South Delhi Municipal Corporation vs Mep Infrastructure Developers Ltd

IN THE MATTER OF: South Delhi Municipal Corporation ....Appellant Civic Centre, Minto Road, New Delhi-110003. Vs.

MEP Infrastructure Developers Ltd. ...Respondent

A-412, Boomerang, Chandivali Farm Road, Near Chandivali Studio, Andheri (East) Mumbai - 400072.

Present:

For Appellant: Ms. Garima Prasad, Sr. Advocate with Mr. Phagun Kalra and Mr. Akshat Kaushik, Advocates for MCD

For Respondent: Mr. Arun Kathpalia, Sr. Advocate, Mr. Rajiv Shankar Dvivedi, Mr. Sushant K. Sarkar, Ms. Diksha, Mr. Rishabh Jain, Mr. Aham Saha, Ms. Arti Dvivedi, Advocates

Judgment (Dated: 17.1.2023)

[Per.: Dr. Alok Srivastava, Member (Technical)]

This appeal has been filed by the South Delhi Municipal

Corporation (in short 'SDMC') under section 61 of the Insolvency

and Bankruptcy Code, 2016 (hereinafter called 'IBC') against the

judgment and order dated 8.10.2021 (hereinafter called Impugned

Order) passed by the Adjudicating Authority (National Company

Law Tribunal, Mumbai) in Company Petition No. IB 246/MB/2021, Company Appeal (AT) (Ins.) No. 461 of 2022

Page 1 of 41 whereby an application under 9 of the IBC filed by SDMC against

the Respondent MEP Infrastructure Developers Ltd. (in short MEP

Infrastructure) was rejected and, the Interlocutory Application

being IA 1670 of 2021 filed by MEP Infrastructure challenging the

maintainability of CP No. IB 246/MB/2021 was allowed.

2. In brief, the facts of the case, as stated and argued by the

Appellant. are that the Appellant entered into an agreement called

'Toll Tax and ECC Collection Agreement' (in short 'Toll Tax

Agreement') on 28.9.2017 for collection of Toll Tax and

Environment Compensation Charge (in short 'ECC') at border

points from specified vehicles entering Delhi. The Appellant has

further stated that by virtue of clause 12.1(A)(a) of the said Toll Tax

Agreement, the MEP Infrastructure was required to remit an

amount of Rs. 23,12,87,671 on weekly basis to the SDMC, which

was the proportionate weekly remittance amount out of the total

payment of Rs.1206 crores per annum, payable for a period of 5

years by the contractor MEP Infrastructure in accordance with the

said Toll Tax Agreement.

3. The Appellant has further stated that during the contract

period, MEP Infrastructure repeatedly made delayed remittances to

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 2 of 41 SDMC and consequently the SDMC imposed penalty agreed as per

the Toll Tax Agreement, and MEP Infrastructure never disputed

the imposition of penalty and deposited Rs. 3,63,07,683/- as

penalty amount imposed on account of delayed remittance of ECC

as per clause 12.1(B)(c) of the said Toll Tax Agreement. The

Appellant has added that when the Respondent MEP

Infrastructure failed to make regular payments and to deposit

penalty amounts, multiple demand notices and intimations with

respect to the outstanding pending payments and penalty amounts

were issued by the SDMC to the MEP Infrastructure through

letters starting from 3.11.2017, and at regular intervals till

18.11.2019. In the meanwhile, the Respondent made an

assurance that the outstanding dues will not exceed the security

amount available with SDMC, while promising that weekly

remittances will be made henceforth through RTGS/NEFT on

regular basis.

4. The Appellant has stated that while the Respondent

continued to default in making payments, it made certain claims

upon SDMC due to reduced toll tax and ECC collection leading to

loss of revenue, and these claims were referred to a High Level

Committee constituted by the Commissioners of South Delhi

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 3 of 41 Municipal Corporation (in short 'SDMC'), North Delhi Municipal

Corporation (in short 'NDMC') and East Delhi Municipal

Corporation (in short 'EDMC') for examination, and after

examination of the said claims, certain recommendations were

made to the Standing Committee of SDMC for consideration. The

Appellant has further stated that the loss in in toll tax collection

was due to mismanagement by MEP Infrastructure and in this

connection the National Highways Authority of India vide letter

dated 25.4.2018 had once noted that there is gross

mismanagement at the Toll Plaza, and as a result thereof regular

traffic jams are taking place.

5. The Appellant has further stated that after the Respondent's

claims were considered and not acceded to, and when the overdue

amounts became large, the Appellant issued a demand notice no.

ABC/TT/HQ/2019/D-932 dated 18.11.2019 to the Respondent

MEP Infrastructure for payment of outstanding principal amount

of Rs.4,50,69,73,096 and penalty amount equal to @ 0.1% per day

within a period of 7 days, whereafter the Respondent preferred a

writ petition before Hon'ble High Court of Delhi being WP(C)

No.12483/2019. This writ petition was disposed of vide order

dated 26.11.2019 by the Learned Single Judge with the

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 4 of 41 observation that the present writ petition be treated as

representation and the same be decided after providing an

opportunity of hearing to MEP Infrastructure by a speaking order.

The Appellant has further stated that the Commissioner, SDMC, in

compliance passed an order dated 30.1.2020, in which certain

benefits which were just and warranted were given to MEP

Infrastructure and most of its claims were rejected.

6. The Appellant has further stated that a fresh demand notice

dated 14.2.2020 for an amount of Rs.7,56,80,748 was issued by

SDMC. He has added that, in the meanwhile the claims of the

Respondent were dealt with by the Commissioner, SDMC through

an order dated 30.1.2020, where after the Respondent filed

another writ petition being WP(C) No. 2241/2020 on 2.3.2020

before Hon'ble High Court of Delhi seeking quashing of the order

dated 30.1.2020 passed by the Commissioner, SDMC, wherein the

Learned Single Judge vide order dated 2.3.2020 directed the

Respondent to comply with the order dated 26.11.2019 made in

WP(C) No. 12483/2019. The Appellant has added that a

termination notice dated 16.3.2020 was issued to the Respondent

and another Notice Inviting Tender (NIT) was issued on 16.3.2020

to ensure that tender process for appointment of a new contractor

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 5 of 41 is completed within the time given for termination so that Toll Tax

collection from 1.4.2020 from entry points of Delhi can be handed

over to the new successful bidder in seamless manner.

