Rahee Jhajharia E To E Jv vs Mb Power (Madhya Pradesh Ltd

[Arising out of the Order dated September 25, 2024 passed by the 'Adjudicating Authority' (National Company Law Tribunal, Indore Bench) in TP 47 of 2019 [CP(IB) No. 187 of 2019]

IN THE MATTER OF: Rahee Jhajharia E to E JV Through its Authorised Representative Mr. Sushil Aggarwal Having registered office at: Flat No. 1C, First Floor, 4 Ho Chi, Minh Sarani, Kolkata - 700071 ...Appellant

Versus

MB Power (Madhya Pradesh Ltd.) Having Registered Office At: Laharpur Jaithari Anuppur, Madhya Pradesh - 484330 ...Respondent

Present: For Appellant : Mr. Abhijeet Sinha, Sr. Advocate with Mr. Rakesh Kumar, Mr. Ankit Sharma and Ms. Preeti Kashyap, Advocates

For Respondent :

JUDGMENT

(Hybrid Mode)

[Per: Arun Baroka, Member (Technical)] That the present Appeal is being preferred under Section 61 of the

Insolvency & Bankruptcy Code, 2016 (for short the "Code") against the

impugned order dated 25.09.2024 passed by the National Company Law

Tribunal, Indore Bench (for short "Adjudicating Authority") in TP 47 of 2019

[CP(IB) No. 187 of 2019] filed under Section 9 of the Code. The petition was dismissed primarily on the ground of no privity of contract between the

Appellant and the Respondent-MB Power with respect to the operational debt.

Submissions of the Appellant:

2. As contended by the Appellant- RAHEE JHAJHARIA E TO E JV (Rahee

in short), the matter pertains to a railway contract awarded by the

Respondent, in relation to its project located in Jaithari, Anuppur District,

Madhya Pradesh. The Appellant had filed a petition under Section 9 of the

IBC, 2016 for the recovery of an operational debt amounting to Rs.

16,08,00,000 (Rupees Sixteen Crores Eight Lakhs). The Appellant contends

that there was indeed a privity of contract between the Appellant and the

Respondent, the petition was wrongly dismissed.

3. It is contended by the Appellant that the Respondent-MBPMPL had

created SPV for the project in the name of Hindustan Thermal - EPC

(HTEPCCPL)1, which is another group company of the Moser Baer group. The

Respondent and Hindustan Thermal - EPC are part of the same Moser Baer

group.

The Appellant highlights several key events and documents to

substantiate the claim of privity of contract between the Appellant and

Respondent and that the Respondent was the ultimate beneficiary of the

project. Some of these events and documents are as highlighted below:

Date Events 04.02.2012 Tender process was initiated by the Respondent

1 Names used interchangeably: Hindustan Thermal - EPC or HTEPCCPL or Hindustan Thermal

Company Appeal (AT) (Insolvency) No. 2279 of 2024 2 of 19 29.05.2012 Bid document issued by the Respondent vide bid document no MBPMPL/Railway siding/ANP/2012/1001(Pg 405-406 of the present Appeal)

21.04.2012 Letter of intent issue by MBPMPL (Pg 1740-1745 of the present Appeal)

09.05.2012 Kick of meeting held between Appellant and the Respondent (Pg 1746-1748 of the present Appeal)

29.06.2012 The Respondent issued letter of acceptance in favour of the Appellant for the aforesaid tender.

(Pg 1755-1765 of the present Appeal)

Work order email by the Respondent to the Appellant (Pg 1768 of the present Appeal)

17.01.2015 Possession of exit line was given by the Respondent to the Appellant

29.03.2013 Amendment of Bank Guarantee of the Appellant by the Respondent via email (Pg 1770 of the present Appeal)

29.06.2012 Purchase order raised by MBCPL with mention of Respondents references (Pg 1451-1460 of the present Appeal)

03.04.2013 Letter of credit of Rs 14.96 Lakhs issued by the Respondent and in favour of Appellant (Pg 1772 &1777 of the present Appeal) 02.01.2014

28.07.2014 Inspection certificate issued by RDSO & RITES to and in the & name of the Respondent (Pg 1795-1797 of the present 09.09.2014 Appeal)

