M/S Anurag Enterprises vs Hindustan Prefab Ltd

IN THE MATTER OF: Anurag Enterprises ...Appellant

Versus Hindustan Prefab Ltd. ...Respondent

Present: For Appellant : Mr. Vidit Garg, Advocate.

For Respondent : Mr. Gaurav Gupta, Mr. Abhishek Verma, Advocates.

ORDER

(Hybrid Mode)

12.11.2025 : Heard counsel for the parties.

2. This appeal has been filed against the order dated 25.07.2025 passed

by the National Company Law Tribunal, New Delhi, Bench-V by which order

the Adjudicating Authority has rejected Section 9 application filed by the

appellant. Appellant has filed Section 9 application against the Hindustan

Prefab Limited claiming debt and default. There was a contract between

appellant-operational creditor and Hindustan Prefab Ltd. under which work

was done by the appellant and after submission the bill payment was not

made, Section 9 application was filed. Adjudicating Authority in the

impugned order relying to Clause-28 of the special condition of contract held

that as per the Cluse-28 the amount shall be payable to the contractor i.e;

operational creditor only when payment is received from Principle, NDRF

and the amount having not been received from the Principle, NDRF no default has been committed by the corporate debtor. Relying on said Clause-

28 Adjudicating Authority rejected the application.

3. Counsel for the appellant challenging the order submits that the

payment cannot be delayed for indefinite period, he relied on a judgment of

Delhi High Court in North Delhi Municipal Corporation and Ors. Vs. Sanjeev

Oberoi decided on 22.03.2018 he submits that Delhi High Court in the said

judgment has issued general guidelines with regard to the contract. He has

referred to paragraph-37 & paragraph-86 of the judgment, which are as

follows:-

"37. However, the quandary for the Contractor begins after the bills are passed by the Engineer-in-Charge. Clause 7 provides that the amount so certified shall be paid by the 30th working day after the presentation of the bill by the Contractor. However, thereafter comes the big caveat i.e. that the Corporation should have funds available with it under the specific head of account.

86. By way of separate order passed today in these appeal, certain guidelines are issued. These guidelines shall be read alongwith the judgment pronounced today in all these appeals.

ORDER These are a batch of appeals which have arisen out of disputes between Contractors/Plaintiffs (hereinafter, 'Contractors') on the one hand and the North Delhi Municipal Corporation (hereinafter, 'NrDMC') and East Delhi Municipal Corporation (hereinafter, 'EDMC'), on the other. NrDMC and EDMC are collectively referred to as 'Corporations'. The facts in each appeal are different and hence separate judgements are being passed in each of the appeals.

Comp. App. (AT) (Ins.) No. 1420 of 2025 2 of 6 The present guidelines are being issued in all the appeals. The Court has had the opportunity of perusing the trial court records in all these 43 appeals. A perusal of the records reveals the following :--

1. In most cases, the Contractors who are awarded the work orders do not submit the interim or final bills to the Engineer-in-Charge for approval;

2. The final measurement recordal is done by the Engineer-in-Charge;

3. The final bill is also prepared and passed by the Engineer-in-Charge on his own accord and the Contractor then accepts it;

4. The procedure for obtaining labour clearance certificate from the Labour Officer is not followed;

5. Once the bills are passed, Contractors are made to wait endlessly for their payments on the ground of non- availability of funds;

6. Even for refunds of Security Deposit and Earnest money deposits, the Contractor is made to wait till the final payment is made;

7. The measurement books and the photographs of work, actually carried out, are not produced in evidence.

The above process is contrary to the General Conditions of Contract. It is therefore, necessary and important that all the steps of the Contract are followed by the Contractors and the Corporations. The following guidelines are being passed:

1. Along with the work order, all the Clauses of the General Conditions of Contract should be attached;

2. On the award of the Work order, periodic inspections of the work being carried out should be done by the Engineer-in-Charge;