7. The Appellant has further stated that the Respondent

challenged the orders passed in WP No. 2241/2020 and interim

order dated 26.11.2019 in WP No.12483/2019 vide two separate

Letter Patent Appeals (in short 'LPAs') and also, inter alia,

challenged the fresh NIT process as well as termination notice

dated 16.3.2020. He has added that the said LPAs were heard by

the Hon'ble High Court of Delhi on 20.3.2020 when the Hon'ble

Division Bench was pleased to grant conditional status quo subject

to MEP Infrastructure immediately complying with the order dated

2.3.2020 before the next date of hearing i.e. 24.3.2020. The

Appellant has added that since the MEP Infrastructure did not

comply with the directions dated 20.3.2020 passed by the Division

Bench of Hon'ble Delhi High Court, the conditional status quo

order automatically stood vacated on 24.3.2020 and on 21.3.2020,

3.4.2020 and 3.5.2020, the Appellant encashed the bank

guarantees for Rs. 65 crores as per clause 6.2(b) of the Toll Tax

Agreement.

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 6 of 41

8. The Appellant has further added that in view of the

"lockdown" imposed in New Delhi due to the Covid pandemic, the

effective date of termination was extended to 2.5.2020 and a fresh

NIT was issued on 6.4.2020 calling for online bids. The Appellant

has further added that while the new NIT was under consideration,

the Respondent again approached the Learned Single Judge,

Hon'ble High Court of Delhi in C.M. Application No. 10236 of 2020

in W.P(C) No. 2241 of 2020 seeking quashing of termination of

notice dated 16.3.2020 and the other termination notice dated

4.4.2020. The Learned Single Judge, after considering the facts of

the case and repeated acts of violation of various orders of Hon'ble

Delhi High Court by the Respondent, did not allow any other relief

except granting extension to postpone the effective date of

termination from 5.5.2020 to 24.5.2020 and also clarified that the

extension of the effective date shall not create any equities in

favour of MEP Infrastructure and shall be without prejudice to the

rights and contentions of the SDMC.

9. The Appellant has further stated that the fresh NIT was

pursued by the SDMC and a letter of intent No. NY

ABC/TT/HQ/2020-D 1496 dated 27.5.2020 was issued in favour

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 7 of 41 of Sahakar Global Ltd.-GB being the highest bidder at Rs.786.60

crores per annum.

10. The Appellant has further added that the writ petitions filed

in the Hon'ble High Court of Delhi bearing nos. WP(C) 12483/2019

and WP(C) 2241/220 primarily claiming that the amount to be

remitted by the Respondent MEP Infrastructure to SDMC was

based on collection of toll tax and ECC and since there were many

challenges in Toll Tax and ECC Collection the revenue had gone

down drastically and, therefore, the Respondent prayed for

reassessment of toll tax revenue in view of changed conditions and

circumstances.

11. The Appellant has further stated that despite certain interim

orders passed by the Hon'ble High Court of Delhi for payment of

amounts on weekly basis in writ petitions (WP No. 12483/2019

and WP No. 2241/2020), MEP Infrastructure has failed to comply

with the said orders and filed various applications and LPAs to

keep the matter pending in judicial process. He has added that

upon failure of the Respondent MEP Infrastructure to make

overdue payments, the SDMC sent a demand notice dated

12.1.2021 under section 8 of the IBC asking for a payment of

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 8 of 41 Rs.788,45,20,136 to be made as operational debt with respect to

Toll Tax, ECC collection amount and penal interest on the said

debt. The Appellant has stated that in its reply dated 22.1.2021 to

the section 8 notice, MEP Infrastructure has denied its liability to

make the demanded payment, and subsequently SDMC filed

application under section 9 of the IBC before the Adjudicating

Authority regarding the operational debt owed to it by MEP

Infrastructure, which was opposed by the MEP Infrastructure on

the ground of maintainability through IA 1670 of 2021. The

Appellant has stated that after due consideration and hearing, IA

1670/2021 was allowed and section 9 application was dismissed

vide Impugned Order dated 8.10.2021 which led to the filing of this

appeal by the Appellant SDMC.

12. We heard the arguments of the Learned Senior Counsels for

SDMC and MEP Infrastructure and perused the record.

13. In oral arguments, the Learned Senior Counsel for SDMC

has submitted that the SDMC is an "operational creditor" as

defined in IBC in accordance with the judgment dated 4.2.2022 of

Hon'ble Supreme Court in the matter of Consolidated

Construction Consortium Ltd. Vs Hitro Energy Solutions

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 9 of 41 Private Limited (2002 7 SCC 164), wherein it is held that the

claim by the operational creditor 'must bear some nexus with the

provisions of goods or services, without specifying, who is to be

supplier or receiver'. He has, thus, contended that SDMC, which

is the receiver of services is the operational creditor and MEP

Infrastructure which owes the debt to SDMC is the corporate

debtor in this case. The Learned Senior Counsel for Appellant has

referred to paras 22 to 25 of the Impugned Order to contend that

the Adjudicating Authority has incorrectly inferred that the claim

of SDMC is not an 'operational debt', but in light of section 5(21) of

the IBC and the ruling of the Hon'ble Supreme Court in the matter

of Consolidated Construction Consortium Limited (supra), the

said debt is certainly an 'operational debt'. She has argued that

the Respondent MEP Infrastructure is the corporate debtor with

which the SDMC, on behalf of NDMC, EDMC and SDMC, executed

a 'Toll Tax and ECC Collection Agreement' on 28.9.2017. She has

further argued that the Toll Tax Agreement very clearly stipulates

payment by the contractor of an amount of Rs.1206 crores p.a. for

a period of five years with the possibility of enhancement of 5% of

the existing awarded amount/committed amount after completion

of every two years. She has further argued that SDMC, in

accordance with section 113(2)(g) of The Delhi Municipal

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 10 of 41 Corporation Act, 1957 (in short 'DMC Act') has been authorised to

levy, assess and collect Toll Tax and the collection can be given

after auction to a private party as per Bye Law 4 of the Delhi

Municipal Corporation (Toll Tax) Bye Laws, 2007. She has argued

that the operational creditor SDMC is a local authority and the

amount being paid by the users as Toll Tax and collected by the

Respondent is Toll Tax amount and therefore the amount due and

payable to SDMC is an "operational debt" as per the definition of

operational debt in the IBC.