24.07.2014 Email sent by Bhaskar Shukla, GM of Respondent to the Appellant for confirming of release of Rs 2.26 Crores payment (Pg 1538 of the present Appeal)

02.08.2014 Materials purchased for the project by the Respondent, like invoice dated 02.08.2014 (Pg 1803 of the present Appeal)

01.07.2015 Respondent sent an email to the Appellant for expediting the work (Pg 1602-1608 of the present Appeal)

25.05.2018 Email by the Respondent to the Appellant for providing payment reconciliation for making payment (Pg No. 1805 of the present Appeal)

Company Appeal (AT) (Insolvency) No. 2279 of 2024 3 of 19 29.12.2017 Completion certificate issued by the Respondent that the Appellant has completed the project under the supervision, control instructions and without any dues of the Respondent with signatures of all authorised signatories such as PE, CCM & Plant Head of MBPMPL.

(Pg. No. 1804, 1806-1809 of the present Appeal)

23.10.2018 Reminder sent by the Appellant to the Respondent for clearing of the outstanding invoices, following various more reminders. That the Respondent on 23.10.2018 replied to the said reminder sent by the Appellant and raised frivolous objections (Pg 863-885 of the present Appeal)

4. Basis above events and the documents, which were executed by the

Respondent-Corporate Debtor-MB Power, it indicates that the Respondent

was the beneficiary of the project. It not only actively participated in the

execution of the contract and also issued various letters/communications.

The AA has failed to take note of these events with respect to the Respondents'

complicity in the work contract. The privity of contract thus exists between

the Appellant-OC-Rahee and the Respondent.

5. The Appellant contends that the letter of intent issued on 21st April

2012, stated that the contract would be executed through its

subsidiary/sister company. The said letter is at Page No. 1743 of the APB.

The relevant portion states that: "The detailed order covering all the terms &

conditions shall be issued to you shortly. The Order may be issued from any of

our subsidiary/sister company."

6. Furthermore, the Letter of Award issued by Hindustan Thermal on

29.06.2012 acknowledges the ongoing relationship between the Appellant

and the Respondent, thereby reinforcing the existence of a contract between

the parties and referring the previous communication that has taken place

Company Appeal (AT) (Insolvency) No. 2279 of 2024 4 of 19 between the Appellant and the Respondent. The same is being reproduced

herein below: (Pg 1451-1460 of the present APB)

"This is with reference to our above Enquiry, your techno- commercial offer and subsequent discussions we had with you. We, Moser Baer Constructions Private limited, MBCPL (hereinafter referred as "EPC Contractor") are pleased to place Letter of Award ("LOA") on M/s Rahee-Jhajharia-EtoE JV (hereinafter referred as "Contractor"), a Consortium between M/s Rahee Infratech Limited, M/s Jhajharia Nirman Private Limited and M/s E to E Transportation Infrastructure Private Limited with M/s Rahee Infratech Limited as Lead Member as per the following terms and conditions."

7. Additionally, the Balance sheets for the financial years 2014-15 and

2015-16 of the Respondent reflect the financial involvement in the project,

further confirming its ownership and participation. These financial details are

summarized as follows:

Area of 2014-15 2015-16 Investment (Amount in Crores) (Amount in Crores)

Capital Work in 98.63 27.49 Progress Work in Progress 41.52 3.32 Rent 0.19 - Expenses 0.51 -

8. The Appellant had also referred to definitions of IBC, 2016 for the

operational debt that clarifies that it is regarding the supply of the goods and

services from the operational creditor. In the present case, the services were

availed by the Respondent from the Appellant. This statutory reference cannot

be overlooked, while looking into the privity of contract relationship between

the parties.

9. The Appellant claims that there was a clear privity of contract between

the Appellant and Respondent, and also relies on the following Section 3 (6)2

Company Appeal (AT) (Insolvency) No. 2279 of 2024 5 of 19 of the IBC Code. The Appellant had further submitted that even otherwise

there is no requirement to have a formal contract in case of operational debt

as mentioned in Section 5(21)2 of the Code. Even though it may be required

in a case of financial contract in a petition under Section 7 of the IBC, 2016,

but such is not the case in case of operational debt. The Respondent-

Corporate Debtor-MB Power is covered as per the definition of the Corporate

Debtor in terms of Section 3(8)3 of the Code which means a corporate person

who owes or debt to any person. Further, in terms of Section 3(6)4 of the IBC,

2016, the petition can also be filed in case of breach of a contract.

