on 31.10.2022 denying any outstanding dues qua the

Operational Creditor besides raising several deficiencies in the performance of

the Operational Creditor with respect to the execution of work by them. The

Operational Creditor thereafter filed Section 9 application on 22.02.2023 which

was rejected by the Adjudicating Authority vide impugned order dated

23.10.2023. Aggrieved by the impugned order, the present appeal has been

preferred by the Appellant.

3. Making submissions on behalf of the Appellant, Shri Vipul Ganda, Ld.

Counsel submitted that the Adjudicating Authority while rejecting their Section

9 application had failed to appreciate the fact that though the Corporate Debtor

had defaulted in clearing the outstanding operational debt which had arisen Page 2 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024 beyond the Section 10-A prohibited period and that this amount crossed the

threshold limit of Rs 1 Cr. prescribed under Section 4 of the IBC. It was

contended that the Adjudicating Authority while deciding on the maintainability

of the Section 9 application should have kept in mind the fact that the invoices

of the various projects were separate and the dates of default were also separate.

Emphasis was laid on the fact that the default in respect of invoices pertaining

to DRDO and IIT Bombay projects admittedly fell within the Section 10-A period

but the relevant invoices in respect of Vanijya Bhawan Project fell outside the

Section 10-A period. It was contended that the amount due and payable from

the Vanijya Bhawan Project alone was Rs 2.36 Cr. The Adjudicating Authority

had erroneously rejected the Section 9 application without taking notice of the

invoices pertaining to Vanijya Bhawan Project.

4. Denying the issue of pre-existing disputes which had been raised by the

Corporate Debtor, it was contended that the Vanijya Bhawan Project was

completed in time and the building already inaugurated on 23.06.2022. It was

also submitted that all the defects pointed out in the Snag List Report in respect

of the Vanijya Bhawan Project had been remedied by them. They had issued a

handing-over note to the Corporate Debtor on 08.10.2022 which note had also

been acknowledged by the Corporate Debtor. Even NBCC which had contracted

out this work to the Corporate Debtor had also issued a completion certificate.

The Corporate Debtor has also availed Input Tax Credit which was reflected in

their ledger in respect of the Vanijya Bhawan Project. The invoices dated

09.03.2022 and 13.07.2022 of Vanijya Bhawan Project which reflected on the

GST Portal was sufficient proof of the Corporate Debtor having accepted the Page 3 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024 services rendered by the Operational Creditor. The Respondent did not raise any

dispute until the receipt of Section 8 demand notice. The letters issued by the

Corporate Debtor on 31.12.2020 and 10.02.2021 basis which Corporate Debtor

has raised the bogey of pre-existing dispute were with respect to services

provided in respect of the IIT, Bombay Project and not the Vanijya Bhawan

Project. The disputes which have been raised by the Corporate Debtor in reply

to the Section 9 application with respect to Vanijya Bhawan Project were raised

only after filing of the Section 9 application which goes to show that the dispute

was raised as an after-thought to overcome the Section 9 application. Hence, the

allegation of pre-existing dispute raised by the Corporate Debtor were not only

unfounded but an after-thought which ought not to have been taken cognizance

of by the Adjudicating Authority. Even the factum of initiation of arbitration

proceedings did not constitute a pre-existing dispute as these proceedings were

filed much after the Section 8 Demand Notice.

5. Refuting the contentions of the Appellant, Shri Bhupesh Narula, Ld.

Advocate on behalf of the Corporate Debtor-Respondent submitted that they had

issued a demand notice on 19.10.2022 which was prior to the Demand Notice

issued by the Appellant. It was emphatically asserted that when the Corporate

Debtor had themselves issued a demand notice to the Appellant before the issue

of Section 8 demand notice by the Appellant, this itself indicates pre-existing

dispute. It was asserted that in their Demand Notice, they had claimed refund of

excess payment made to the Operational Creditor to the tune of Rs 1.43 Cr. It

was further pointed out that though the Operational Creditor had over-billed

their invoices, instead of clarifying the issue of excess payment receipt, they Page 4 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024 issued a counter notice of demand on 21.10.2022 which was a frivolous notice

of demand. It was submitted that the tax invoices and Input Tax Credits relied

upon by the Appellant to substantiate their plea of outstanding debt did not

contain the signature of the Corporate Debtor and such manipulated documents

cannot be looked into. It was also mentioned that several communications were

exchanged with the Operational Creditor regarding unexplained delay on their

part in completing the work. The Operational Creditor had abandoned the

projects midway and not having completed the works undertaken by them

cannot rightfully claim any payment to be made to them. Since the Operational

Creditor had abandoned the work, the Corporate Debtor had to make alternative

arrangements to complete these works as these were time-bound works. The

works were executed through alternative contractor viz. Global Aircon at a much

higher rate because of which they had to suffer losses. It was added that Global

Aircon was paid directly by the Corporate Debtor but the Appellant has

mischievously raised invoices for the same works completed by Global Aircon. It

was submitted that details of the payments made to Global Aircon was reflected

by them in para 4 of their Reply to the present appeal at page 11. It was pointed

out that at para 5 of the same Reply at page 13 other disputes relating to the

invoices were also fleshed out. A reconciliation statement was also placed at para

7 of the same Reply at page 15-16 which statement shows that the Operational

Creditor was liable to refund Rs 3.40 Cr. alongwith interest to the Corporate

Debtor. It was further contended that the Appellant had no grounds to raise the

Section 9 application because the Respondent had already invoked the

Page 5 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024 Arbitration Clause in terms of the work order and since the arbitration petition

is pending, the continuance of the Section 9 application had become infructuous.