14. The Learned Senior Counsel for Appellant has explained that

Bye-law 4(2) of the Delhi Municipal Corporation (Toll Tax) Bye

Laws, 2007 gives power to the Commissioner of SDMC to allot the

work of collection of Toll Tax to one or more private agencies by

way of auction process and on such terms and conditions as may

be decided by the Corporation. She has referred to clause (e) of

'Exhibit A - Terms and Conditions' of the Toll Tax Agreement to

emphasise that the contractor had agreed and confirmed that it

shall not be entitled to any compensation, rebate or reduction in

toll collection contract fee on account of change or variation in

traffic pattern, volume or intensity for any reason as per the Toll

Tax Agreement and hence, MEP Infrastructure cannot now claim

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 11 of 41 benefit of reduced toll tax collection due to decrease in traffic

intensity and traffic flow.

15. The Ld. Senior Counsel for SDMC has also referred to clause

17 of "Exhibit A - Terms and Conditions" of the Toll Tax Agreement

to point out that there has been an event of default as the

contractor MEP Infrastructure has failed to comply with the terms

and conditions of RFP/Toll Tax Agreement in payment of the

remittances and as per clause 12.5 of "Exhibit A - Terms and

Conditions" of the Agreement the Commissioner, SDMC is entitled

to recover from the contractor all amounts due to or recoverable by

SDMC as arrears from taxation agreement as per the DMC Act and

applicable laws, and further in view of default in payment of

remittances, a termination notice was given to the contractor by

SDMC on 16.3.2020, and the effective date of termination the

effective date of termination was extended to 5.5.2020 and later to

24.5.2020 in view of the orders of the Hon'ble High Court of Delhi

keeping in mind the lock down imposed by Covid pandemic.

16. The Learned Senior Counsel for Appellant has further

argued that the dispute that is being claimed as 'pre-existing

dispute' is merely a spurious dispute raised by the contractor MEP

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 12 of 41 Infrastructure to avoid its liability of paying the amounts as agreed

by it in the Toll Tax Agreement. Moreover, she has also claimed,

the contractor has not raised the dispute in any civil court where

the jurisdiction regarding adjudication of contractual dispute lies,

which goes to show that the dispute that is being claimed by the

contractor MEP Infrastructure is merely a spurious one. She has

pointed out that the SDMC had appointed the contractor to

provide Toll Tax and ECC collection services and executed an

agreement to that effect and now the contractor cannot renege

from its obligation to pay the agreed amount of Rs. 1206 crores

every year to SDMC as per the Toll Tax Agreement. She has

clarified that the writ petitions bearing nos. WP 12483 of 2019 and

2241 of 2020 do not relate to any dispute regarding the agreement,

but relate to declaration of the Toll Tax and ECC Collection

Agreement as ultra-virus section 113 (2)(g) of the DMC Act and has

further argued that the disputes alleged do not relate to any

deficiency in quality or quantity of goods or services. She has,

further, referred to the admission made by MEP Infrastructure in

its reply to section 9 application, wherein MEP Infrastructure has,

at the time of entering into contract, agreed to be bound by the

terms and conditions of the Toll Tax Agreement and not seek any

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 13 of 41 rebate or concession in payment of the agreed amount even if there

is decrease in traffic intensity or traffic flow.

17. The Learned Senior Counsel for Appellant has further

argued that in case the Toll Tax Agreement does not provide any

alternative dispute resolution mechanism, any contractual dispute

has to be settled in terms of the Contract Act in a court of law of

appropriate jurisdiction, which evidently the contractor has not

done, and since it had agreed unreservedly to pay the agreed

amount, it knows it cannot raise any dispute under the contract.

She has relied on para 26 of the judgment of Hon'ble Supreme

Court in the matter of Mobilox Innovations Private Limited vs.

Kirusa Software Pvt. Ltd. [2017 SCC Online SC 1154] to argue

that the dispute that is now being claimed by MEP Infrastructure

is merely a spurious and moonshine dispute and therefore section

9 application ought to have been admitted after disregarding such

an illusory dispute.

18. The Learned Senior Counsel for Appellant has lastly claimed

that the Learned Adjudicating Authority has correctly noticed the

order dated 9.4.2021 of Hon'ble Single Judge of the Hon'ble High

Court of Delhi, wherein the writ petition of SDMC was dismissed

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 14 of 41 on the ground of maintainability and the Hon'ble Single Judge has

held that "this court in exercise of powers under Article 226 of the

Constitution of India would not go into the purely contractual dispute

and that the parties would have to enforce contractual rights

through appropriate civil proceedings before the appropriate court."

She has contended that in such a situation, since the Respondent

MEP Infrastructure has not approached the appropriate court

having jurisdiction for resolution of any purported contractual

dispute, it only goes to show that the alleged dispute is only a

hypothetical one.