10. The Appellant submits that the AA's finding that by merely issuance of

invoices by the Respondent for payments via Hindustan Thermal - EPC

absolves the Respondent of liability was incorrect. The Respondent, being a

part of the same corporate group, remains responsible for the debt incurred

under the contract, regardless of the involvement of a subsidiary. The

Appellant had also demonstrated that it is the Respondent, who had funded

entire project and is ultimately the beneficiary of the assets. It was the

Appellant, who was acting as per the instructions of the Respondent.

2 Section 5(21): operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;

3 Section 3(8): "corporate debtor" means a corporate person who owes a debt to any person;

4 Section 3(6): "claim" means--

(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured;

(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;

Company Appeal (AT) (Insolvency) No. 2279 of 2024 6 of 19

11. It is contended that the Respondent has availed services from the

Appellant and is, therefore, liable to pay the outstanding operational debt

The Respondent has invested funds in the project which is evident from the

balance sheets of the Respondent for the year ending 31.03.2015 and March

2016. The same is reproduced herein below:

Area of 2014-15 2015-16 Investment Amount invested (in Amount invested crores) (in crores)

Capital Work in 98.63 27.49 Progress Work in Progress 41.52 3.32 Rent 0.19 - Expenses 0.51 -

12. The Respondent-Corporate Debtor-MB Power has admitted that it is the

owner of the project. In the reply filed by the Respondent, it indicates itself as

the owner of the project which is reproduced herein below: -

"It is submitted that the employees of the Corporate Debtor who was principal employer were also monitoring the project progress and some correspondences were done with the Applicant by the Corporate Debtor's employees. That the Corporate Debtor is the owner hence all these assets are part of its books."

Not even that, the balance sheet of the Respondent-Corporate Debtor-MB

Power Respondent-Corporate Debtor-MB Power was also reflecting the

reference of the work contract being awarded to the Appellant. All such events

have been completely overlooked by the Adjudicating Authority, while

deciding on the issue of the privity of contact.

13. The Appellant-OC-Rahee claims that the Respondent-Corporate

Debtor-MB Power was acting as a guarantor for releasing of the payment of

Hindustan Thermal in terms of the work completion certificate issued with its

Company Appeal (AT) (Insolvency) No. 2279 of 2024 7 of 19 co-signature indicating the outstanding amount. Therefore, it cannot be said

that there was no privity of contract between the Appellant and the

Respondent.

14. The AA has failed to consider the judgment of Hon'ble Supreme Court

of India in Arcelormittal India Private Limited vs. Satish Kumar Gupta

& Ors. reported in (2019) 2 SCC 1 in which the principles had been laid

down that the corporate veil can be lifted in the cases related to the Code. The

Appellant, submits that it's the Respondent who owes an amount of Rs.16.08

Cr. to the Appellant. If the Corporate Veil of Hindustan Thermal - EPC is

pierced, it will be found that the Respondent is the ultimate beneficiary.

15. The Code is evolving on day to day basis. The AA cannot shut its eyes

in such cases where the beneficiary of the project is evading the liabilities on

technical grounds and whereas the beneficiary of the contract can definitely

be liable for the payments to the creditor. Merely on technical issue, the

beneficiary cannot be allowed to evade from its financial

responsibility/obligation.

16. During the proceedings before the AA, the Appellant elucidated the

structural dynamics of the Moser Bear Construction (P) Ltd. group. This

structure, comprising of subsidiary companies, has been used by the

Respondent group to obfuscate and evade their legitimate debts in default.

17. In the facts of the circumstances, the appellant prays to set aside the

impugned order dated 29.05.2024.

Company Appeal (AT) (Insolvency) No. 2279 of 2024 8 of 19 Submissions of the Respondent:

18. Basis the materials placed in the APB, we note the submissions of the

Respondent as before the AA in the proceedings are noted herein.

