TMI Blog2020 (2) TMI 1124X X X X Extracts X X X X X X X X Extracts X X X X ..... ode. The Code is not intended to be substitute to a recovery forum. The moment there is existence of a dispute, the corporate debtor gets out of the clutches of the Code. In the factual background of this case 'existence of real dispute' cannot be totally overruled - The provisions of section 9 (5) (ii) (d) of the Code clearly mandates that Adjudicating Authority shall reject the application when notice of dispute has been received by the applicant operational creditor. In the present case notice under section 8 was duly replied within the period prescribed by bringing to the notice of the operational creditor the existence of dispute. Materials placed before us show that dispute was raised prior to the issuance of notice under section 8 of the Code. The claim of operational debt in question is not free from dispute. There is substance and plausible contention in the pleadings of both sides, which necessitates investigation - Respondent has raised dispute with enough particulars to qualify as a dispute as defined under sub-section (6) of section 5 of the Code. Application dismissed. - Company Petition (IB) No. 1797/ND/2019 - - - Dated:- 3-12-2019 - Dr. P.S.N. Pras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r performed their obligations entirely and had completed the construction of factory building. 4.3 It is submitted by the operational creditor that the terms and condition of the work order stated that the payment for the work done shall be made on completion of work. Despite completion of the work, the corporate-debtor has failed to pay the full consideration in accordance with the terms and conditions of the work order as well as the agreement. On 07.08.2015 07.07.2015 the Operational-creditor sent 2 letters to the Corporate-debtor and requested for releasing the pending payments of a sum of ₹ 1,54,78,889/- (Rupees One Crore Fifty Four Lakhs Seventy Eight Thousand Eight Hundred Eighty Nine Only) towards bills R.A. 18-21 and further retention amount of ₹ 71,86,184/- is payable by the corporate-debtor to the Operational-creditor. The total amount due as on March, 2015 amounts to a sum of ₹ 2,26,65,070/- (outstanding principal debt). 4.4 The operational-creditor on 17.08.2016 sent a Legal Notice through his counsel to the Corporate-debtor to pay outstanding debt amount a sum of ₹ 2,26,65,073/- (Principal debt) and 12.09.2016 Operational-creditor again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RA 19 was raised on 05.01.2015 for an amount of ₹ 49,49,085/- (Rupees forty nine lakhs forty nine thousand eighty five only), i.e., allegedly payable 20.01.2015, RA 20 was raised on 05.02.2015 for an amount of ₹ 31,85,927, allegedly payable on 20.02.2015 and RA 21 on 01.04.2015 for an amount of ₹ 16,52,235/- allegedly payable on 15.04.2015. 7.3 It is submitted that the application of the operational-creditor ought to be dismissed as the Operational-creditor has filed a non-est application. The Operational-creditor has failed to comply with the mandate stipulated under Section 9(3)(c) of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as IBC), that categorically stipulates that an Application filed by Operational-creditor has to be accompanied with a certificate from a financial institution that maintains the accounts of the Operational-creditor confirming that there has been no payment of the unpaid operational debt by the Corporate-debtor. In the present case, no such confirmation in the form of a certificate by any financial institution has been furnished by the operational-creditor, and hence the application ought to be rejected on this ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rational-creditor raised total of 21 (twenty one) bills for the construction work undertaken, out of which 17 (seventeen) bills have been paid by the Company. The RA bills 18-21 raised (and as annexed with the Application of the Operational-creditor) are uncertified and have been raised for incomplete and unfinished work undertaken by the Operational-creditor. The work undertaken by the Operational-creditor against which RA 18-21 were raised is shoddy and was neither completed nor were the defects rectified by the Operational-creditor, despite repeated requests and reminders by the Company. 7.10 The Operational-creditor never completed the contract and the work assigned thereunder, and the same is evidenced from the fact that no final bill was presented accompanied with a no claim certificate to the Company by the Operational-creditor in terms of Clause 6.4, which is being reproduced for ready reference,- Clause 6.4- Payment of contract's Bill: the CONTRACTOR shall prepare the detailed measurements with bill and submit to the Engineer. After a scrutiny of Running Account bills and upon certification by the Engineer, the accepted value of the certificates after recoveries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of the defects would amount to a dispute under IBC. 7.16 The Corporate-debtor had even provided the Operational-creditor with a list of pending works on 20.12.2014. Further, the Corporate-debtor sent an e-mail on 27.02.2015 to the Operational-creditor, bringing to their attention the issue of water leakage at several locations, with attached photographs. The Operational-creditor tried to rectify the same, but failed. The Corporate-debtor further sent another e-mail on 10.10.2015 regarding the water seepage issues in wire drawing and annealing bay machine trenches, but the Operational-creditor never rectified the defects. 7.17 The Operational-creditor had management problems. In its Board Report submitted to ROC the issue of mismanagement of the Operational-creditor due to factors such as neglection of order book, using SAP system that wasn't customised for Indian Business environment among others lead to the downfall of Operational-creditor, which further resulted in the Operational-creditor not being able to finish the work assigned under the Work Orders on time and non-rectification of defects. A copy of the Report submitted to ROC in 2015 is annexed herein an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pletion of the contract beyond a period as stipulated in the work order. 10. It is also submitted by the respondent that it had to hire services of a third party (other contractors) to rectify the defects in the construction undertaken by the Operational-creditor and had to bear huge expenses for the same, the delay caused due to the deficient services provided by the Operational-creditor resulted in heavy losses to the Corporate-debtor as the commencement of the operational of the plant factory got delayed. Copies of the bills raised by other contractors that rectified the defective work of the Operational-creditor has also been placed on record. 11. These are matters of trial and enquiry. Tribunal in the present proceeding cannot go into roving enquiry into the disputed claims made by the parties. This is not the forum to examine and adjudicate as to which portion of the claims or counter claims are admissible. At this stage it is immaterial to consider who will succeed. Tribunal will not examine the merits of the dispute other than to see if there is in fact exists a real dispute having some substance. 12. With regard to the contention of the petitioner it is pertinent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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