19. In his arguments, the Learned Senior Counsel for

Respondent MEP Infrastructure has submitted that the purported

payment of dues is not an 'operational debt' as per section 5(21) of

the IBC, as the issue is not about the dues payable to a local

authority, but it is an obligation by way of contractual payment

strictly covered by the Toll Tax and ECC Collection Agreement

dated 28.9.2017. He has further referred to the contractual

agreement, wherein as per the recital clause (B), the SDMC is

empowered to levy and collect Toll Tax on commercial vehicles as

specified, which are entering the city of Delhi whereas in the

present case the contractor MEP Infrastructure is to merely pay

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 15 of 41 certain amount annually in accordance with the Toll Tax and ECC

Collection Agreement, and the contractual payment has no direct

correlation with the collection of Toll Tax and ECC. He has

clarified that there is no collection of tax by the Respondent, but

the contract gives a grant and would, therefore, not come in the

definition of an 'operational' debt as defined in section 5(21) of the

IBC.

20. The Learned Senior Counsel for Respondent has further

claimed that the dispute regarding the contractual conditions had

started in 2019 and MEP Infrastructure has filed WP No.

12483/2019 in 2019 assailing the demand made by the SDMC

and has been pursuing litigation regarding the dispute since then.

He has added that the section 8 notice was issued on 22.1.2021,

which was much after the dispute had already arisen and

therefore, the dispute is in the nature of 'pre-existing dispute'. He

has referred to the order of Hon'ble High Court of Delhi in WP(C)

12483/2019 dated 20.6.2019 to point out that this order deals in

detail about the grievance of the petitioner (MEP Infrastructure)

regarding the issue of opening of Eastern Peripheral Expressway

(in short 'EPE') for general traffic on 27.5.2018 when the issue was

discussed and considered by the High Level Committee of SDMC

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 16 of 41 when the matter of reduction in 30% of commercial traffic was also

highlighted. He has claimed that the order by Hon'ble High Court

of Delhi in WP (C) No. 12483/2019 clearly mentions that MEP

Infrastructure has been submitting representations to SDMC with

regard to the decline in revenue due to diversion of traffic from

1.6.2018, whereupon the High-Level Committee looked into the

claims of MEP Infrastructure, and that a sum of

Rs.18,98,54,798/- was approved as the justified claim of the

Respondent by the High Level Committee. He has also pointed out

that the Hon'ble High Court of Delhi had earlier looked into the

dispute resolution clause and decided that this petition would be

treated as representation of the petitioner to the Commissioner of

SDMC regarding the dispute, who was asked to pass speaking

order after giving due opportunity of hearing to the Respondent,

and thus the dispute being a 'real' and 'genuine' is established.

21. The Learned Senior Counsel for Respondent has further

referred to the judgment of Hon'ble High Court of Delhi in LPA

No.165/2020 whereby the Hon'ble High Court had held that due to

the operation of 'Force Majeure' clause, an order was given that the

payments from the contractor shall be reduced/suspended. He

has further contended that a weekly payment of Rs. 20 crores by

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 17 of 41 MEP Infrastructure was ordered and noticeably this amount is less

than the amount stipulated in the Toll Tax Agreement, and such a

reduced payment was ordered only after appreciation of the fact

that there was a 'dispute' between the parties regarding the

amount of payment that required resolution. He has also pointed

out that the observation of Hon'ble Single Judge that the matter

could be referred for alternative dispute resolution with the

consent of parties clearly points to the fact that there is a 'dispute'

which was noticed by the Hon'ble Single Judge.

22. The Learned Senior Counsel for Respondent has further

claimed that the contract between SDMC and MEP Infrastructure

is not one under section 113(2)(g) of the DMC Act, but it is an

independent contract where a 'grant' has been given to collect Toll

Tax and a certain amount of money is to be paid in return and

there is no direct relation with the Toll Tax and ECC collection with

the amount stipulated to be paid under the Toll Tax Agreement by

the contractor. The Learned Senior Counsel for Respondent has

referred to the judgment of Hon'ble Supreme Court in the matter of

Rajratan Babulal Agarwal vs. Solartex India Pvt. Ltd. and

Others [2022 SCC OnLine SC 1395] to contend that one of the

objects of the IBC qua an operational debt is to ensure that such

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 18 of 41 debts, which are usually small in amount, should not put the

corporate debtor into corporate insolvency prematurely and

therefore, existence of dispute is a good enough reason to prevent

the admission of a section 9 application. He has also pointed out

to the observation in this judgment that if a notice of dispute has

been received by the operational creditor, the Adjudicating

Authority must reject the application without examining whether

the dispute is likely to succeed or fail on consideration of the

merits of the dispute.

23. Looking at the grounds raised in the appeal and the

arguments of the rival parties, the following two issues arise in this

appeal:-

(i) Whether the amount claimed by SDMC in connection

with Toll Tax and ECC Agreement is an 'operational

debt' as defined in section 5(21) of the IBC?

(ii) Whether a 'pre-existing dispute' is present between

SDMC and the contractor MEP Infrastructure, which

would lead to rejection of the application filed under

section 9 by SDMC?

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 19 of 41

24. It is noted that the SDMC is authorised to levy Toll Tax in

accordance with section 113(2)(g) of the DMC Act, 1957. Further

the Commissioner, SDMC is authorised to allot the work of

collection of Toll Tax on any of the zones/routes to one or more

private agencies by way of auction process or otherwise in

accordance with Bye-law 4 of the Delhi Municipal Corporation (Toll

Tax) Bye Laws, 2007. Therefore, the SDMC, acting on behalf of

SDMC, EDMC and NDMC, selected a contractor MEP

Infrastructure for collection of toll tax and ECC through an open,

transparent process and entered into an agreement called "Toll Tax

and ECC Collection Agreement" dated 28.9.2017 with the

contractor MEP Infrastructure.

25. A perusal of the recitals of the Toll Tax Agreement makes it

clear that the collection of Toll Tax and Environment

Compensation Charge (ECC) for vehicles plying on certain routes

was given to MEP Infrastructure which was in turn required to

remit to SDMC a total amount of Rs.1206 crores per annum for a

period of 5 years subject to the enhancement of 5% in the awarded

amount/committed amount after completion of every two years

from the date of authorisation by the competent authority, which

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 20 of 41 came to a weekly remittance of an amount of Rs.23,12,87,671/-

by MEP Infrastructure to the SDMC.