19. The Purchase Order with Reference No. MBCPL/MP/LOA/RS/12-

13/10006 and also the work order MBCPL/MP/WO/RS/12-13/10006 was

issued to the Appellant by Hindustan Thermal - EPC for supply, erection,

testing and commissioning of equipments/ material/ accessories for

complete/ Composite Railway Siding from Jaithari Railway Station of

Bilaspur Division to Anuppur Project Site including Road Bed, Major and

Minor Bridges, Buildings works, Tracks/Rails supply, Signaling and Telecom

and Overhead Electrification and associated equipment for the safe

completion of the project for 2 x 600 MW Anuppur Thermal Power Plant at

Anuppur District, Madhya Pradesh. All the invoices were issued by the

Appellant to Hindustan Thermal only. The CD and Hindustan Thermal

Respondent No.2 are separate legal entities. The CD has neither issued any

purchase order / work order to the Appellant. Even the Appellant has never

raised any invoice upon the CD for the alleged payments of its outstanding

dues. Therefore, filing of the present application under Section 9 of the IBC

against the CD is nothing but a sham exercise of the Appellant to illegally and

which itself and cost of the CD.

20. The letters dated 09.10.2018 and 23.10.2018 written by Hindustan

Thermal - EPC show that there is an existence of dispute between the

Appellant and the Hindustan Thermal. The Appellant had initially issued a

Company Appeal (AT) (Insolvency) No. 2279 of 2024 9 of 19 notice under Section 8 to Hindustan Thermal - EPC and thereafter issued an

under Section 8 of the Code to the CD and thereafter filed the application

under Section 9 of the IBC. From the records, it is seen that Hindustan

Thermal - EPC vide their letter dated 09.10.2018 and 23.10.2018 denied the

allegations levelled against Hindustan Thermal - EPC and on the contrary

claimed that the appellant is liable to pay an amount of Rs. 20.10 crores

(approx.) to Hindustan Thermal - EPC towards compensation in terms of

purchase and work orders executed between them. Thus, their exist a dispute

between the appellant and Hindustan Thermal - EPC. Section 8 and

thereafter Section 9 filed by the Appellant against the CD is nothing but an

afterthought. This was done upon realising that the Appellant cannot initiate

Section 9 proceedings against Hindustan Thermal - EPC.

21. Respondent has been wrongly described as the CD by the Appellant

and the appellant has also wrongly described itself as the Operational

Creditor of the answering respondent. There exists no such relationship of

the Debtor- creditor between the Appellant and the Corporate Debtor.

22. The Appellant has placed on record forged and fabricated ledger

account as regards the Corporate Debtor. Same invoice number as well as

cheque number for identical amount cannot be for two separate companies

i.e. Corporate Debtor and Hindustan Thermal - EPC. Neither any invoices

were raised in the name of the CD nor any payment has been made by the

CD against any of the invoices as stated in the ledger account annexed as

Annexure A-2 deals with the company name "Moser Baer power (MP) Limited"

Company Appeal (AT) (Insolvency) No. 2279 of 2024 10 of 19 (Moser Baer). As per records of the Registrar of Companies, there is no such

company existing by the said name and the CD is a distinct entity as

compared to the said name.

23. The Appellant does not fall in the category of OC of the CD as per the

definition provided under Section 5(20) r/w 3(23) of the Code. The Appellant

is a Special Purpose Vehicle (SPV) and SPV is an association of the person

and does not fall within the definition of the OC as provided in the code.

Therefore, the application was legally itself untenable.

24. Appellant is not an operational creditor of the CD in terms of Section

5(20) r/w Section 5(21) of the Code also.

25. Default in the payment of the outstanding dues by the CD is a sine qua

non for initiating any proceeding under Section 9 of the IBC. The default can

only take place when invoices raised by the OC to the CD is not paid. Since

no invoices were raised by the Appellant upon the CD. The present application

under Section 9 is illegal.

26. A demand notice can be submitted either in Form No. 3 or in Form No.4

as per the Rule 5(1) of the Insolvency and Bankruptcy Application to

Adjudicating Rules, 2016. However, both the forms cannot be issued

simultaneously. In this case, both forms have been issued, therefore, the

petition itself needs to be dismissed on this ground.

Appraisal

27. Heard the counsel of the Appellant and have also gone through the

material on record.

