TMI Blog2019 (6) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice of dispute pursuant to service of notice of demand on the Corporate Debtor within the specified time or a dispute emerges from the record of information utility. A suit or arbitration proceeding relating to a dispute may be pending between the parties or the dispute raised qua the claim or the invoices may emerge from the record of information utility or correspondence and communication between the parties. The issue of pre-existing dispute raised by the Corporate Debtor much prior to service of demand notice under Section 8(1) of I B Code requiring adjudication by a competent judicial forum brings the case out of the clutches of Corporate Insolvency Resolution Process - in the given circumstances triggering of Corporate Insolvency Resolution Process at the instance of Operational Creditor was uncalled for and unwarranted - Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 622 of 2018 - - - Dated:- 14-5-2019 - Mr A. I. S. Cheema, Member (Judicial) And Mr Bansi Lal Bhat, Member (Judicial) For The Appellant : Mr. Suryanarayan Iyer, Ms. Garima Bajaj and Mr. Sanskar Agarwal, Advocates For The Respondent : Mr. Devans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which - 4- Company Appeal (AT) (Insolvency) No. 622 of 2018 is pre-existing-i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. In a later judgment titled Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. , (2018) 1 SCC 353 , the Hon ble Apex Court further observed as under:- 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 operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the completion time to 31st May, 2015. The Operational Creditor claims to have completed the work awarded to it on 28th March, 2015 culminating in issuance of completion certificate by the Corporate Debtor. The Operational Creditor raised retention bill dated 11th August, 2014, final bill dated 27th February, 2016 and retention bill dated 10th March, 2016 besides claiming overrun compensation (ORC) of ₹ 5,49,22,446/- vide its email dated 11th February, 2014. The Operational Creditor had provided two bank guarantees for ₹ 1,90,00,852/- and ₹ 41,80,585/- towards a performance guarantee/ security deposit to the Corporate Debtor which were extended from time to time due to extension in the contract period. While the Corporate Debtor sought extension of the two bank guarantees, the Operational Creditor, vide its letter dated 18th March, 2017, explained the amounts due to the Corporate Debtor and sought release of the bank guarantees as contractual conditions had been fulfilled. Responding thereto, the Corporate Debtor vide its letter dated 20th March, 2017 to SBI Baroda withdrew its requests for extension of the two bank guarantees. According to Corporate Debtor, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted a pre-existing dispute. It is submitted that completion certificate has nothing to do with settlement of dues. It is further submitted that the parties are in dispute over the liability of the delay and without resolution of the same provisions of I B Code cannot be invoked. It is further submitted that the release of bank guarantee does not amount to acceptance of Operational Creditor s claim by the Respondent. It is submitted that the Corporate Debtor in its email dated 17th July, 2017 has clearly stated that the pending payment is subject to decision on liquidated damages imposition by the Corporate Debtor as per agreement between the parties. Therefore, same could not be construed as an admission. It manifested that the amounts were disputed and there was no admission of any debt. It is further submitted that there existed some dispute between the parties in regard to completion of work and computation of liquidated damages. It is further submitted that the amount claimed by the Operational Creditor is a disputed claim and the application under Section 9 of I B Code is not maintainable. 7. We have given our anxious consideration to the arguments advanced at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances specified in the Contract. The compensation for any time overrun of two months beyond the time schedule was not admissible for delay caused due to reasons attributable to the Corporate Debtor. It is the admitted case of the parties that the Work Order had to be revised fifteen times and the time schedule got extended beyond proportion. Letter dated 8th October, 2014 (at page no. 317 of the paper book) from Operational Creditor to the Corporate Debtor is with respect to overrun compensation worked out at ₹ 5,49,22,446/- as on 14th June, 2014 but the same has not been included in the claim. In reply thereto, the Corporate Debtor sent reply dated 11th December, 2014 (at page no.319 of the paper book) saying that the issue was under consideration and same would be settled alongwith final bills. Therefore, there can be no quarrel with the proposition canvassed by learned counsel for the Operational Creditor that there was no dispute as regards claim of Operational Creditor for overrun compensation, as the issue was agreed to be settled alongwith final bills. However, the matter does not end there as the issue of liquidated damages raised by the Corporate Debtor is di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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