26. It is noted that the Toll Tax Agreement also includes

acknowledgement by the contractor whereby the contractor agreed

and confirmed that it shall not be entitled to any compensation,

rebate or reduction on account of change or variation in traffic

pattern volume or intensity for any reason whatsoever other than

as specifically permitted with the Toll Tax Agreement and also

regarding the collection contract fee of ECC. This

acknowledgement is included in clause (3) of the Toll Tax

Agreement, which is as follows:

"3. Acknowledgements

xx xx xx

(e) The Contractor agrees and confirms that it shall not be entitled to any compensation rebate or reduction in Toll Collection Contract Fee on account of change or variation in traffic pattern, volume or intensity for any reason whatsoever other than as specifically permitted in accordance with this Agreement.

(f) The Contractor agrees and confirms that it shall not be entitled to any compensation, rebate or reduction in toll collection contract fee in the event of extension / discontinuation / modification of ECC. It is also agreed that it shall not fasten any liability on either side i.e. SDMC or contractor."

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 21 of 41

27. We now examine the first issue which is regarding the

classification of debt that is claimed to be in default and payable to

SDMC. The Learned Senior Counsel for MEP Infrastructure's

contention is that this debt arises out of a grant given by SDMC for

collection of Toll Tax, but the amount sought to be paid through

the Toll Tax Agreement by MEP Infrastructure has no direct

relevance to the collection of Toll Tax and Environment

Compensation Charge (ECC) by the contractor. In this connection,

the Learned Counsel for SDMC has referred to section 113(2)(g) of

the DMC Act, 1957 to state that the SDMC and two other

municipal corporations viz. EDMC and NDMC are authorized to

levy and collect Toll Tax and ECC (which is imposed vide order

dated 9.10.2015 and 16.10.2015 passed by the Hon'ble Apex

Court in WP No 13029/85 titled M.C. Mehta vs. Union of India &

Ors). She has referred to Bye-Law 4 of the Delhi Municipal

Corporation (Toll Tax) Bye Laws, 2007, where the Commissioner of

the Municipal Corporation is authorised to allot the work of

collection of Toll Tax to one or more private agencies byway of

auction which was exactly how the contractor was selected and an

agreement entered into with it.

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 22 of 41

28. On the issue whether the said amounts due and payable are

'operational debt' or not, we note the judgment of Hon'ble Supreme

Court in the matter of Consolidated Construction Consortium

Ltd. (supra), wherein the Hon'ble Apex Court has observed as

follows:

"50.1 First, Section 5(21) defines "operational debt" as a "claim in respect of the provision of goods or services". The operative requirement is that the claim must bear some nexus with a provision of goods or services, without specifying who is to be the supplier or receiver. Such an interpretation is also supported by the observations in the BLRC Report, which specifies that operational debt is in relation to operational requirements of an entity."

29. Thus, it is clear that an 'operational debt' is a claim in

respect of provisions of goods or services and the claim must bear

some connection with the provision of goods or services, without

specifying who is the supplier or receiver. Thus, the supplier in

the present case of services is MEP Infrastructure and the receiver

is SDMC, but in accordance with the clearly held position in the

case of Consolidated Construction Consortium Ltd. (supra), the

debt owed by MEP Infrastructure to SDMC falls in the definition of

"operational debt" under the IBC and hence we hold that the debt

owed by MEP Infrastructure to SDMC is an 'operational debt' as

defined in section 5(21) of the IBC.

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 23 of 41

30. We now turn our attention to examine the issue of dispute

raised by the Respondent, and examine whether the dispute is a

'pre-existing' dispute.

31. We note that clause 15 of the Toll Tax Agreement provides

events of "Force Majeure", which are quite limited and, are

primarily which materially and adversely affect, prevent, delay any

Party in the performance of its obligations under the Toll Tax

Agreement. Clause 15.2 explains the events that may constitute a

Force Majeure event. Further, clause 16 of the Toll Tax Agreement

stipulates how disputes are to resolved and it is as hereunder:-

"16. Dispute Resolution

16.1 Except where otherwise provided in the Agreement, all questions and disputes in any way arising out of or relating to the Agreement shall be dealt with as mentioned below.

16.2 In the event the Contractor considers any work demanded of it as being outside the requirements of the Agreement, or disputes any record or decision given in writing by the Competent Officer in any matter in connection with or arising out of the Agreement, to be unacceptable, it shall promptly within [15] days request the Competent Officer in writing to give his instructions or decision in respect of the same. Thereupon, the Competent Officer shall give his written instructions or Company Appeal (AT) (Ins.) No. 461 of 2022

Page 24 of 41 decision within a period of [30] days from the receipt of the Contractor's letter.

16.3 If the Competent Officer fails to give his instructions or decision in writing within the aforesaid period or if the Contractor is dissatisfied with the instructions or decision of the Competent Officer, the Contractor may, within [15] days of receipt of the Competent Officer's instructions or decision, appeal to the Commissioner, SDMC who shall afford an opportunity to the Contractor to be heard, if the latter so desires, and to offer evidence in support of its appeal. The Commissioner, SDMC shall give his decision in writing within [30] days of receipt of Contractor's appeal which shall be acceptable to the Contractor."

32. The termination of the Toll Tax Agreement is also provided in

clause 17 in case of default and it is provided in the agreement

that even after termination of the agreement, the rights and

obligations of any of the parties that arise before termination are

protected.

33. We note from the pleadings of the Appellant, and which is

not objected to by the Respondent, that the contractor MEP

Infrastructure made delayed payments with respect to the weekly

remittances as agreed to in the Toll Tax Agreement and as a result

multiple demand notices were sent by SDMC between the period

3.11.2017 and 18.11.2019. We note that while the contractor

repeatedly failed to make timely payment of weekly remittances, it Company Appeal (AT) (Ins.) No. 461 of 2022

Page 25 of 41 made many claims for reduction in payment of agreed amounts on

account of loss of revenue due to certain factors during the period

October, 2017 to September, 2019. These factors, as claimed by

the contractor, related to O&M expenses during the suspension of

Toll Tax collection due to REID construction work, transport

strike, traffic restrictions on account of increased air pollution etc..