Company Appeal (AT) (Insolvency) No. 2279 of 2024 11 of 19

28. Brief issue before us is whether the dismissal of Section 9 Petition

under the Code by the Adjudicating Authority on the ground of non-existence

of privity of contract between the Appellant and the Respondent is correct or

not.

29. The claim of the Appellant-OC-Rahee is that the Corporate Debtor-MB

Power is liable to pay the outstanding amount to the Operational Creditor for

the following reasons:

a) Letter of Creditor/ Letter of intent-/ letter of acceptance/ Bid

document and work order received from Hindustan Thermal - EPC

at the behest of the Corporate Debtor.

b) Bank Guarantee was issued by the Appellant-OC-Rahee in the name

of the Corporate Debtor-MB Power.

c) Third party supervision and quality control for the assigned task

was done by the either the Indian Railway or RITES organisation,

who further addressed the work status to the Corporate Debtor-MB

Power.

d) Several invoices were raised to the Hindustan Thermal - EPC at the

behest of the Corporate Debtor-MB Power.

e) Several emails exchanged between the Appellant-OC-Rahee and the

Corporate Debtor-MB Power for the assigned work.

f) Various letters sent by Hindustan Thermal - EPC at the behest of

the Corporate Debtor-MB Power for the assigned work.

Company Appeal (AT) (Insolvency) No. 2279 of 2024 12 of 19

30. The Appellant had attempted to persuade us that it is the Respondent-

MB Power, who had invited bids, issued LOI, issued bank guarantee, issued

LC for material, held meetings with the Appellant during entire execution of

project, issued completion certificate, asked for reconciliation of payment,

arranged material for projects and funded entire project and was ultimately

beneficiary of the assets and it was the Appellant, who was acting as per the

instruction of the Respondent-MB Power.

31. Per contra the Respondent-MB Power in the proceedings before the

NCLT had filed a Reply in which the following grounds were taken to

controvert the Section 9 Petition were taken:

a) There was no Privity of Contract between the Appellant and the Respondent.

b) The Appellant has referred to a false and fabricated ledger.

c) The Appellant has no locus to file the Petition against the Respondent.

d) The Appellant is not eligible to file Petition under Section 9 of the Code.

32. From the materials on record, we delve deeply in the case and find that

initially the Appellant had sent Form 3 Demand Notice5 to the Hindustan

Thermal - EPC on 05.11.2018 for 92 invoices. Vehemently denying,

Hindustan Thermal - EPC sent a Reply to the Demand Notice to the Appellant

on 14.11.2018 and also raised counter claim and dispute. Basis this Reply

the Appellant withdrew the Demand Notice on 05.12.2018 and called it a

"Redundant Notice".

5 Under section 8(2) of the Code

Company Appeal (AT) (Insolvency) No. 2279 of 2024 13 of 19

33. We also note that the invoices are not addressed to the CD-Respondent-

MB Power, and are raised upon a company namely Moser Baer Construction

Pvt. Ltd. (now renamed as Hindustan T-EPC), which is a different legal entity

than the Respondent. A Demand Notice under Section 8 of IBC upon a

Corporate Debtor basis the dues of a sister-concern/ group company cannot

be held to be valid and an application basis such Demand Notice therefore

cannot be accepted.

34. Separately, around the same time on 04.12.2018 the Appellant issued

a fresh Demand Notice to the Respondent-MB Power for the same 92 invoices,

which was refuted by the Respondent on 20.12.2018. The relevant paras of

the Reply dated 20.12.2018 are extracted below:

"...

2. It is most respectfully submitted that from the perusal of the documents submitted by you, it is amply clear that a Purchase Order bearing Reference No. MBCPL/MP/LoA/RS/12-13/10006 (hereinafter referred to as the "Purchase Order") was issued to you by a Company by the name of Moser Baer Construction Private Limited (name changed to Hindustan Thermal- EPC Company. Private Limited (hereinafter referred to as the "HT EPCCPL")) for supply for equipment/material/accessories for complete Composite Railway Siding from Jaithari Railway Station of Bilaspur Division to Anuppur Project Site including Road Bed, Major and Minor Bridges, Buildings works, Tracks/Rails Supply, Signaling, & Telecom and Overhead Electrification and associated equipment for the safe completion of the Project for 2 x 600 MW Anuppur Thermal Power Plant at Anuppur District, Madhya Pradesh.

