TMI Blog2021 (10) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no relationship between them as Operational Creditor (SPJV) and Corporate Debtor (GIPL). Whether the claim of ₹ 2.03 Crores is an Operational Debt legally recoverable from GIPL? - HELD THAT:- SPJV has not completed the work to the satisfaction of GIPL and therefore, they have withheld ₹ 2.03 Crores and subsequently, released ₹ 5 Lacs and no completion certificate was issued in favour of SPJV - there is a pre-existing dispute between the parties, therefore, Section 9 Application is not maintainable. Hon ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [ 2017 (9) TMI 1270 - SUPREME COURT] has held that the Adjudicating Authority is to see at the time of admitting or rejecting the Application whether there is plausible contention which requires further investigation and that the dispute is not patently feeble legal argument or an assertion of fact unsupported by evidence. Therefore, so long dispute exist in fact and it is not spurious hypothetical or imaginary, Adjudicating Authority has to reject the Application. Moreover, the existence of dispute must be pre-existing i.e. it must exit before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is adjourned. On 24.08.2021 I heard Ld. Counsels for the parties and reserved the matter for Judgment. Thereafter, Ld. Counsels for the parties have filed the Written Submissions. 4. I have gone through the Judgments of Hon ble Members dated 18.06.2021. Hon ble Judicial Member after considering the agreement dated 14.12.2013 (Settlement Agreement), email dated 21.01.2015 addressed by Mr. Sunil Gupta a certificate of merit issued by Corporate Debtor GIPL demand notice and its reply sent by GIPL hold that the impugned order is free from legal flaws, thus, he directed the Appeal to be dismissed. 5. Hon ble Technical Member had gone through the Judgment of the Hon ble Judicial Member and recorded his dissent Judgment on the points (i) pre-existing dispute (ii) debtor-creditor relationship between the Corporate Debtor and Operational Creditor and (iii) maintainability of the Petition against the Corporate Debtor. He has considered theall the aforesaid documents including MOU dated 20.05.2016 and held that so far as the claim of ₹ 33.98 Cr. is concerned as per agreement dated 14.12.2013 the Corporate Debtor GIPL has paid ₹ 10 Cr. and now there is no obligation to pay a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at without there being any evidence would also give rise to a substantial question of law. Applying this principle, it is apparent that the points of dissent are the questions of law. 10. Ld. Counsel for the Appellant submitted that Hon ble Supreme Court in the case of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 held that three factors are required to determine the maintainability of the Application under Section 9 of IBC, which pertains to question of law, namely default of the Operational Debt, documentary evidence showing that the debt is due and payable and has not been paid and no pre-existing dispute with respect to Operational Debt. All these questions of law have been clearly stated in the points of dissent by the Hon ble Member (T). 11. Per Contra, Ld. Counsel for the Respondent No. 1 Operational Creditor (SPJV) submitted that in view of the R Narayanasamy s case hearing by a Third Judge is only on the point of law on which the division bench could not concur. There is no hearing of the appeal by third Judge where the difference of opinion is on facts. In such a situation, the third Judge is required under law to confirm the impugn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of ₹ 33.98 Crores on the ground that the as per agreement dated 14.12.2013 the GIPL had paid ₹ 10 Crores on 24.12.2013 to the Operational Creditor SPJV and remaining amount ₹ 23.98 Crores was payable in instalments by the AJVPL, thus, GIPL had no further liability or obligation regarding the agreement dated 14.12.2013.Therefore, there is no relationship between them as Corporate Debtor and Operational Creditor and the claim of ₹ 2.03 Crores resisted on the ground that there is pre-existing dispute. 