These claims made by MEP Infrastructure were referred to a High

Level Committee constituted by the orders of Commissioners of

SDMC, NDMC and EDMC for examination, and consequently in a

meeting held on 17.10.2019, the claims of MEP Infrastructure

were examined by the High Level Committee under the

chairmanship of Additional Commissioner (Toll Tax), SDMC and

the recommendations were submitted to the Standing Committee

of the SDMC for consideration.

34. It is further noted that MEP Infrastructure filed a writ

petition being WP(C) No. 12483 of 2019 in Hon'ble High Court of

Delhi praying for the following reliefs:-

"a. Issue a suitable writ, order and direction declaring that in the guise of section 113 (2) (g) of the Delhi Municipal Corporation Act, 1957 the petitioner cannot be compelled to pay to the respondent no. 1 more than the actual amount collected towards toll tax from commercial vehicles entering the NCT, Delhi;

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 26 of 41 b. Issue a writ in the nature of declaration, declaring that the Toll Tax & ECC Agreement is ultra vires Section 113 (2) (g) of the Delhi Municipal Corporation Act, 1957 to the extent it contemplates payment of amount by the petitioner to the respondent no. 1 in excess of the toll tax actually collected by the petitioner;

c Issue a writ in the nature of mandamus directing the respondents to make a fresh assessment as to the circumstances affecting toll collection taking into account the circumstances highlighted by the petitioner and reassess and re-determine the annual/ weekly amount payable by the petitioner to the SDMC towards toll tax;

d. Issue a writ in the nature of mandamus directing the respondents to take into consideration the change in circumstances make suitable downward revision in the weekly/ annual remittance commensurate with the reduction in toll tax paying commercial vehicles and taking into account the tax leakages on account of free lanes;

xx xx xx

g. Issue a writ in the nature of Mandamus directing the

SDMC to provide a suitable mechanism for resolution of disputes/grievances of the petitioner as the mechanism provided by the contract has become unworkable."

(Emphasis Supplied)

35. It is further noted that Hon'ble Delhi High Court vide its

orders dated 26.11.2019 disposed WP (C) No. 12483/2019 with

the direction that the Writ Petition No. 12483/2019 would be

treated as representation of MEP Infrastructure made to

Commissioner, SDMC, who shall after giving opportunity of

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 27 of 41 hearing to the contractor, pass a reasoned order/speaking order

within two months.

36. It is further noted that the Commissioner, SDMC heard the

MEP Infrastructure on its claims and passed a reasoned order

dated 30.1.2020. A perusal of Para 20 of this order shows that

MEP Infrastructure had raised the following claims prior to the

filing of W.P. No. 12483/2019:-

"20. Claims of MEP as per record, prior to filing of the Civil Writ- Petition No.12483 of 2019, MEP vide its different letters, which have been summarized below, had submitted following claims to the SDMC.

S.No. Description of Claim Amount of claim

1. Indefinite Road Transport Strike by Rs.5,96,01,600/-

All India Motor Transport Congress (Period of claim 20.07.2018 to 28.07.2018) - claimed under Force Majeure Clause 15.1 (a) & (b) of Contract dated 28.09.2017 vide letter No. MEPIDL/OUT/2018-19/1027 date 29.09.2018, letter No.MEPIDL/ OUT/2018-19/1037 dated 03.10.2018 and further letter No. MEPIDL/OUT/2018-19/1239 dated 15.11.2018.

2. Operated Cost incurred by the Rs.9,06,52.414/-

Contractor towards O & M Expenses during the Period from 09.08.2018 to 30.09.2018 during the suspension of Company Appeal (AT) (Ins.) No. 461 of 2022

Page 28 of 41 MCD Toll - Due to stoppage of Toll collection for providing encumbrance free working environment to RFID concessionaire M/s Tecisdel India Pvt. Ltd.-GHV India Pvt. Ltd. (JV) for installation of RFID system including civil work vide letter No. MEPIDL/OUT/2018-19/1172 dated 29.10.2018.

3. Loss of Toll revenue due to air Rs.19,05,28,800/-

pollution in Delhi resulting into drop of traffic and directions of the Hon'ble Supreme Court of India to Transport Department, GNCTD to declare the list of Diesel and Petrol Vehicles which have crossed more than 10 and 15 years of life, so that they can be impounded these vehicles if found while plying on the road for the period 01.11.2018 to 12.11.2018 vide letter No. MEPIDL/OUT/2018-19/1260 dated 19.11.2018.

4. Due to diversion of Traffic at Eastern Rs.184.4 crores Periphery Expressway (EPE) and Western Periphery Expressway (WPE) for the period from June-2018 to June-2019 vide letter No. MEPIDL/OUT/2019-20/427 dated 05.07.2019

5. Due to preparation for and the main Rs.5,44,38,323/-

event of independence Day Function 2019, there is a substantial reduction in vehicular traffic on the dates 12.08.2019, 14.08.2019 & 15.08.2019 vide letter

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 29 of 41 No.MEPIDL/OUT/2019-20/638 dated 16.08.2019

6. Due to revenue loss towards evading Rs. 241,92,89,000/-

Toll Tax by the commercial vehicles plying from free lanes at - 13 major border entry toll plaza for the period October-2017 to August-2019 vide letter No. MEPIDL/OUT/2019-20/862 dated 04.10.2019.

