Ved Contracts Pvt. Ltd vs Pan Realtors Pvt. Ltd

[Arising out of Order dated 18th July 2019 passed by NCLT, New Delhi Bench in Company Petition No.(IB)-645(ND) 2019]

IN THE MATTER OF:

Ved Contracts Pvt. Ltd. ...Appellant Versus Pan Realtors Pvt. Ltd. ...Respondent

Present: For Appellant: Mr Amit Prabhat Deshpande, Advocate. For Respondent: Mr Alok Dhir, Ms Varsha Banerjee and Mr Kunal Godhwani, Advocates.

[Per; V. P. Singh, Member (T)]

This appeal has been filed against the order dated 18th July

2019 passed by the Adjudicating Authority, National Company Law

Tribunal, New Delhi Bench, in Company Petition No. (IB)-645(ND) 2019 M/s

Wed construction Pvt. Ltd. whereby the petition filed under Section 9 of the

Insolvency and Bankruptcy Code, 2016 (for short I&B Code) has been

rejected. Feeling aggrieved by the said order, the Appellant - „Operational

Creditor‟ has filed this Appeal.

Brief facts as stated by the „Operational Creditor‟ is engaged in the

business of construction and was awarded a contract by the „Corporate

Debtor to undertake civil construction of their project PAN OASIS at Sector

70 Noida. Four work orders were awarded to the Operational Creditor 2

between January 2010 and January 2014 under which the work was

executed. The Corporate Debtor made part payment of the running bills

raised and deducted TDS.

The „Operational Creditor‟ claims that Rs. 16,83,03,963/- has been

paid by the Corporate Debtor including TDS and WCT through cheques and

RTGS. The bills of Rs. 2,41,58,130/- is due and payable against the

„Corporate Debtor‟. The „Corporate Debtor‟ had raised a debit note of Rs.

6,21,164/- which was never accepted by the Operational Creditor when the

defaulted in making the payment, therefore, a demand notice under Section

8 of the Insolvency and Bankruptcy code, 2016 was issued on 5th January

2019 against the Corporate Debtor demanding the outstanding balance

together with the interest accruing thereon as well as the GST and other

charges payable. The demand notice was duly replied to by the Corporate

Debtor.

The Adjudicating Authority has rejected the petition on the ground of

„pre-existing dispute‟ before the issuance of demand notice. We have heard

the argument of both the parties and perused the record.

Learned counsel for the „Corporate Debtor‟ submitted that the

Operational Creditor‟ has not adhered to the specification of the work order.

The demand raised in only in respect of the running and the final bills has

neither been raised nor accepted by the Corporate Debtor. The contract

stands concluded only on submission of the final bill duly approved and

certified by them.

3

We have heard the arguments of the Learned Counsel for the parties and

perused the record.

The Learned Counsel for the Operational Creditor has claimed

Rs.2,41,58,130/- as outstanding amount towards Corporate Debtor

including Rs.69,00,000/- as the retention amount. Learned Counsel for the

Corporate Debtor disputed the allegations and submitted that Operational

Creditor has not adhered to the specification of the work order. The demand

raised is only in respect of the running bills and the final bills has neither

been raised nor accepted by the Corporate Debtor. It is further, pleaded that

the contract stands concluded only on submission of the final bill. The

Corporate Debtor has also pleaded that there was pre-existing dispute

before the issuance of the demand notice. Therefore, the petition under

Section 9 is not maintainable on account of „pre-existing dispute‟. The

Respondent has placed reliance on the e-mail communication dated 24th

October 2018 copy of the e-mail is given as under: -

"From- Rahul Rajvanshi,

Dear Prashant,

With reference to trailing mail regarding updated payment to you

(M/s. Ved Contracts), confirmation is still pending, please do the

needful on a priority basis.

Further; you have shared a statement "Claim PAN 3.10.2018"

without references and supporting documents, it seems to

be totally baseless, please submit your claim with the 4

consideration of work order's Terms & Conditions and

mutually agreed, as following:

 Final Bill certified Amount w.r.t. work order

 Payment Received in any Account

 Recovery against electricity

 Recovery against client supplied Machinery as Tower Crane,

Boom place etc.

