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TMI Blog2020 (2) TMI 1496X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ltd., a corporate entity, having its registered office at Kolkata, West Bengal, (hereinafter referred to as the "corporate debtor"). 2. It is submitted that the operational creditor has supplied C. R. Coils (hereinafter referred to as the "goods") to the corporate debtor between the period February, 2013 and February, 2014 and raised invoices for the same from time to time. The goods supplied to the corporate debtor were duly received and utilized by the corporate debtor in its usual course of business. Thus at the relevant time the corporate debtor was indebted to pay to the operational creditor a sum of Rs. 8,82,11,723 (rupees eight crores eighty two lakhs eleven thousand seven hundred twenty three only) being principal outstanding amount of Rs. 4,75,28,807 (rupees four crores seventy-five lakhs twenty eight thousand eight hundred and seven only) plus interest at the rate of 21 per cent. per annum as on August 9, 2017. 3. It is further submitted that in relation to the aforesaid outstanding payments as on September 4, 2017 the operational creditor had filed an application under section 9 of the Insolvency and Bankruptcy Code, 2016 at National Company Law Tribunal, Kolkata Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oached the operational creditor for the purpose of settlement of total dues and on January 11, 2018 the settlement came in to existence between the parties subject to various terms and conditions mentioned therein. 7. It is stated that the corporate debtor has not adhered to the payment schedule as detailed in the settlement agreement and has defaulted in making the payments in terms of the settlement agreement. Therefore, the operational creditor issued a legal notice dated May 10, 2019 which was duly served and the corporate debtor vide letter dated May 23, 2019 has vaguely replied to the aforesaid legal notice. Thereafter on June 27, 2019 the operational creditor issued a demand notice as per section 8 of the I and B Code, 2016 which was received by the corporate debtor by registered post on July 1, 2019 at its registered office at Kolkata on July 6, 2019. It is submitted that the corporate debtor replied to the aforesaid notice on July 10, 2019 and that the corporate debtor's reply is a reiteration of its stand in the previous company petition filed by the operational creditor against it in the year 2017 which subsequently culminated into the settlement agreement dated Jan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no default on the part of the corporate debtor and that there is no operational demand due or outstanding to the operational creditor from the corporate debtor. It is submitted that the application is barred by principles of waiver estoppel, acquiescence and/or principles analogous thereto and should be dismissed in limine. 11. In its defence, the corporate debtor has submitted that the operational creditor had filed the earlier application under section 9 of the Code in C. P. (IB) No. 513/KB/2017 by taking full wrongful advantage of documents procured from an employee of the corporate debtor. It is submitted that the operational creditor was compelled to enter into the settlement with the operational creditor by filing the terms which ultimately resulted in the order of the hon'ble Supreme Court dated January 22, 2018. 12. It is submitted that between January, 2018 and September, 2019, the corporate debtor was required to pay the operational creditor a sum of Rs. 2,10,00,000 (rupees two crores ten lakhs only) and the said sum has been paid by the corporate debtor to the operational creditor. It is submitted that the occasional delays in payment was due to an attempted media ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and denied the averments and allegations made in the affidavit in reply filed by the corporate debtor. 17. It is submitted that the existence of operational debt is well established and can be gathered beyond doubt from the original admission order as well as the settlement agreement. The corporate debtor has expressly admitted the entire amount at clause 5 of the settlement agreement which reads as follows : "The corporate debtor agrees and admits the total dues (i. e., Rs. 8,82,11,723 as on August 9, 2017) is outstanding and due from the corporate debtor to the operational creditor. The corporate debtor further agrees and admits that it has defaulted in making payment of total dues to the operational creditor". It is further stated and submitted that in view of the aforesaid documents alone, no further evidence is required to prove the existence of operational debt. It is stated and submitted that the amount of debt is Rs. 9,21,85,391 (rupees nine crores twenty one lakhs eighty five thousand three hundred and ninety one only) which is well above the limit of Rs. 1,00,000 (rupees one lakh) : "It is further agreed and declared that in the event the corporate debtor fails to mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operational creditor has waived its right to seek strict adherence to the settlement agreement, once the payments are accepted by the operational creditor even after the alleged default committed by the corporate debtor. 21. The operational creditor has insisted that the application deserves to be admitted because the corporate debtor has not strictly adhered to the clauses of the settlement agreement, even though the operational creditor had accepted a reduced amount of Rs. 3,70,00,000 instead of Rs. 9,21,85,391. 22. Learned counsel for the corporate debtor further submitted that there is no default and once the operational creditor has accepted the payments with slight change in the payment schedule, it has lost its right to raise any objection and it would tent-amount to waiver and acquiescence. Learned counsel for the corporate debtor further submits that the present application is liable to be dismissed in terms of section 65 of the IBC as this application has been filed with malicious intent for taking undue advantage and using coercive measures to recover the money and not for resolution of insolvency. To support his argument, learned counsel for the corporate debtor has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... give notice of default at the very initial stage of default. It is submitted that if they continue to accept the amount, they cannot later come forward and say that there was a default and the corporate debtor is liable to pay any interest or any penalty thereafter. It is stated that the operational creditor has accepted the payment after alleged date of default and therefore it does not lie in their mouth to say that there was any violation of payment schedule by the corporate debtor. In support of its arguments learned counsel for the corporate debtor has referred to and relied upon the case of General Manager, Northern Railway v. Sarvesh Chopra reported in AIR 2002 SC 1272, wherein the hon'ble Supreme Court has held that : "In our country question of delay in performance of contract is governed by sections 55 and 56 of the Indian Contract Act, 1872. If there is an abnormal rise in prices of material and labour, it may frustrate the contract and then the innocent party need not perform the contract. So also, if time is of the essence of the contract, failure of the employer to perform a mutual obligation would enable the contractor to avoid the contract as the contract beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted the work. It is not the respondent's case that while agreeing to extension of the period of contract he put the Government on notice of his intention to claim compensation on that account. Section 55 of the Contract Act reads thus : '55. Effect of failure to perform at fixed time, in contract in which time is essential.