Total claim amount Rs.465,49,10,137/-

37. A perusal of the claims submitted by the MEP Infrastructure

before the Commissioner, SDMC, makes it clear that the

contractor MEP Infrastructure was seeking various monetary

reliefs in payment of remittances on account of Road Transport

strike during 20.07.2018 and 28.07.2018, loss of road revenue due

to drop in traffic of account of commercial vehicle pollution in

Delhi, diversion of traffic at Eastern Periphery Expressway and

Western Periphery Expressway for the period from June 2018 to

June 2019, reduction in vehicular traffic on account of preparation

of main event of Independence Day, 2019 and loss of Toll Tax

revenue due to evasion by commercial vehicles plying from free

lanes at thirty border entry points during the period of October

2017-August 2019. It is thus clear that these claims that amount

to Rs.465,49,10,137/- were first taken for consideration by the Company Appeal (AT) (Ins.) No. 461 of 2022

Page 30 of 41 High Level Committee and later by the Commissioner, SDMC in

compliance of the order of Hon'ble Delhi High Court in WP No.

12483/2019.

38. We find that the Commissioner, SDMC vide his order dated

30.1.2020 allowed certain claims amounting to Rs.9,85,02,384/-,

but disallowed other claims, which were of much large quantum

and which were on account of loss of revenue by evasion to Toll

Tax by large of commercial vehicles (disallowed claim of Rs.1766

crores), loss of revenue due to diversion of commercial heavy traffic

at Eastern Periphery Expressway and Western Periphery

Expressway (disallowed Rs 257.77 crores), loss of revenue due to

ban in construction activities in Delhi (disallowed Rs.7.60 crores),

loss of revenue due to strike by motor transport (disallowed Rs.

5.96 crores) and loss of revenue due to drop in traffic in view of

directions looking at increased air pollution (disallowed to the

extent of Rs.9.85 crores out Rs.19.05 crores). Thus, it is clear that

from the total amount claimed by MEP Infrastructure, a major

amount was disallowed by the Commissioner, SDMC, and as a

result MEP Infrastructure filed writ petition being WP 2241/2020

before the Hon'ble High Court of Delhi seeking the quashing of

order dated 30.1.2020 of Commissioner, SDMC on addition to

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 31 of 41 certain other reliefs. Thus ot becomes amply clear that there were

disputes raised by the contractor MEP Infrastructure which were

actively considered by the High Level Committee and

Commissioner, SDMC and many disputes remained unresolved as

the further litigation pursued by the contractor shows.

39. One such litigation pursued by the contractor was writ

petition WP No. 2241/2020, wherein the Hon'ble High Court of

Delhi was pleased to give an interim order on 02.03.2020 which is

as follows:-

"5....... In the meantime, petitioner will deposit all arrears, as directed by this court in its order dated 26.11.2019, which as per the respondent is Rs.115.04 crores in three equal monthly instalments without prejudice to their rights and contentions. First instalment will be payable within 15 days from today. He will also continue to pay Rs.20 crore per week as stated in the earlier order dated 26.11.2019. They will also ensure compliance of the order of this court dated 26.11.2019 regarding issue of fresh Post-Dated Cheques."

40. Thus it is quite clear that the claims put forward by MEP

Infrastructure, their consideration by High Level Committee of

SDMC, then by Commissioner, SDMC upon order of Hon'ble Delhi

High Court were in the nature of disputes between SDMC and the

contractor and these disputes were subsequently carried to the

Hon'ble Delhi High Court for resolution.

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 32 of 41

41. The order dated 20.4.2020 in WP(C) 2241/2020 was

challenged in LPA No. 139/2020 and an earlier order dated

26.11.2019 of the Hon'ble High Court of Delhi in WP (C) No.

12483/2019 was challenged in LPA 140/2020, but later both the

LPAs were withdrawn and LPA no. 165/2020 challenging order

dated 12.6.2020 in WP No. 2345/2020 and LPA No. 167/2020

challenging order dated 24.6.2020 were filed before the Division

Bench of Hon'ble High Court of Delhi. These LPAs were also in

pursuance of the issues and disputes raised by the contractor. It

is worthwhile to note the operative part of the order of Delhi High

Court in LPAs No.165/2020 and 167/2020 (attached at pp. 217-

301 of appeal paperbook, Vol.II), which is as follows:-

"29. In view of the above we hereby dispose-of both the Letters Patent Appeals by holding that:

1). The Force Majeure clause stands invoked- w.e.f.

26.03.2020 in terms of OM dated 18.05.2020 issued by MORTH, Govt. of India and shall stand revoked when 90% traffic, in comparison to the traffic. before lockdown period of weekly basis, stands resumed.

;

2). The SDMC shall be entitled to weekly payments of Rs.20.00 crores till 25.03.2020 and after resumption of 90% traffic in comparison to the pre-lockdown period on weekly basis during pendency of the writ petition. Arrears of Rs.

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 33 of 41 115.04 crores are held to be cleared without being affected by Force Majeure clause.

3).With effect from 26.03.2020 till resumption of 90% traffic in comparison to pre-lockdown period on weekly basis, MEP shall continue to deposit entire collection of toll tax, ECC, cash received from sale of monthly passes, fast tag stickers and any other revenue generated from any toll collection in the bank accounts of SDMC on daily basis by next day after deduction of administrative and toll collection expenses @7.5%.

4). Ld. Single Judge, may order for an exercise to be conducted by a reputed agency to estimate the flow of traffic passing through toll gates managed by MEP from 26.03.2020 onwards on the basis of the available data and material.

Xx xx xx xx

8). There is no occasion to appoint a Retired Judge to adjudicate the dispute at this stage. However, the Ld. Single Judge may explore the possibility of referring the matter to alternative dispute resolution with consent of parties.

(Emphasis Supplied)

42. A perusal of the order reproduced above shows that the

Division Bench of Hon'ble Delhi High Court took cognisance of the

dispute regarding traffic intensity as a result of 'lockdown' due to

Covid pandemic and ordered an interim arrangement for payment

of toll tax collection amount, and noticeably the amount ordered to

be deposited is less than the amount of weekly remittance as Company Appeal (AT) (Ins.) No. 461 of 2022

Page 34 of 41 agreed to in the Toll Tax Agreement. This is also an indication of

the fact that the Hon'ble High Court of Delhi surmised that there

existed a dispute between the parties regarding the amount of

weekly remittance, and hence it ordered a reduced amount to be

remitted till the time the matter would be finally resolved.