 Recovery against client supplied material as Bricks, Scaffolding

material, Sand, Badarpur etc.

 Recovery against client-supplied labour

 Debit against incomplete work which was executed by third party

on your risk and cost

 Debit against quality.

 Tax deductions as per work done and payment.

 Recovery against reconciliation of material as per work order

terms and condition.

 Balance (if any) will be considered at the time of finalisation.

Up to Finalization of submitted bills, we negate your

exaggerated claim. Any other information/detail required

not stated as above will be intimated to you after received

receipt of the above information.

This mail is without prejudice to all our rights which are hereby

expressly reserved.

Thanks & Regards, 5

Rahul Rajvanshi, Sr. Manager-Billing & Contracts, Pan Realtors Pvt. Ltd.

GH- 01, Sector- 70, Noida, U.P. M- 9560095584".

On perusal of the above email, correspondence dated 24th October

2018, it is clear that Corporate Debtor demanded certain documents to settle

the claim dated 3rd October 2018 from the Operational Creditor. The details

of the documents are mentioned in the email above.

It is also stated in the above email that "up to finalisation of submitted

bills, we negate your exaggerated claim. Any other information/detail

required not stated as above will be intimated to you after received receipt of

the above information".

Admittedly, notice under Section 8 of the Insolvency and Bankruptcy

Code, 2016 (I&B Code) was issued against the Corporate Debtor on 5th

January 2019, i.e. much before the issuance of demand notice. The

Corporate Debtor raised an objection regarding alleged bills and stated that

in the email dated 24th October 2018, the submitted bills are the exaggerated

claim.

Thus, it is clear that before the issuance of the demand notice, there

was a pre-existing dispute.

In 2018 (1) SCC 353 Mobilox Innovation Private Limited Vs. Kirusa

Software Private Limited Hon‟ble Supreme Court has laid down the test for 6

determination of existing dispute for admitting and rejecting the petition

under Section 8 & 9 of the Insolvency and Bankruptcy Code, 2016.

Hon‟ble Supreme Court has held that the Adjudicating Authority is to

see at the stage of admitting/rejecting the application is whether there is

plausible contention, which requires further investigation and that the

dispute is not patently, feeble, legal arguments or assertion of facts,

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 authority does not need to be satisfied that the defence is likely

to succeed. ___________ So long as a dispute truly exists in fact and is not

spurious, hypothetical or illusory, the adjudicating authority has to reject

the application.

In the present case, applying the test of "existence of a dispute",

without going into the merit of the dispute, it is apparent that the Corporate

Debtor had raised a plausible contention to require further investigation,

which was not a patently, feeble, legal arguments or an assertion of facts,

unsupported by evidence. The defence was not spurious, mere bluster,

plainly, frivolous or vexatious.

It is also apparent from the record that alleged demand of the

Operational Creditor is only in respect of the running bills and the final bill

has neither been raised nor accepted by the Corporate Debtor. The contract

stands concluded only on submission of the final bill duly approved and

certified by the Operational Creditor. In this Operational Creditor has not 7

filed any documents to show that the final bill was submitted regarding the

alleged contract and the outstanding amount was also acknowledged by the

Corporate Debtor. These email/communication submitted by the Corporate

Debtor also shows that there was a pre-existing dispute, before issuance of

the demand notice. Therefore, we are of the considered opinion that the

Adjudicating Authority has rightly rejected the application filed under

Section 9 of the I&B Code for initiation of the Corporate Insolvency Process.

There is no need for interference in the order passed by the Adjudicating

Authority. Thus, the appeal is rejected. No order as to cost.

[Justice Venugopal M.] Member (Judicial)

[Kanthi Narahari] Member (Technical)

[V. P. Singh] Member (Technical)

NEW DELHI 03rd JANUARY, 2020

pks/md