3. It is further relevant to mention herein that all the alleged invoices which are claimed to be due and payable in the notice under reply were also raised by you to HT EPCCPL. It is most respectfully submitted that our Client and HT EPCCPL are two separate legal entities. The alleged liabilities, if any, of HT EPCCPL can't be saddled on Our Client in absence of any specific undertaking by Our Client. It is stated that in the instant case neither any goods nor services being supplied to Our Client nor any invoices raised to our Client. Further even the ledger as appended with the Notice under reply also reflects payment by HT EPCCPL.

Company Appeal (AT) (Insolvency) No. 2279 of 2024 14 of 19 Thus no case can be made out against Our Client in absence of any debtor-creditor relationship between the parties herein.

4. It is most respectfully submitted that there is no privity of contract between our Client and your Client. It is submitted that our Client has neither issued any purchase order to your Client nor has your Client ever raised any invoice upon our Client for the alleged payment of its outstanding dues. Therefore, issuance of the Demand Notice under reply to our Client is nothing but a sham exercise of your Client to illegally enrich itself at the hands of our Client. It is submitted that not just your Client is trying to abuse the process of law but has also not informed you the above facts and has got the instant Notice under reply issued by you by distorting the original facts which is in grave violation of law."

......

7. It is also submitted without prejudice that to the limited knowledge of our client there is in fact "existence of dispute"

between your Client and/HTEPCCPL and it is only because there is an existence of dispute between your Client and HT EPCCPL that you have manifestly issued the captioned notice to our Client just to illegally enrich itself by distorting true facts. Hence, issuance of the present notice is nothing but an afterthought with a view to illegally enrich your Client at the cost of our Client."

(emphasis supplied)

35. Initially a Section 8 Notice was issued to the Hindustan Thermal - EPC,

which was later on withdrawn and fresh Section 8 and 9 Notices were issued

against the Respondent. We fail to understand that, on one hand the

Appellant had raised invoices against Hindustan Thermal - EPC and then

later on for unknown reasons it started proceedings under Section 8 against

Respondent-MB Power for the same set of invoices. We are inclined to agree

with Respondent that it is an afterthought. It is also seen that Hindustan

Thermal - EPC vide their letter dated 09.10.2018 and 23.10.2018 had denied

the allegations levelled against Hindustan Thermal - EPC and on the contrary

claimed that the Appellant is liable to pay an amount of Rs. 20.10 crores

(approx.) to Hindustan Thermal - EPC towards compensation in terms of

purchase and work orders executed between them.

Company Appeal (AT) (Insolvency) No. 2279 of 2024 15 of 19

36. From the materials on record, we note that there is no privity of contract

or any sort of Debtor-Creditor relationship between the Applicant and CD and

also the quality issues and delay in completion of work as regards works

executed by the Applicant was duly notified by Hindustan T-EPC to the

Applicant in their letter dated 09.10.2018 and 23.10.2018, some of which are

noted as below:

o Counter claim of Rs.1,44,78,749/- was made by Hindustan T- EPC on account of price variation.

o Debit note of Rs.5.95 Crores vide letter dated 03.07.2015. o Demand of Rs.20,10,66,736/- was made by Hindustan T-EPC from the Applicant on 09.10.2018 itself.

o Letter dated 12.02.2014 issued by Hindustan T-EPC whereby the Applicant was notified that it had failed to its commitments in relation to the project.

o Letter dated 04.02.2016 issued by Hindustan T-EPC notifying the Applicant of delay in the project despite repeated assurances from the Applicant.

37. Thus, we find that there was a pre-existing dispute between the

Appellant and Hindustan Thermal. Even though there is an issue of pre-

existing dispute also, but the AA dismissed the Petition basis mainly on the

maintainability of the petition. It will be worthwhile to note the relevant paras

13 to 15 which are as below:

".....