43. After order dated 6.11.2020 was passed by Hon'ble Delhi

High Court in LPA No. 165/20 with LPA No. 167/2020, SDMC with

some others filed a SLP before Hon'ble Supreme court being SLP(C)

15173/2020 which was disposed of vide order dated 12.1.2021,

whose operative portion is as follows:-

"We are not inclined to entertain this special leave petition which arises out of an order passed by the Division Bench of the Court which in turn arises out of an interim order passed by the Learned single Judge of the High Court.

Having regard to the fact that the matter has been pending before the learned single judge, we are of the view that it would he appropriate in the interest of justice, if the learned single Judge is requested to dispose of the matter expeditiously preferably by the end of February, 2021.

Xx xx xx xx

All points are left open for decision before the learned single Judge."

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 35 of 41

44. The above observation made by Hon'ble Supreme Court also

goes to show that the Hon'ble Supreme Court left the issue of

resolution of dispute to the wisdom of Single Judge of Hon'ble

Delhi High Court. It implies that there was an implicit

understanding that there was some dispute that needed to be

resolved or addressed. We also note while the writ petition was

pending before the Learned Single Judge of Hon'ble Delhi High

Court for adjudication, the SDMC went ahead to issue notice

under section 8 on 12.1.2021.

45. From the detailed discussion regarding the issues/claims

raised by the contractor MEP Infrastructure and their

consideration in various forums including the High Level

Committee of SDMC, Commissioner SDMC and Hon'ble Delhi High

Court, we can infer that the claims, which arose out of disputes

raised by the contractor, were the subject matter of litigations and

adjudicatory processes. Further, as is noted from paras 20-21 of

the Commissioner, SDMC's order dated 30.1.2020, these claims

related to loss of revenue in Toll Tax and ECC collection due to

various factors and events.

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 36 of 41

46. We also note that the first time the dispute was raised and

was considered by the High Level Committee was in the year 2019

which was much before the section 8 notice dated 12.1.2021 was

given to the contractor by SDMC. This it is clear that the disputes

predate the demand notice under section 8 of the IBC issued by

the SDMC, and furthermore, in the reply to demand notice sent by

MEP Contractor vide letter dated 22.1.2021 (attached at pp. 359-

344 of appeal paperbook Vol. II) the various issues raised by the

contractor including dispute about payment of agreed amounts

and the litigations that are pending with regard to the issues

raised and the claims made by the MEP Contractor in relation to

Toll Tax and ECC Collection Agreement have been explicitly

mentioned. It is also clear that these issues are not just spurious

or illusory disputes raised by the contractor to avoid payment of

dues, but they relate to the very core of the Toll Tax and ECC

Collection Agreement about which the contractor has approached

the Hon'ble High Court of Delhi and which have been taken notice

by the Hon'ble Delhi High Court.

47. We refer to the judgment of Hon'ble Supreme in Rajratan

Babulal Agarwal (supra), wherein the following is held: -

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 37 of 41 "34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine:

(i) Whether there is an "operational debt" as defined exceeding Rs 1 lakh? (See Section 4 of the Act) CA NO.

2199/ 2021 46.

(ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and

(iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case may be, depending upon the factor s mentioned in Section 9(5) of the Act.

xx xx xx

38. ........................................ We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties.

xx xx xx

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 38 of 41

51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application."

(Emphasis Supplied)

48. A perusal of the relevant portions of paras 54 and 56 of the

Rajratan Babulal Agarwal judgment (supra), wherein the decision

of Hon'ble Supreme Court in Mobilox Innovations Private Ltd.

(supra) has been extensively discussed by the Hon'ble Supreme

Court, clarifies that if there is an existence of dispute between the

parties before the receipt of demand notice, the application under

section 9 would have to be rejected. Further, the Mobilox

Innovations Private Ltd. judgment (supra) lays down that if Company Appeal (AT) (Ins.) No. 461 of 2022

Page 39 of 41 notice has been received by the operational creditor, the

Adjudicating Authority must reject the application under section

9(5)(2)(d) and that it is sufficient to ascertain that the dispute truly

exists in fact and is not spurious, hypothetical and illusory and

that the Court does not at this stage have to examine the merits of

the dispute.

49. In the above-mentioned situation, we are of the view that the

dispute such as the one raised by MEP Infrastructure, first before

the High-Level Committee and Commissioner, SDMC and later

through WP No. 12483/2019 and 2241/2020 and subsequently in

LPAs No. 165/2020 and 167/2020 are not merely hypothetical and

illusory disputes, but those that go into the very heart and core of

the Toll Tax Agreement and the payments to be made in

accordance with the Toll Tax Agreement by the contractor. These

disputes that have been raised by the contractor MEP

Infrastructure are in the nature of 'pre-existing disputes' that were

first raised in 2019, much before the issue of section 8 demand

notice on 12.1.2020.

50. The detailed discussion in the aforementioned paragraphs

makes it clear that though the debt claimed by SDMC is an

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 40 of 41 'operational debt', there are clearly 'pre-existing disputes' raised by

MEP Infrastructure regarding which litigations/dispute resolution

mechanism have been pursued by both the parties in Hon'ble High

Court and the internal forum of SDMC and the existence of these

disputes has been brought to the notice of the operational creditor

SDMC by MEP Infrastructure through its reply to demand notice

under section 8. In such a situation, the section 9 application,

which is clearly impacted by such 'pre-existing dispute', has

correctly been disallowed by the Adjudicating Authority. Finding

no error in the Impugned Order we refuse to interfere with it. The

appeal is, therefore, rejected and is disposed of accordingly.

51. There is no order as to costs.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical)

[Mr. Barun Mitra] Member (Technical) New Delhi 17th January, 2023

/aks/

Company Appeal (AT) (Ins.) No. 461 of 2022

Page 41 of 41