TMI Blog2018 (11) TMI 1537X X X X Extracts X X X X X X X X Extracts X X X X ..... For The Petitioner : Shri Sanjay Kumar Ruia, CA, Ranga Rao Doradla, PCA and Ms. Kanchan Kukreja, PCS For The Respondent : K. Narsimha Reddy and A.M. RAO, Advocates ORDER 1. This petition is filed by Shri Shrikrishna Rail Engineers Private Limited, which is the Operational Creditor stating that Madhucon Projects Limited, Corporate Debtor herein had defaulted in repaying a sum of ₹ 4,16,97,565/-, under Section 9 of Insolvency and Bankruptcy Code, 2016, R/w Rule 6 of Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, seeking admission of the Petition, initiation of Corporate Insolvency Resolution Process, granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon. 2. The averments made in Form-5 in brief are as under:- (1) The Petitioner/Operational Creditor is into the business of construction activity. The Respondent / Corporate Debtor, which was incorporated in 1990, is in the business of EPC turnkey projects, power, mining, irrigation, building express ways, national highways etc. The Operational Creditor was engaged by the Corporate Debtor for construction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,00,00,000/- to the Operational Creditor with regard to the outstanding payments due to the Corporate debtor. The Operational Creditor too sent another letter dated 22.01.2015 to the CEE, MMRDA, Mumbai requesting them to release the payment of ₹ 2,32,00,000/- (8) It is averred that finally Operational Creditor sent a letter dated 20.05.2017 to the Corporate Debtor that the work as per LOI and its amendments was completed and to release the outstanding payments amounting to ₹ 2,36,34,381/-. (9) It is averred that the total amount of work done and certified by Madhucon Projects Limited (Corporate Debtor) was ₹ 4,26,26,667/-. Total payments received from 17.05.2013 till date is ₹ 1,81,42,213/. Total outstanding amount as on 18.10.2017 is ₹ 2,32,10,411/- plus ₹ 12,74.043/- i.e 50% of Retention Money due on 17.10.2019 along with interest @ 18% p.a for the period post 30 days from the date of default amounting to ₹ 1,72,13,111/-. Therefore, the total amount due to operational Creditor is ₹ 4,16,97,565/-. (10) It is further submitted that Corporate Debtor has clearly deducted TDS on ₹ 3,96,81,402/-. However payments made is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out the work as per LOI. Further, it is contended that as per the alleged RA bills submitted by the Petitioner, it has completed all the works mentioned in LOI in the month of October, 2014 itself and the petitioner has not received any subsequent LOI dated 17.02.2015 and not carried out any work but is claiming the works done by some other Agencies which was engaged by the Respondent. (4) It is the case of Respondent that as claimed by the Petitioner, the outstanding four RA bills is ₹ 2,32,10,411/- (as per para 23 of the petition) but at the same time the Petitioner claims that the outstanding against four RA Bills comes to ₹ 2,39,83,202/-. (5) It is stated that the alleged outstanding as per the Petitioner is only towards the payment for the work which is yet to be reconciled. (6) It is further contended that the retention money is to be released after expiry of time period i.e. October 2019. (7) It is further alleged that the Respondent engaged other contractors also for the same work allegedly done by the Petitioner and also made payment. Thus, reconciliation was necessary for ascertaining any dues in r/o of the claims by the Petitioner. It is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DS was deducted on the RA Bill dated 17.10.2014. It is also stated that the Respondent has given the completion certificates upon which the Petitioner generated the RA Bills. It is also the case of Petitioner that RA Bills for which the payments were made by Respondent never went through such reconciliations or scrutiny by the Respondent. The Petitioner has denied the allegation that the rates mentioned in the RA Bills was inflated. The fact is that site Engineer of the Respondent has approved the same and provided work completion certificate. The Respondent made payment. 5. I have heard the counsels for the Operational Creditor and Corporate Debtor. I have perused the written submissions filed on both the sides. The points urged in the written submissions will be dealt in the course of the order. 