-When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract. Effect of such failure when time is not essential.-If it was not the intention of the parties that time should be of the essence of the contract, the contract does not become voidable by the failure to do such thing at or before the specified time ; but the promisee is entitled to compensation from the promisor for any loss occasioned to him by such failure. Effect of acceptance of performance at time other than that agreed upon.-If, in case of a contract vo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall claim compensation "on account of delays or hindrances to work from any cause whatever". That the delays and hindrances contemplated by clause 59 include the stoppage, hindrances and delays on the part of the Department as well is clear from the following sentence in the first part of the said clause, viz., "the Executive Engineer shall assess the period of delay or hindrances caused by any written instructions issued by him, at 25 per cent. in excess of the actual work period so lost". Indeed the second paragraph of the clause also contemplates delays and hindrances being caused on account of the failure of the Executive Engineer to issue necessary instructions. In such a case, the contractor has a right to claim the assessment of such delay by the Superintending Engineer of the Circle, whose decision is declared to the final and binding on the parties. But, any such claim has to be lodged in writing to the Executive Engineer within fourteen days of the commencement of such delay, or hindrance, as the case may be. We find it difficult, therefore, to say that clause 59 has no application to the present case. The words "from any cause whatever", occurring in clause 59, are wid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 12(3) of the Act. That is reflected in clause (1) of the compromise terms. However, the land lord gave a concession by clause (3) to the effect that if the entire arrears are cleared by October 10, 1970 he would not execute the decree for possession. This, counsel argued, does not show that the decree for possession was provided for as in terrorem to be construed as a penalty and not a concession. Counsel contended that while a penal stipulation cannot be enforced, a grant of a concession cannot undo the main operative part of the eviction decree, unless it is shown that the tenant had done all that was necessary to avail of the concession. Counsel for the tenant, however, insisted that the pro vision for delivery of possession is in the nature of a penalty and was, therefore, unenforceable. He supported the judgment of the High Court and submitted that the appeal should be dismissed with costs. 7. It is settled law that unless the terms of contract are ambiguous the intention of the parties must be gathered from the terms them selves. It is only where the terms are ambiguous and capable of more than one meaning that evidence aliunde can be permitted together the inten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that the defendant shall pay Rs. 20,000 with interest and costs to the plaintiff. However, if the defendant pays Rs. 15,000 and costs on or before December 31, 1993 to the plaintiff, the plaintiff will treat the decree as fully satisfied and will not claim the balance amount from the defendant. In such a case the latter clause operates as a concession and the plaintiff waives his right to the balance amount. Such a decree will be executable to the full extent if the defendant fails to avail of the con cession by paying Rs. 15,000 and costs on or before December 31, 1993." 27. Learned counsel for the operational creditor further referred to and relied upon the judgment in the case of Smt. Amiya Debi v. Ranendra Narayan Saha reported in AIR 1983 Cal 24. The relevant paragraph is reproduced as under : "3. The parties agreed in the following manner : 'There will be a preliminary mortgage decree against defendants Nos. 1 to 4 for the sum of Rs. 38,000 with interest on the principal sum of Rs. 25,000 at the rate of 6 per cent. per annum from September 27, 1972 being the date of filing, of this suit until realization and costs- (b) If however defendants Nos. 1 to 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he parties dated December 8, 2004. Admittedly, the appellant has committed default and he is liable to face the consequences of the default by which the entire decretal amount has become due and payable giving right to the respondent to execute the decree as such. The court has rightly rejected the plea of the appellant for grant of extension and consequent acceptance of instalments despite default. The court could only alter the terms and conditions agreed between the parties by consent of the parties and not on a unilateral plea taken by the appellant. Merely because the agreed terms were titled as 'minutes of decree on admission' would not change the sub stance of the document. As already noticed, the minutes of the decree dated December 8, 2004 were result of negotiations between the par ties and were recorded without intervention of the court. This was a document executed by the parties and signed by their respective counsel by way of an agreement settling all the disputes in the subject-matter of the suit. This agreement provided different terms and condition including the consequences of default. It is categorically stated that in the event the appellant failed to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te debtor, however, are quite convincing when it is stated that even though the payments are not strictly as per the payment schedule but the operational creditor has received all the payments without any objection or protest which indicated that they were voluntarily accepting the payments which would tantamount to waiver. It is submitted that even if there was delayed payment, it would not entitle the operational creditor to seek corporate insolvency resolution process against the corporate debtor because the operational creditor has not given notice of default at the very initial stage but has done so only after accepting payment till August, 2018 which would be against the very spirit of section 55 of the Indian Contract Act, 1872. 33. Having heard learned counsel for the parties and having gone through all the pleadings and after considering the aforesaid judgments relied upon by the parties, we are of the considered view that the application of the operational creditor lacks merit and deserve to be dismissed because this is not a forum where the parties can seek implementation of settlement agreements and that too after accepting a major portion of the amount due. If it is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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