15. In the light of the pleadings of the parties following issues arose for consideration: (i) Whether the claim of ₹ 33.98 Crores is an Operational Debt legally recoverable from GIPL? (ii) Whether the claim of ₹ 2.03 Crores is an Operational Debt legally recoverable from GIPL? 16. The Hon ble Members in their Judgments have elaborately mentioned the arguments of the parties and the same arguments urged before me. Therefore, it is not required to reproduce the same in my opinion. Issue No. (i) Whether the claim of ₹ 33.98 Crores is an Operational Debt legally recoverable from GIPL? 17. Firstly I have considered the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (MIAPL and MK collectively referred to as Guarantors'); (G) Mr. M. Sai Ram, Individual, Indian citizen, son of Mr. M Bhaskara Rao, at present residing at D. No. 8-2-472/6, Road No. 4, Hyderabad, 500039, Andhra Pradesh, India (referred to as the Arbitrator 1 , which expression shall, unless it is repugnant to the context, include his heirs and successors); (H) Mr. C.L. Rajam, (insert designation), Indian citizen, son of Mr. Narasaiah, at present residing at Plot No. 1264/A, Road No. 63/A, Jubilee Hills, Hyderabad 500033, Andhra Pradesh, India (referred to as the Arbitrator 2 , which expression shall, -unless it is repugnant to the context, include his heirs and successors) (Arbitrator land Arbitrator 2 collectively referred to as Arbitrators'); (Each of the parties mentioned above, are hereinafter collectively referred to as the Parties and individually as a Party'), in relation to the full and final settlement of all dues and claims of SPJV and GIPL made against each other under the contract for execution of certain civil and hydro mechanical works dated August 12, 2006 executed amongst SPJV and GIPL ( Construction Contract) ( Settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd SPJV shall be bound by such provisions of the Construction Contract in accordance with the terms thereof. 2.2 GIPL hereby confirms that on or after the date of this Agreement, it shall not raise any claims against SPJV other than claims, if any, arising pursuant to continuing obligations under the Construction Contract of the nature described in Clause 2.1 above. 2.3 Out of the aggregate Settlement Amount, GIPL shall pay an amount of ₹ 10 Crores representing RA bills due and part of interest amount to SPJV upon the signing of this Agreement. Upon payment of ₹ 10 Crores, GIPL shall have no further liability or obligation in respect of the Settlement Amount. SPJV may initiate any suit action or proceeding against only the Promoter (to the exclusion of GIPL) for recovery of such balance Settlement Amount in excess of ₹ 10 Cr. It is mutually agreed and understood amongst the Parties that GIPL shall arrange the payment of ₹ 10 crores within 2/3working days of execution of this Agreement. 2.4 Notwithstanding anything contained in any document/agreement/understanding, the Settlement Amount(to the exclusion of the amount set out in Clause2.3 above) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter alia, guarantee as a primary obligor, the repayment obligations of under this AGREEMENT and undertake that whenever any Settlement Amount is not paid as per the terms of this AGREEMENT as may be applicable, the Guarantors shall immediately pay that amount as if he were the principal debtor. 4. No amendment/change to this AGREEMENT shall be binding unless in writing and signed by duly authorised representatives of the Parties. 5. All disputes and differences arising out of this AGREEMENT shall be subject to the exclusive jurisdiction of the courts of Hyderabad, India. 6. The provisions of this Agreement shall become effective automatically and without any further action on and from the date on which:(i) all Parties have affixed their signatures to this Agreement; and (ii) GIPL has made the payment of an amount of ₹ 10 Crores to SPJV in accordance with Clause 2.3 hereof. 7. Each of the signatories of this Agreement jointly and severally represent and warrant that they have full power and authority, as by law, to enter into this Agreement and other transaction documents arising out of this agreement and all approvals, consents and authorizations have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable, the Guarantors shall immediately pay that amount as if they were the principal debtor. In this agreement, MIAPL and MK are the guarantors. 21. Now, we have considered the email dated 21.01.2015, which is sent by Sunil Gupta to Arbitrator, CL Rajam. Which is as under:- From: gupta.sunil@gatiinfra.com To clrajam@netscape.net Cc; mahendra@gati.com, chairman.e@capitalfortunes.com, sairam@capitalfortunes.com, Sent: Wed, Jan 21, 2015 5:13 PM Sub: - Payment Plan Dear sir, it was nice meeting other day, regarding payments, please note that we shall be making one crore payment every month starting with this month end. Further, we are signing long-term EPA expected in April and thereafter lenders have agreed to release funds. We have already signed minutes with PTC in this regard. Thereafter, we shall make full payment. With warm regards. Sun sent from my iPad. 22. Ld. Adjudicating Authority held that this email was sent by Sunil Gupta as Director of GIPL and this is an acknowledgement on behalf of the GIPL. Sunil Gupta has sent the aforesaid email as a director of AJVPL for this purpose, it is useful to refer the letter dated 22.03.2015 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession shall always Include Its successors and assigns etc., of the SECOND PART; and 3. INTERCONTINENTAL INFRASTRUCTURE LIMITED, a company. Incorporated under the companies Act, 1956 and having registered office at Plot No.1267/A Road No:63/A, Jubilee Hills, Hyderabad. 