13. Considering the above, the issue here is whether the application filed under section 9 of the Code against the respondent is maintainable or not. We find that the invoices were raised by the applicant in the name of group concern of the respondent i.e. Hindustan Thermal for an amount of Rs. 105,62,05,167/ out of which Hindustan Thermal made the majority payment leaving the outstanding amount to Rs. 16,08,00,632/-. Here, since the invoices were raised by the applicant against Hindustan Thermal, the payment (major) were received by the applicant from Hindustan Thermal and even the

Company Appeal (AT) (Insolvency) No. 2279 of 2024 16 of 19 Work Order was received by the applicant from Hindustan Thermal, then we fail to understand as to for what reason the applicant has filed the present application against the respondent instead of filing the same against Hindustan Thermal even after sending the demand notice under section 8 of the Code. Merely because the respondent tried to reconcile or settle between the applicant & Hindustan Thermal or merely because the work completion was signed by the respondent being the owner of the project does not entitle the respondent to be liable for the outstanding amount. There is no privity of contract between the applicant and the respondent.

14. Be that as it may, without going into any other details as to whether there is pre-existing dispute between the applicant and Hindustan Thermal; or, whether or not there was any delay in completion of the work by the applicant, we are of the considered view that the present application against the respondent is not maintainable and is liable to be rejected.

15. In view of the above, we pass the following order:

ORDER The application TP 47 of 2019 [CP(IB) 187 of 2019] filed under Section 9 of the Code stand rejected and disposed of."

(emphasis supplied)

38. We find that the Adjudicating has rightly concluded that since the

invoices were raised by the Appellant against Hindustan Thermal - EPC, the

majority payment was received by the Appellant from Hindustan Thermal -

EPC and even the work order was received by the Appellant from Hindustan

Thermal - EPC and the reasons for Appellant to file the Application against

the Respondent were not understood. AA has also noted that merely because

the Respondent tried to reconcile or settle between the Hindustan Thermal -

EPC or merely because the work completion was signed by the Respondent,

being the owner of the project does not entitle the respondent to be liable for

the outstanding amount. Therefore, it did not find any privity of contract

between the Appellant and the Respondent. We do not find any infirmity in

the findings and the conclusions of the Adjudicating Authority.

Company Appeal (AT) (Insolvency) No. 2279 of 2024 17 of 19

39. The Appellant claims that Respondent is the ultimate beneficiary and

therefore corporate veil of Hindustan Thermal - EPC needs to be lifted. In its

support the Appellant has cited the judgment of Arcelor mittal India

Private Limited (supra). We are not persuaded to agree with the arguments

of the Appellant when we find pre-existing dispute as noted earlier. Presuming

a hypothetical scenario that there was a privity of contract between the

Appellant and the Respondent, we proceed to determine the prayer of the

Appellant for Section 9 Petition. We find that the same set of invoices were

used against Hindustan Thermal - EPC in the initial Demand Notice and later

on they were used for issuing a Demand Notice and Petition against the

Respondent-MB Power. The Appellant claims that the Respondent, being a

part of the same corporate group, remains responsible for the debt incurred

under the contract, regardless of the involvement of a subsidiary. Hindustan

Thermal - EPC had raised counter claims and the dispute. We note that if a

dispute and counter claim was raised by Hindustan Thermal - EPC, it will

continue to remain a dispute for the same reasons as noted above for the

Respondent-MB Power also as the ground situation remains the same.

Therefore, even after presuming that there was privity of contract between the

two parties, The Appellant will not get any support in the case. And the

Petition, even if it was maintainable due to privity of contract, will have to be

rejected basis pre-existing dispute.

40. In the facts and circumstances of the case, we find that the Application

filed under Section 9 of the Code is not maintainable for there being no

Debtor-Creditor relationship between the Appellant and the CD, the facts and

Company Appeal (AT) (Insolvency) No. 2279 of 2024 18 of 19 circumstances of the present case clearly establish that no invoices were

raised by the Applicant to the CD, also no payments have been made by the

CD to Applicant and as such there exists no privity of contract between the

parties.

Orders:

41. As noted above, in the facts and circumstances of the case the Appeal

is therefore, dismissed. The Appellant is at liberty to pursue remedies as

available to him under applicable laws. No orders as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) New Delhi.

March 26, 2025.

pawan

Company Appeal (AT) (Insolvency) No. 2279 of 2024 19 of 19