TMI Blog2020 (7) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... peal against is also stated to be pending. The Petitioner issued yet another Demand Notice dated 25.06.2019, under Rule 5 of I B, 2016, to the Respondent by inter alia demanding to pay the outstanding amount within a period of ten days on failure to pay the outstanding amount the instant Company Petition filed by seeking to initiate CIRP in respect of the Corporate Debtor and thus filed the instant Petition. The facts and circumstances shows that the amount claimed by the Petitioner is in substantial dispute, which is deemed to be pre-existing one. The Petitioner also invoked multiple remedies for same cause of action, which is not tenable basing on Principle of natural justice and doctrine of double jeopardy - It is also not in dispute that the Respondent has paid part amount for the work done, and the remaining claimed amount could not be paid due to the reasons explained supra. Admittedly, the Respondent is solvent Company having 40 employees and the Respondent has not paid the alleged amount due to the defective service rendered by the Petitioner. It is a settled position of law that provision of the code cannot be invoked when there is pre-existing dispute and it also ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Kundaiahalli, Bangalore for a sum of ₹ 22,47,305/- Accordingly, the Applicant had commenced the work upon receipt of email instruction by the Corporate Debtor dated 13th September, 2016. (4) Subsequently, upon several follows ups made by the Operational Creditor, the Corporate Debtor had provided: a. The work order dated 10th September 2016 was sent by the Corporate Debtor vide email dated 29 th September 2016 for Water Proofing works. b. The work order dated 30th November 2016 was sent by the Corporate Debtor vide email dated 26th December 2016 for Cinder and Concrete Works. (5) It is further stated once the work is executed, it was the duly of the Site Engineer of the Operational Creditor to verify the executed work and sign the measurement sheet specifically maintained for such work. Subsequent to verification by the Site Engineer, it is the duly of the Project Manager of the Corporate Debtor to verify the same and approve the work by signing the measurement sheet. Upon obtaining the approval from Project Manager of the Corporate Debtor, the Operational Creditor shall raise the proforma invoice for the same. Once the Corporate Debtor reconciles its acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble High Court stayed the further proceedings against the Respondent No.4 and Respondent No.5 vide its order dated 4 th September 2019. The Next dated of hearing before Chief Metropolitan Magistrate is scheduled on 30th March 2020. (8) Subsequently, the Operational Creditor sent demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 on 25th June 2019 (Demand Notice dated 25.06.2019) which was received by the Corporate Debtor on 26th June 2019. However, the Operational Creditor has not received any response for the same. (9) It is stated that the Operational Creditor made reference to Micro and Small Enterprises Facilitation Council (MSEFC) under Section 18 of the MSME Act, 2006 with respect to work order nos.011 and 012 issued by the Corporate Debtor as detailed in Form 5 in the present application, on 18th June 2019 vide application no. KR03D0041473/M/00001. The MSEFC has issued notice on 18th June 2019 to the Corporate Debtor for making payment to Operational Creditor within 15 days of receipt of the said notice. Further, the Operational Creditor received an email on 6th July 2019 from MSEFC for submission of certain documents in connection to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant. was required to use the product for water proofing of the brand of 'Penetron India'. Further, as per the contract, the Applicant was required to furnish a joint warranty bond of the Applicant and that of Penetron India with regard to the work carried out for a period of ten years. The said contract is dated 10.09.2016. The Applicant has failed to furnish the said warranty bond committing default in this regard. Thus, he is a defaulter in this regard. The Respondent has paid for the work done. In course of time, leakages and cracks were noticed on the walls of the buildings, RJ Brooke Square, which is clear from the photographs collectively produced. And' it is the obligation of the Applicant to carry out the work without any cracks or leakages and furnish warranty bond for a period of ten years. It may be appreciated that, the Respondent cannot deliver possession of the apartment or the building to its customers with the cracks and leakages and leakages marks on the walls. The shoddy work of the Applicant has caused great amount of monetary loss and delay in completing the project. The Respondent was forced to postpone the date of delivery of the flats to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Karnataka, at Bengaluru, challenging the initiation of the said criminal proceedings. The Hon'ble High Court by an order dated 01/ 10/2019 was pleased to grant stay of the further proceedings .in the criminal case, as against the two lady Directors in the Respondent Company. The said interim order is extended till 06/12/2019. The interim order is further extended on 09/ 12/2019, till next date of hearing. (4) The Applicant has approached Micro and Small Enterprises Facilitation Council (MSEFC), under the provision of the MSME Act, 2006. Accordingly, it has filed its objections before the MSEFC on 09/09/2019.Therefore, it is contended filing of instant Application by invoking section 9 of the IRC Code is nothing but an abuse of the process of law and courts, which needs to be sternly dealt with. There is a serious breach of contract by the Applicant causing great amount of embarrassment and prejudice to the respondent. (5) It is successfully running Company having considerable net worth, being able to discharge its lawful debts and obligations and the Applicant having committed breach of contract cannot be allowed to arm twist the Respondent to pay the alleged debt, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.46 Crores as on 31.03.2019. 7. The facts as narrated above do not establish that the debt and default in question are not in dispute, as contended by the Applicant/ petitioner. The Petitioner, though places work orders in question, has not enclosed all other terms and conditions as mentioned in the work order so as to examine whether the Petitioner is entitled to claim the amount in question or not. On the other hand, the Respondent, has addressed the letter dated 19th June, 2019 to the Petitioner, which reads as under: We have been monitoring the water proofing work progress closely and we had regular meetings in our Site Office of Project R.J. Brooke Square at Brooke field, Kundalahalli, Bangalore and as well as R.J. Rishikarna Projects Pvt. Lt. Head Office, M. G. Road, Bangalore with you on the same. Many telephonic reminders and Instructions on Quality issues brought to your kind notice during the meetings and also had been followed up for the rectification of the defected work. We were waiting, while you have been assuring us that extra efforts will be put in to rectify the default work and as well as speeding up the delayed work Schedule to complete the Water ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8. The Petitioner got issued notice dated 28.06.2019 to the Respondent in the context of dishonor of cheques issued by the Respondent. In response to this notice also, the Respondent has issued a Reply dated 12.07.2019, through their Counsel, by inter alia pointing out the defective services and the reasons for stopping the payment, the failure to rectify the defective services etc. Subsequently, they have filed Criminal Complaint before Chief Metropolitan Magistrate at Bangalore, and the case is stated to be pending there and appeal against is also stated to be pending. The Petitioner issued yet another Demand Notice dated 25.06.2019, under Rule 5 of I B, 2016, to the Respondent by inter alia demanding to pay the outstanding amount within a period of ten days on failure to pay the outstanding amount the instant Company Petition filed by seeking to initiate CIRP in respect of the Corporate Debtor and thus filed the instant Petition. The Petitioner has also filed complaint before the Micro and Small Enterprises Facilitation Council (MSEFC) on 23.07.2019 for recovery of principal amount together with the interest amounting to ₹ 49,94,603/-. The case is stated to be reserve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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