Navkar Builders Limited vs Niyojit Infratech Private Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No. 800 of 2022 IN THE MATTER OF: Navkar Urbanstructure Ltd. ...Appellant Versus Niyojit Infratech Pvt. Ltd. ...Respondent Present: For Appellant: Mr. Pavan Godiwala, Mr. M.S. Vishnu Sankar, Advocates For Respondent: ORDER

22.08.2022: Heard Learned Counsel for the Appellant.

This appeal has been filed by the Appellant ('Operational Creditor') against

the order dated 28.04.2022 passed by the Adjudicating Authority by which

application filed under Section 9 by the Appellant has been rejected.

2. The 'Corporate Debtor' received a Work Order from one M/s. 'Annu Infra

Construct India Pvt. Ltd.' for trenching, ducting, backfilling supply and

installation of manholes etc. in the state of Bihar. The 'Corporate Debtor'

assigned part of the Work to Appellant by agreement dated 30.11.2018.

3. The notice dated 12.01.2021 u/s 8 of the Code, (dispatched on

25.01.2021) was issued by the Appellant to the 'Corporate Debtor demanding

amount due and payable on account of service provided to the 'Corporate Debtor'

by the 'Operational Creditor'. The Corporate Debtor has issued notice dated

22.01.2021 invoking Arbitration Clause under the agreement. Notice u/s 8 was

issued by the Operational Creditor on 25.01.2021 to the 'Corporate Debtor'

which was replied by the Corporate Debtor vide reply dated 09.02.2021.

Company Appeal (AT) (Insolvency) No. 800 of 2022 1

4. In the reply notice, the claim of the Appellant was denied stating that no

money could be claimed by Operational Creditor before obtaining the Completion

Certificate for the work stated in Letter of Intent (LOI). The reply also referred to

the notice dated 22.01.2021 by which Operational Creditor was informed about

the Arbitration Clause in LOI dated 30.11.2018.

5. Section 9 application was filed by the Operational Creditor claiming an

amount of Rs. 8,29,54,798/-. The Corporate Debtor filed a detailed reply to

section 9 application.

6. After hearing the parties, by impugned order dated 28.04.2022 the

Adjudicating Authority dismissed Section 9 application noticing that Section 8

notice was posted by the Operational Creditor on 25.01.2021 whereas Corporate

Debtor vide notice dated 25.01.2021 has invoked Arbitration Clause.

7. The Appellant challenging the order contended that the Appellant was not

present only on the date when the order was passed whereas he appeared on

earlier dates. He submits that he could not file any rejoinder to the reply filed

by the Corporate Debtor due to certain valid reason which have not been taken

note of by the Adjudicating Authority. He further submits that notice invoking

arbitration was received after Section 8 notice was issued.

8. We have considered the submissions of the Appellant and perused the

record.

9. In para 13,17 and 18 of the reply, following averments have been

specifically made:-

Company Appeal (AT) (Insolvency) No. 800 of 2022 2 "13. It is stated that the petitioner was

supposed to complete the work as aforesaid

by March 31,2019. However, the same was

incomplete and whatever work was done

was not satisfactory of the Authorities and

therefore for the same no completion

certificate and/or NOC was issued by the

competent Authority. The Petitioner at all

material points of time knew about Payment

Clause of both the Agreements.

17. Pursuant thereto, the Corporate

Debtor had issued a notice inviting the

arbitration for adjudication of the alleged

claim made by the petitioner and for

adjudication of the damage suffered to the

Corporate Debtor due to non completion of

work in accordance with the Letter of Intent or

Work Order done by the petitioner. A copy of

letter send on January 22, 2021 is annexed

and marked as annexure 'H' at Pg. 61 of the

said Petition.

Company Appeal (AT) (Insolvency) No. 800 of 2022 3

18. It is noted that the said purported

notice under Section 8 of the Insolvency and

Bankruptcy Code, 2016 was received after

issuance of the arbitration notice and the same

was replied to by the Corporate Debtor vie its

letter dated February 9, 2021. A copy of the

reply dated February 9, 2021 is annexed hereto

and marked 'C'. It is relevant to mention herein

that both alleged that the notice of invocation

annexed and marked as annexure 'H' at Pg.61

of the said Petition is a reply to the purported

notice under Section 8 of the Insolvency &

Bankruptcy Code, 2016."

10. The Corporate Debtor in reply to Section 8 notice as well as in reply to

Section 9 application has categorically pleaded that there is Arbitration Clause

in the contract between the parties. Notice dated 22.01.2022 was issued by the

Corporate Debtor Invoking Arbitration Clause and the Operational Creditor

issued notice dated 12.01.2021 only on 25.01.2021 when it demanded amount

from the Corporate Debtor.

11. The Corporate Debtor in its reply has clearly stated that no amount can

be claimed by the Appellant to be due on the Corporate Debtor since no

Completion Certificate regarding the work of the Appellant was ever issued.

Company Appeal (AT) (Insolvency) No. 800 of 2022 4 When Completion Certificate regarding Work Order was never issued, the

amount claimed by the Appellant is disputed and the Adjudicating Authority has

rightly taken the view that in view of the pre-existing dispute between the parties

the application u/s 9 cannot be admitted.

12. There being Arbitration Clause in the agreement between the parties. The

Appellant is always at liberty to pursue his claim in the Arbitration.

13. We are satisfied that there is no good ground to entertain this appeal.

There is no merit in the appeal. The appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Justice M.Satyanarayana Murthy] Member (Judicial)

[Mr. Barun Mitra] Member (Technical)

Shashi/nn

Company Appeal (AT) (Insolvency) No. 800 of 2022 5