TMI Blog2019 (7) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER Per : RAJESWARA RAO VITTANALA, MEMBER (J) 1. C.P. (IB) No.02/BB/2018 is filed by M/s. Simplex Infrastructures Limited ('Petitioner/Operational Creditor') under Section 9 of the IBC, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudication Authority) Rules, 2016, by inter alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Nitesh Estates Limited ('Respondent/Corporate Debtor') on the ground that it has committed a default of ₹ 6,03,55,646/- (Rupees Six Crores Three Lakhs Fifty Five Thousand Six Hundred and Forty Six Only) along with interest at the rate of 18% per annum w.e.f. 26.12.2014. 2. LA. No.72 of 2018 is filed by M/s. Nitesh Estates Limited (Corporate Debtor) U/s 8 of Arbitration and Conciliation Act, 1996 by inter alia seeking to refer the matter for arbitration, as per clause 5 of Letter of Acceptance dated 19.03.2008, and consequently dismiss the main Company petition etc., and this IA was allowed by the Tribunal vide order dated 25th July, 2018. Subsequently, it was questioned before the Hon'ble High Court of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... performance warranty for a period of 10 years for which works carried out by Operational Creditor. (4) As per the Final Payment Certificate dated 31.10.2014, the following details of claim and payments are made available: Sl No. Description Amount in INR 1. DLKPK Recommended as on 31.10.2014 98,54,97,854 2. SIL Received as on date 31.10.2014 92,51,42,207 3. P G amount to be released after completion of DLP (1,22,00,000) 4. Waterproofing amount to be released after completion of DLP (3,24,00,000) 5. Balance to be payable as on 31.10.2014 1,57,55,646.33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Annexure-A of Letter of Acceptance dated 19.03.2008, which reads as follows: Venue of Arbitration shall be Bangalore/Mumbai. Arbitration shall be conducted as per the Indian Arbitration and Conciliation Act, 1996. Accordingly, the Respondent, vide his Counsel's letter dated 22.12.2017, has allegedly denied all the claims in question and in turn suggested to appoint Hon'ble Mr.Justice Anand Byrareddy (Retd.) as sole Arbitrator. It is contended that without deciding the rights and liabilities of the parties, and the quality of the construction completed, the instant insolvency petition is incomplete. However, Section 8 of the Arbitration and Conciliation Act, 1996 provides that if here is an arbitration agreement between the parties exists, the Judicial Authority is duty bound to refer the same to the Arbitration. Since the Respondents themselves agreed for the matter to be referred to the Arbitration, the application is eligible to be allowed. No hardship whatsoever will be caused to the Respondents if the Company Application is allowed. 5. The Operational Creditor has opposed the said I.A. No. 72 of 2018 by filing Statement of Objections d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i. Debit note for a sum of ₹ 27,000/- dispatched along with letter bearing reference No.NRHPL/RCH/869/13-14 dated 13.01.2014; ii. Debit note No.NRHPL/DN/SIL/003 dated 03.04.2014 for an amount of ₹ 12,49,115/- dispatched along with letter bearing reference No.NRHPL/RCH/965/14-15 dated 07.05.2014; and iii. Debit note bearing reference No.NRHPL/DN/SIL/001 dated 02.12.2013 for an amount of ₹ 4,18,50,000/- dispatched along with letter bearing reference No.NRHPL/RCH/765/ 13-14 dated 02.12.2013. (6) They have relied upon the following judgments in support of their case: i Swiss Ribbons Private Limited and anotherVs Union of lndia and others, (Wit Petition (Civi) 99 of 2018); ii. Booz Allen and Hamilton Vs SBI Home Finance Limited and Others (2011) 5 SCC 532; iii Hangna Telecom Limited, Vs, Sterlite Industnes India Limited, (1999) 5 SCC 688; iv Mob! ox Innovations Private Limited Vs, Kirusa Software Private Limited, (2018) 1 SCC 353. 6. Heard Shri Manu Kulkarni, learned Counsel for the Petitioner and Shri Naman Jhabakh, learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dependent and separate. Therefore, the Order dated 25.07.2018 passed in IA. No.72 of 2018 is contrary to law. Admittedly, the Respondent has not denied the debt and requested for settlement of the issue. Therefore, it is a fit case to admit by initiating the CIRP. As per the Final Certificate dated 31.10.2014, total amount payable by the Corporate Debtor for the work done by the Operational Creditor under the Contract was ₹ 98,54,97,854/-, out of which an amount of ₹ 92,51,42,207/- was paid by Corporate Debtor as on 31.10.2014. The Arbitration Clause was invoked after the issuance of the Demand Notice under Section 9 of the IBC, 2016. Therefore, the dispute raised by the Corporate Debtor is not bona fide and is moonshine to evade liability. 9. The learned Counsel for the Petitioner further point out a reply dated 22.12.2017 (Page 133 to 137 in IA. No.72 of 2018) to show that there is an outstanding amount and the letter reads as under: 7. As per the Final Payment Certificate, you are liable to our Client for an amount of ₹ 6,03,55,646/- ('Outstanding Amount'), together with interest thereon @ 18% p.a. from the due date. As p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar the case under Section 9 of the IBC, 2016. However, the Hon'ble High Court has directed to decide the application under Section 8 of the Arbitration and Conciliation Act, 1996 as well as with regard to the proceeding under Section 9 of the Code by a speaking order after affording an opportunity of hearing to both the parties. 12. So far as IA. No.72 of 2018 is concerned, the Tribunal has examined the entire issue after hearing the learned Counsels for both the parties. However, the C.P. was not considered as merit, since the matter was referred to Arbitration. As detailed supra, the learned Counsel for Petitioner has again opposed IA. No.72 of 2018 on various grounds and insists that C.P. is still maintainable independent of Arbitration, under the provisions of Code. Therefore, it is necessary to advert the merits of main Company Petition under the provisions of Code. 13. As admitted by the Petitioner (Operational Creditor) in the Statement of Objections dated 23.04.2018, the Contract Agreement dated 19.03.2008 for the construction of 'The Ritz Carlton Hotel' in Bengaluru was executed and completed, and it has been in operation since 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a settled position of law that provisions of Limitation Act would be applicable to the provisions of Code. The Hon'ble Supreme Court in the case of B.K. Educational Services (P.) Ltd. V/s. Parag Gupta and Associates (2018) SCC Online SC 1921 has, inter alia, held that provisions of Limitation Act will apply to proceedings or appeals before NCLT/NCLAT. Section 238A of the Code make provisions of Limitation Act would apply to proceedings under the Code. The Petitioner failed to explain as to how the instant Company Petition is within limitation since the alleged debt and default occurred as early in the year, 2014. 16. So far as the dispute is concerned, the Hon'ble Supreme Court in Transmission Corpn. of A.P. Ltd. V/s. Equipment Conductors and Cables Ltd. (CA No of 2018) dated October, 2018 (2018) CLA 112 (SC) it is, inter alia, held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of judgment, it is stated that Adjudicating Authority, while examining an application filed under Section 9 of Code, will have to determine: i. Whether there is an 'operational debt' as defined exceeding ₹ 1 Lakh? ..... X X X X Extracts X X X X X X X X Extracts X X X X
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