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2021 (2) TMI 53

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....ode, 2016 (in short 'IBC') by the Respondent herein (Operational Creditor) was barred by limitation as prescribed under Article 137 of Limitation Act 1963. Second ground raised by the Appellant is that the contract was frustrated by efflux of time. Since the Respondent failed to establish the above grounds he prays the Bench to allow the Appeal by dismissing Section 9 Application. The learned Counsel corroborated his arguments on legal and factual issues. 3. Learned Counsel for the Respondent submitted that the Application filed under Section 9 of IBC by them before the Adjudicating Authority does not barred by limitation on the ground that the contract, which they entered with the Appellant is still subsisting. He further submitted that there is no such provision that the contract would frustrate by efflux of time. He submitted that there is continuous correspondence between the Respondent and the Appellant and the Appellant even did not reply to the correspondences and even to the Demand Notice. He further submitted that the claim of the Respondent admittedly an operational debt the same is due and payable. He further submitted that the Appeal does not have any merit and prayed ....

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.... various sub-contractors have raised litigations against the Respondent herein which led the Respondent to suffer huge loss and damage. 8. From the aforesaid facts we have seen that except the grievance raised by the Appellant herein with regard to limitation contending that the claim of the Respondent herein does not fall under the category of Operational debt and the contract was frustrated by efflux of time. The other factual aspects are admitted. Therefore, we deal with the same. 9. The EPC contract was supposed to be completed in 14 months. It is seen from the pleadings that the work was suspended by the Respondent vide communication dated 30.07.2011 for the reason that the Appellant did not fulfil the contract obligation. It is also on record that the Letter of Award signed on 24.12.2010 and the payments were released to the extent of Rs. 50.15 Crores and the second instalment of 10% of the contract had to be released on finalisation and submission of un-price of such order goods. It is submitted that the Respondent issued notice on 15.02.2011. The Respondent submitted that they had suspended work by communicating letter dated 30.07.2011 to the Appellant herein. A copy of t....

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....otice to Supplier specifying the part of the Supplies to be terminated and the effective date of termination. Upon receipt of such notice, Supplier shall promptly initiate steps to stop provision of such terminated Supplies. In the event of a partial termination, Supplier shall continue to produce the part of the Supplies not terminated. In case of a termination of part of the Supplier's Work, Owner shall authorize a Scope Change Order making reasonable adjustments to one or more of the Schedule Unit(s). Completion date, Scheduled Facility Completion Date, the Contract Price, the Contract Schedule, the Performance Guarantees and any other affected provisions of this Agreement, as applicable. In the event of termination by Owner under this Article 14.1, Owner shall pay to Supplier (or Supplier may retain) such amounts as are required pursuant to Article 4.4 hereof. In case of a termination of all or remaining part of the Supplier's Work, the Owner shall provide at least 30 days' prior written notice to Supplier providing details of the reasons for such termination and the effective date of termination. Owner will authorize a Scope Change Order making reasonable adjustments to the Co....

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....14 if Owner fails to pay Supplier any payment as required thereunder and such failure continues for 25 days' after written notice thereof has been given to Owner by Suppler, then the Supplier shall give 10 days' prior written notice thereof to Owner and the Financing Parties and thereafter may stop all performances of Supplier's obligation therein until Supplier receives payment of all amounts then due plus reasonable suspension and resumption expenses. However, the Respondent did not invoke this clause for terminating the contract despite several challenges and financial constrains faced by them from their Suppliers/Vendors. 13. As stated supra, the Respondent by letter dated 30.07.2011 suspended the work for non-receipt of payment. In view of non-receipt of payment from the Appellant, the Respondent could not pay to the Venders/Suppliers, those who have supplied goods and rendered services to the project of the Appellant due to non-availability of fund. 14. Apart from the above, we have also perused a letter dated 05.01.2012 addressed by the Appellant-Company to the Chief Engineer, IRP Division, Central Electricity Authority, Sewa Bhawan, R K Bhawan, New Delhi [page-54, Annexur....

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....n the contract regarding frustration or termination by efflux of time, we hold that there is no merit in this point and accordingly, we negate this point issue also. 20. Learned Counsel for the Appellant relied upon a judgment in the matter of KLA Construction Technologies Pvt. Ltd. V. CKG Realty Pvt. Ltd., rendered in CA(AT)(Ins.) No. 67/2018. In this judgment this Tribunal was of the view that if the machinery or equipment was not moved to the construction site would be a debatable issue which can be agitated before the Civil Court. However, in the facts of the present case, the Appellant did not raise any existence of dispute prior to the issuance of Demand Notice and there is no termination of contract as held by us. Therefore, this judgment is not applicable to the facts of the present case. 21. Learned Counsel for the Appellant also relied upon the decision of Hon'ble Apex Court in B.K. Educational Services Pvt. Ltd. Vs. Paras Gupta & Associate, AIR 2018 SC 5601 and Vashdeo R. Bhojwani Vs. Abhudaya Co-operative Bank Ltd. (2019) 9 SCC 158 citing that the period of limitation for Applications seeking initiation of CIRP under Sections 7 & 9 of IBC is covered under Article 137 ....