TMI Blog2020 (2) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant to invent cause of action to file an application of this nature. If the operational creditor has anything outstanding or if the amount of interest is also been claimed, it should resort to other legal remedies available to it but in no case the present application under section 9 is permissible to be filed or allowed. Application dismissed. - C. P. (IB) No. 1499/KB/2019 - - - Dated:- 13-2-2020 - K. R. Jinan (Judicial Member) And Harish Chander Suri (Technical Member) For the Operational Creditor : Ratnanko Banerji , Senior Advocate, Mayur Khandeparkar and Ms. Labanyasree Sinha For the Corporate Debtor : Jishnu Saha , Senior Advocate, Lokenath Chatterjee , Jaydeb Ghorai and Saugata Banerjee ORDER HARISH CHANDER SURI (TECHNICAL MEMBER).- 1. This application C. P. (IB) No. 1499/KB/2019, under section 9 of the Insolvency and Bankruptcy Code, 2016 (I and B Code) read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, has been filed by M/s. Malda Barrels P. Ltd., a corporate entity through one of its directors, Mr. Haresh Dharmani, hereinafter referred to as the operational creditor , seeking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2018 the hon'ble Supreme Court of India after taking the settlement agreement on record set aside the order of admission dated January 9, 2018 passed by this Tribunal. 4. It is further submitted that despite having a definitive schedule to the settlement agreement, the corporate debtor has not adhered to the payment schedule as detailed in the settlement agreement. The operational creditor issued a demand notice dated June 27, 2019 as per section 8 of the I and B Code. The corporate debtor has replied to the aforesaid notice by its letter dated July 10, 2019 which was received by the advocates for the operational creditor on the same day. The corporate debtor's reply is a reiteration of its stand in the previous company petition filed by the operational creditor. 5. It is submitted that the operational creditor has proposed the name of Mr. Rajat Mukherjee, an insolvency professional to act as interim resolution professional in case of admission of the petition. Form 2 dated July 22, 2019 has also been filed by the aforesaid IRP. 6. The operational creditor has claimed a total sum of ₹ 9,21,85,391 inclusive of interest (i. e., principal amount ₹ 8,82,11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he operational creditor shall be at liberty to revive the aforementioned application and file such new proceedings against the corporate debtor as it may deem fit. It is not in dispute at all that the parties had settled their disputes in the previous petition bearing No. 513/KB/2017 which was admitted and their litigation went up to the hon'ble Supreme Court of India. It is true that the parties had entered into settlement pursuant to which the hon'ble Supreme Court of India vide its order dated January 13, 2018 observed as under : Order Leave granted. Heard learned counsel appearing for the parties. The present appeal arises out of an operational debt. The National Company Law Tribunal, Kolkata Bench, Kolkata, on January 9, 2018 has admitted the petition and we are informed that by an order passed on January 12, 2018 has corrected some errors that have crept in. However, the matter now stands settled. We take a copy of the settlement agreement dated January 11, 2018 entered into between the parties on record and by using our powers under article 142 of the Constitution of India set aside the order(s) passed by the National Company Law Tribunal. Accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the settlement agreement, the corporate debtor had to make total payments in the sum of ₹ 2,10,00,000 till September, 2019. There is no default whatsoever on the part of the corporate debtor as per the terms of settlement dated January 11, 2018. The operational creditor is illegally and wrongfully holding on to the said cheques even though it is incumbent upon the operational creditor to return the cheques. It is stated that the operational creditor has tried to mislead this Tribunal. 14. The corporate debtor further submitted that there is no debt due on account of principal or interest as alleged. It is denied and disputed that there was any default on the part of the corporate debtor or any such default has occurred or that any purported outstanding amount due or going to the operational creditor. 15. In the supplementary affidavit, the operational creditor has filed a tabular chart showing the details of payments received from the corporate debtor until July 19, 2019 which is in consistent with the corporate debtor's reply dated May 23, 2019 to the legal notice dated May 10, 2019. It is stated that these documents were omitted to be annexed with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... editor to exercise and delay in exercising any right remedy in respect of any provision of this settlement agreement shall operate or be termed as waiver of such right or remedy. 19. It is submitted that the corporate debtor has demonstrated gross non- application of mind by alleging that the operational creditor has waived time as the essence of the corporate debtor's obligations by its own conduct. It is stated that the delayed payments are squarely attributable to the corporate debtor's negligent conduct and the corporate debtor had failed to understand that the post-dated cheques were only taken as a security. 20. During the course of arguments, learned counsel for the operational creditor submitted that the settlement agreement was part of the order of the hon'ble Supreme Court of India, therefore, the present proceedings are not barred. It is submitted that the operational creditor is strictly entitled to payments by the corporate debtor, strictly adhering to the settlement agreement and since the corporate debtor has failed to adhere to the payment schedule, as per the agreement, the corporate debtor is liable to pay interest at 21 per cent. per annum on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er than that agreed upon.-If, in case of a contract voidable on account of the promisor's failure to perform his promise at the time agreed, the promisee accepts performance of such promise at any time other than that agreed, the promisee cannot claim compensation for any loss occasioned by the non-performance of the promise at the time agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so. 23. Learned counsel for the corporate debtor has submitted that if there was a default which was not acceptable to the operational creditor, why did the operational creditor not object to the same immediately, and accepted money continuously till August, 2018. It is submitted that the post dated cheques issued by the corporate debtor were not presented for payment by the operational creditor which compelled the corporate debtor to send the money electronically to the operational creditor. Learned counsel for the corporate debtor has further submitted that if the time was of the essence of the contract, and time expired, the third limp of action under section 55 comes into force and the operational creditor shall not be entitled to any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreed, unless, at the time of such acceptance, he gives notice to the promisor of his intention to do so . Thus, it appears that under the Indian law, in spite of there being a contract between the parties whereunder the contractor has under taken not to make any claim for delay in performance of the contract occasioned by an act of the employer, still a claim would be entertainable in one of the following situations : (1) if the contractor repudiates the contract exercising his right to do so under section 55 of the Contract Act, (ii) the employer gives an extension of time either by entering into supplemental agreement or by making it clear that escalation of rates or compensation for delay would be permissible, (iii) if the contractor makes it clear that escalation of rates or compensation for delay shall have to be made by the employer and the employer accepts performance by the contractor in spite of delay and such notice by the contractor putting the employer on terms. 