6. The counsel for Corporate Debtor has relied on the following judgements: (1) Judgement in the matter of Speech Software Technologies (India) (P.) Ltd. v. Neos Interactive Ltd. [2009] 1 SCC 475. (2) Judgement in Dresser Rand SA v. Bindal Agro Chem Ltd. AIR 2006 (SC) 871. (3) Judgement in the matter of Nikhil Adhesives Ltd. v. Kandla Port Trust 2011 (2) GLH 283. (4) J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for the Operational Creditor to prove the Corporate Debtor owed the operational debt claimed by it. 10. The contention raised by Corporate Debtor that there is no concluded contract. Secondly, there is no provision for payment of interest. Thirdly the Operational Creditor cannot claim interest under MSME Act. 11. The Operational Creditor relied on Letter of Intent (LOI) dated 17.05.2013 which was subsequently amended twice. The PCA for operational Creditor strongly contended that LOI dated 17.05.2013 and subsequent amendments to the LOI were acted upon and a part of amount covered under RA Bills was in fact paid by the Corporate Debtor. The PCA contended, it is not open to the Corporate Debtor to raise dispute over the execution of work. The other contention of the PCA for the Operational Creditor that Corporate Debtor never raised dispute at any point of time except by way of counter after petition was filed against it. PCA contended, for the demand notice, the Corporate Debtor did not issue any reply raising any dispute. He contended no credence can be given to the alleged dispute. 12. The amount claimed to be in default as per Form-5 in the Default Column was ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor waived the same otherwise the Corporate Debtor would have cancelled LOI. There was no question of executing amended LOIs. The fact some payments were made to the Operational Creditor and the fact LOI was amended twice are by themselves sufficient to conclude that corporate debtor failed to comply the condition in clause (D) of LOI dated 17.05.2013. 16. It is the case of Operational Creditor, it raised 1st RA Bill dated 09.06.2013 shown at page No.74 marked as Exhibit-I. The ledger account of Operational Creditor shows the entry dated 09.06.2013 by raising RA Bill for ₹ 32,45,238/-. The further case of Operational Creditor that Corporate Debtor also issued interim payment certificate No.1 which is dated 22.06.2013 for ₹ 28,48,317/-. It is shown at page No.62 marked as Exhibit H . It is true this interim payment certificate No.1 for LOI dated 17.05.2013 is given on behalf of Corporate Debtor. It goes without saying that LOI dated 17.05.2013 was being acted upon without cancelling the same and interim payment certificate/vouchers were also being issued. Therefore, it is not open to the Corporate Debtor to contend that there was no concluded contract and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid to have been outstanding shown at page 90-93 marked as Exhibit K. RA Bill No.8 is dated 15.03.2014. RA Bill NOS.9 is dated 30.04.2014, RA Bill No. 10 is dated 30.06.2014 and RA Bill No.11 is dated 17.10.2014. The important document is form 26AS for the assessment year 2014-15 of the Corporate Debtor. Exhibit L is Form 26AS which clearly shows that Company has deducted TDS on the Bills raised by the Operational Creditor. The next important document is email of Corporate Debtor dated 13.10.2017 which is shown at page no. 99. This is from the Corporate Debtor to the Operational Creditor, wherein Corporate Debtor clearly admitted that as per its Books of account amount due to the Operational Creditor is ₹ 2,10,39,189/-(including retention money of ₹ 23,80,884/-) but it is subject to reconciliation. Thus evidence on record goes to show that Operational Creditor executed work entrusted in pursuance of LOI issued by Corporate Debtor and that Corporate Debtor had failed to pay the balance and there was no dispute raised except pleading reconciliation of account prior to demand notice. 20. It is the case of Operational Creditor 12 RA Bills were raised in respect of execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised. The Operational Creditor filed bank statement to prove that no payment from the side of Corporate Debtor. The Petition is therefore liable to be admitted. The Petition is in order. Hence Petition is admitted. 26. The Operational Creditor has filed a fresh Form-2, the consent given by Mr. Rakesh Rathi having IP registration No. IBBI/IPA-001/IP-P00696/2017-18/11211 to act as Interim Resolution Professional. 27. Hence, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code, with following directions:- (a) The Adjudicating Authority hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority; Transferring , encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under Securitiza ..... X X X X Extracts X X X X X X X X Extracts X X X X
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