500 033 and duly represented by Its Chairman Mr.CL Rajam (hereinafter referred as 'Third party which expression shall always include Its successors and assigns etc., of the THIRD PART) and 4. SEU-Prasad JV, a Joint Venture Entry having office at 6-3-871 Snehalata Greenlands Road, Begumpet, Hyderabad 500016 and duly represented by its authorized signatory, Mr. G Ramesh (hereinafter referred as (Fourth Party) which expression shall always include its successors and assigns etc, of the Fourth Part: Whereas The Fourth Party had earlier executed through the First Party various civil works relating to the Chuzachen Hydro Electric Project, located at Rongli, 'East Sikkim for Gati Infrastructure Private Limited, In respect of the said project works executed for GATI Infrastructure Private limited various amounts are due to the Fourth Party and subsequently these dues are transferred to and ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding does not conflict with any of their constitutional documents or any Law applicable to them, 7. The Courts in Hyderabad alone shall have the Jurisdiction to try any dispute or difference arising out of this Memorandum of Understanding. IN WITNESS WHERE OF the parties have executed this Memorandum of Understanding on the day, month and year first above written. 25. In the aforesaid MOU, it is admitted by the SPJV that SPJV had executed through SIL various civil works relating to the Chuzachen Hydro Electric Project for GIPL and various amounts are due to SPJV and subsequently these dues are transferred to and agreed to be paid by AJVPL. This MOU also provides that the dues receivable by SPJV have been transferred/assigned to SEW Infrastructure Ltd. (SIL) first party of the MOU. 26. Thus, the MOU again confirmed the terms of the agreement dated 14.12.2013 that the amounts which are due to SPJV from GIPL are transferred to AJVPL. That is why SPJV has sent a letter on 22.03.2015 to Sunil Gupta director of AJVPL that they have no objection to release funds directly to SEW Infrastructure Ltd. 27. Hon ble Member (J) in his Judgment consider the clause 2.6 of the ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other clients for PQ purpose. Thanking you sir. With regards Ramesh SEW Infrastructure Ltd. 32. This email is not disputed by the SIL or SPJV. Therefore, GIPL issued certificate of merit even without completion of the work only because SIL has to submit certificate of merit to his other client. 33. It is also useful to refer the letter dated 23.05.2017 (At Pg. 189) which is reproduced here: To, MS GATI Infrastructure Pvt. Ltd. 268, UdyogVihar Phase-IV, Gurgaon - 122 016 Kind Attention: SriSanjeev Upadhyay, President (Hydro) Dear Sir, Sub: Execution of various Civil Works of Chuzachen. Hydro Electric Project, Request for Release for withheldamount. Ref: 1) Agreement dated. 14thDecember, 2013 2) Our Ir. Ref: SEW/TW/F.CHEP-GIL (SR-0649, Dated 12th July 2104. 3) Your Ir. Ref: No, GIL/CHEP/HQ/SPJV/14-15/002 Dated 25thJuly,2014 4)Our Ir. Ref: SEW/TW/F.CHEP GIL/SR-0677, Dated 25thJuly 2104. 5) Our Ir. Ref. No.: SEW/CHEP/005/14-15, Dated 22nd August 2014. 6) Our Ir. Ref: SPJV/F.CHEP/SR-0044 Dated 23rd January 2015 with reference to above subject, this is to inform you the pending wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is true that the letter dated 10.08.2017 has been sent to SPJV after receiving notice under Section 8 of the IBC. 36. With the aforesaid correspondence, it is clear that SPJV has not completed the work to the satisfaction of GIPL and therefore, they have withheld ₹ 2.03 Crores and subsequently, released ₹ 5 Lacs and no completion certificate was issued in favour of SPJV. With these facts, I am of the view that there is a pre-existing dispute between the parties, therefore, Section 9 Application is not maintainable. 37. Hon ble Supreme Court in the case of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 held that:- 51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending bet ..... X X X X Extracts X X X X X X X X Extracts X X X X
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