25. The hon'ble High Court of Andhra Pradesh in the case of State of Andhra Pradesh v. Associated Engineering Enterprises reported in AIR 1990 AP 294 has held that : 20. The first aspect to be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt. It must be remembered that this provision of law was specifically referred to, and relied upon in the counter filed by the Government to the respondent's claim before the arbitrator. But, it is not brought to our notice that the contractor had given such a notice (contemplated by the last sentence in section 55). We must make it clear that we are not entering into the merits of the decision of the arbitrator. What we are saying is that such a claim for compensation is barred by law, except in a particular specified situation- and inasmuch as such a particular specified situation is not present in this case, the claim for compensation is barred. It is well-settled that an arbitrator, while making his award, has to act in accordance with law of the land, except in a case where a specific question of law is referred for his decision. 22. Even apart from section 55, we are of the opinion that the arbitrator had no power to award compensation as claimed by the respondent. Clause 59 of the APDSS specifically bars such a claim. We have set out the clause in full hereinbefore. The meaning of the said clause was considered by a Bench of this court of which one of us (Jeevan Redd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it was a case to which clause (b) to that sub-section was attracted. It is evident from the terms of the compromise that even on the date of the compromise in July, 1970 the tenant was in arrears of rent. If the suit had gone to trial the landlord may have secured a decree in ejectment for the tenant's failure to comply with the requirements of clause (b) of section 12(3) of the Act. By clause (1) of the compromise decree it was, therefore, provided that the tenant will vacate and deliver possession of the demised premises by October 10, 1970. Failure to deliver peaceful possession by that date would entitle the landlord 'to take possession by execution' of the decree. Clause (2) indicates the rate at which the arrears will be calculated and clause (4) describes those rates as standard rent. Clause (3) which is the crucial clause gives a 'concession'. What is that concession ? It is that if the tenant pays up the entire amount of arrears, i. e., the amount involved in the suit meaning thereby the claim of arrears set out in the suit, future mesne profits, electricity and water charges, the rent of the godown, cost of the suit, by October 10, 1970 the landlo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andlord secured a decree for possession as well as arrears of rent, etc., giving a grace period to the tenant to comply therewith by October 10, 1970. There after by clause (3) of the consent terms, the tenant is given a con cession, in that, if he pays the entire arrears of rent, mesne profits, electricity and water charges, cost of the suit, etc., by October 10, 1970, the landlord agrees not to execute the decree for possession. In other words on the fulfilment of the obligation to clear the entire arrears of rent and other charges by October 10, 1970, the tenant is given a concession that the decree for possession passed against him will not be put to execution. Such a clause cannot, in our opinion, be said to be penal in character. It is necessary to understand when a clause in the contract can be described as penal in character. Let us illustrate by taking two concrete situations. A plaintiff files a suit to recover ₹ 20,000 with interest and costs from the defendant. They enter into a compromise, the terms whereof are as under : Situation 1 : The defendant shall pay to the plaintiff a sum of ₹ 15,000 and costs on or before December 31, 1993. If, however, he fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal, Mumbai Bench in the case of DBM Geotechnics and Constructions P. Ltd. v. Dighi Port Ltd. reported in (C. P. No. 1382/I BC/2017) [2021] 224 Comp Cas 276 (NCLT). wherein it is held that (page 282) : So by seeing these consent terms, it is vividly clear that whatever disputes either in relation to the services given by the petitioner or in relation to any of the arbitration proceedings, it has to be understood that the parties arrived into an understanding that whatever disputes were there before entering into consent terms in respect to berth No. 3 would also be merged (doctrine of merger) as part of the consent terms, today the corporate debtor counsel could not say that there is a pre-existing dispute in respect to berth No. 3, therefore, this claim cannot be construed as hit by pre-existing disputes. When the parties arrived to a settlement or consent terms, whatever disputes that were in existence before execution of the consent terms, have to be treated as resolved by the consent terms subsequently arrived at. 29. Learned counsel for the operational creditor further relied upon the decision of the High Court of Bombay in the case of Sunil Mehra v. Rajinder Singh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the parties to bear their own costs. 30. We have heard learned counsel for both the parties at length, who have relied upon various provisions of law and also the judgments of hon'ble Supreme Court and hon'ble High Court. The main thrust of the operational creditor is on the arguments that since the operational creditor had accepted a reduced amount by way of a settlement agreement, terms of which had been precisely laid down in the said agreement, the corporate debtor was legally and morally duty bound to make the payment strictly as per the said settlement agreement. It is stated that since the corporate debtor has failed to make the payment as per the schedule and committed frequent defaults, it is liable to pay the interest on the amount due apart from consequential action, i. e., compensation. The operational creditor has submitted that the settlement agreement having been entered into between the parties, which forms part of the Supreme Court order, should be got properly implemented by this Tribunal by admitting this petition because the corporate debtor has failed to pay its dues and have committed default repeatedly. 31. It is submitted that even though t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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