3. If possible, photographs of the works at different stages should be taken and maintained on the record;

Comp. App. (AT) (Ins.) No. 1420 of 2025 3 of 6

4. Interim bills should be submitted by the Contractor-duly certifying the work which has been carried out;

5. Final bills should be submitted by the Contractor-duly certifying the work carried out along with photographs;

6. The Bill should be scrutinised by the Engineer-in-

Charge, works should be recorded in the measurement book and thereafter, the bill should be passed;

7. Once the Bill is passed, the payment schedule of 6 months and 9 months should be adhered to. Delay in payments would result in Interest being levied;

8. For refunds of Security deposit and Earnest Money deposit, the Contractor should unscrupulously comply with the conditions in Clauses 17 and 45. For refunds to be made, payment of final bill need not be awaited. Once the conditions of Clauses 17 and 45 are complied with and the final bill is passed, refunds ought to be made;

9. In suits relating to recovery of Contractor's dues, all the evidence including the NIT, General Conditions of Contract, periodic inspection reports, Final bill as submitted, Final bill as passed, Measurements carried out, Photographs etc., should be produced and duly exhibited.

10. IT infrastructure ought to be created to maintain records of the work orders, inspection reports, final bills, photographs etc., digitally, as it is noticed that the trial court record does not contain all the relevant documents and in several cases, different versions of clauses are relied upon by both sides, bills are not properly understandable and there is no evidence of actual inspections or measurements having been taken. Maintenance of digital records will make it more transparent and easily accessible for the officials and for production in the Court in case of future litigation. Adherence to the above shall ensure that the works are duly carried out as per the quality standards prescribed

Comp. App. (AT) (Ins.) No. 1420 of 2025 4 of 6 and there is proper record of work being done. Once the work is carried out payments ought not to be delayed, inasmuch as delay in payments compromises on availability of quality civil work for the Corporations, who take care of basic amenities for citizens such as roads, pavements, civil works, sewerage lines etc. These guidelines shall be read along with the judgments pronounced today in these appeals.

4. we have considered submissions made by the counsel for the

appellant and perused the record.

5. Clause-28 on which reliance has been placed by the Adjudicating

Authority has quoted in paragraph-10 of the impugned order which is as

follows:-

"10. Clause 28 of the Special Conditions of Contract of Agreement dated 20.04.2016 stipulates that the Contractor stall be entitled to payment only after the Corporate Debtor receive the corresponding payments from the NDRF and no delay in release of payment will pass on any additional compensation/ interest to the Operational Creditor. Clause 28 of the Special Conditions of Contract is reproduced below:

"28. It is clearly agreed and understood by the tenderers/ contractors that notwithstanding anything to the contrary that may be stated in the agreement between HPL & the contractor, the contractor shall become entitled to payment only after H.P.L. received the corresponding payment(s) from the client / owner for the work done by the contractor. Any delay in the release of payment by the client / owner to HPL leading to a delay in the release of the corresponding payment by HPL to the contractor, shall not entitle the contractor any compensation / interest from HPL."

Comp. App. (AT) (Ins.) No. 1420 of 2025 5 of 6 Clause-28 was part of the agreement which was entered between the

operational creditor and corporate debtor when the payment has not yet

been received by the corporate debtor, the entitlement of the appellant or

default cannot be found and we are of the view that Adjudicating Authority

did not commit any error in rejecting Section 9 application. In so far as

submission of the appellant relying on judgment of Delhi High Court the

said judgment was passed in petition filed by different Contractors of Delhi

Municipal Corporation and guidelines with regard to contracts with the

Delhi Municipal Corporation had been issued, which guidelines cannot be

relied by the appellant in a proceedings u/s 9 in IBC. We thus are of the

view that Adjudicating Authority did not commit any error in rejecting

Section 9 application. We, however, make it clear the dismissal of Section 9

application shall not preclude the appellant to take such remedies as are

available in law as per the contract.

With these observations, we dismiss the appeal.

The observation made by Adjudicating Authority in the impugned

order are only with respect to Section 9 proceedings of IBC and shall not

come in the way of any other proceedings initiated by the appellant.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Harleen/MD

Comp. App. (AT) (Ins.) No. 1420 of 2025 6 of 6