6. We have duly considered the arguments advanced by the Learned Counsel

for the parties and perused the records carefully.

7. The short question before us for consideration is whether the invoices

raised by the Appellant-Operational Creditor in respect of Vanijya Bhawan

Project in the Section 9 application fell within the excluded period of Section 10A

or not.

8. To arrive at our findings, we may advert our attention to the Section 9

application with reference to details of the Vanijya Bhawan invoices set out

therein along with invoice number, date of default and outstanding amount. The

relevant particulars are as reproduced below:

PART-IV PARTICULARS OF OPERATIONAL DEBT

1. Total amount of Total amount of Debt debt details of Rs. 8,23,72,560/- (Rupees Eight Crores Twenty-

transactions on Three Lakhs Seventy-Two Thousand Five Hundred account of which Sixty) along with 18% interest till the date of actual debt fell due, and realization.

the date from ....

which such debt ....

fell due. 3. That, the Operational Creditor provided firefighting and HVAC services to the Corporate Debtor and was associated in the following three different projects staring from the year 2019:

Page 6 of 10

Company Appeal (AT) (Insolvency) No. 502 of 2024 .... S. No. Name of Location .... the Project

1. Vanijya Delhi Bhavan

2. DRDO Delhi

3. IIT Mumbai Bombay

8. As per the invoices raised to the Corporate Debtor, the debt became due and payable became due and payable within 15 days of the receipt of the payment by the Corporate Debtor from their respective clients.

The details of the said uncleared invoices are as under:

Invoice No. Date of Amount (Rs.) Default Vanijya Bhawan, Delhi 25/2021- April 14, 1,41,82,896 2022 2022 04/2022- July 29, 1,07,29,601 2023 2022 Less: Partly 12,19,002 received amount for the invoice Total (A) 2,36,93,495 DRDO, Delhi .....

Page 7 of 10

Company Appeal (AT) (Insolvency) No. 502 of 2024

2. Amount claimed ....

to be in default ....

and the date on which the default Invoice No. Date of Invoice Date of occurred. Default VANIJYA BHAVAN, DELHI 25/2021-2022 March 29, 2022 April 14, 2022 4/2022-2023 July 13 , 2022 July 29, 2022 DRDO, DELHI 80/2020-2021 October 21,2020 November 6, 2020 108/2020- February 15, March 3, 2021 2021 2021 IIT BOMBAY 88/2020-2021 November 11, November 2020 27, 2020 87 /2020-2021 November 11, November 2020 27, 2020

9. From the Part-IV entries, it becomes clear that the Appellant had raised

claim against six invoices. Two out of six invoices related to the Vanijya Bhawan

Project were dated 29.03.2022 and 13.07.2022 whose dates of defaults were

14.04.2022 and 29.07.2022. The dates of defaults of these two invoices

undisputedly fall outside the Section 10-A period.

10. Having seen the Part-IV particulars, we now turn to the impugned order

to find out how the Vanijya Bhawan Project invoices have been treated. The

relevant excerpt of impugned order is as extracted below:

"7. Analysis and Findings

iii. As per Section l0A of the IBC, 2016 and the MCA Notifications dated 24.09.2020 and 22.12.2020, no application for CIRP may be filed for defaults occurring between 25.03.2020 to 24.03.2021. The

Page 8 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024 invoices based on which the present Application has been filed are dated 06.11.2020, 27.11.2020 and 03.03.2021. Therefore, the present Application is barred by Section l 0A of the IBC, 2016."

11. From the above extracts, it is unambiguously clear that only invoices dated

06.11.2020, 27.11.2020 (two invoices) and 03.03.2021 have been recorded in

the impugned order. These invoices undisputedly fall in the excluded period of

Section 10-A. We also find that the Adjudicating Authority held the present

Section 9 application to be not maintainable by taking notice of only three

invoices dated 06.11.2020, 27.11.2020 and 03.03.2021. Where the Adjudicating

Authority blundered was that it clearly failed to take note of the two invoices of

the Vanijya Bhawan Project, the date of which invoices and their date of defaults

unambiguously fell beyond the period covered by Section 10-A of IBC. Since the

date of default arising out of these two invoices fall beyond the Section 10-A

period, the Section 9 application could not have been dismissed by the

Adjudicating Authority on grounds of Section 10-A. We find that the amount

arising out of the two invoices in respect of Vanijya Bhawan Project which is

more than the amount of threshold provided under Section 4 of IBC of Rs 1 Cr.,

the Section 9 application could not have been dismissed by the Adjudicating

Authority without looking into these two invoices. It is pertinent to add here that

during the oral submissions made before this Tribunal, the Appellant has

categorically stated that they would like to confine their claims in the Section 9

application only with respect to these two invoices pertaining to Vanijya Bhawan

Project.

Page 9 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024

12. In sum, we have no hesitation in concluding that the impugned order is

unsustainable as it has failed to notice that the two invoices relating to Vanijya

Bhawan Project are not covered by Section 10-A of IBC. We therefore find merit

in the present Appeal. The appeal is hereby allowed and the impugned order is

set aside. The application bearing CP No. 126 of 2023 is hereby restored and the

matter is remanded back to the Adjudicating Authority to be considered again in

accordance with law with the caveat that the claim of operational debt shall

remain confined only to the two invoices relating to the Vanijya Bhawan Project

dated 29.03.2022 and 13.07.2022. We also add here that we have not expressed

any opinion on the contentions raised by both parties with respect to pre-existing

dispute qua the Vanijya Bhawan Project. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

Place: New Delhi Date: 07.01.2026 Harleen

Page 10 of 10 Company Appeal (AT) (Insolvency) No. 502 of 2024