TMI Blog2022 (7) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... is noted from the reply sent by the corporate debtor to the section 9 application that the corporate debtor had been repeatedly pointing out the deficiency/insufficiency of documents relating to labour law compliances submitted by the operational creditor. At one point in his e-mail dated 12.11.2016, the operational creditor claims that the requirements of labour compliances are not relevant for the purpose of clearing the outstanding dues. The sections on Terms and Conditions and Other Terms and Conditions of the work order dated 17.8.2013 very clearly show that the work order relates to a labour contract and therefore the conditions regarding compliance of all labour laws and Central/State/Local authorities statutory requirements are necessary and have to be done. The Adjudicating Authority, who has relied on the facts and documents presented before it alongwith the section 9 application, has not erred in holding that a pre-existing dispute was present in the case, and has, therefore, correctly rejected the section 9 application - Appeal dismissed. - Company Appeal (AT) (Ins.) No. 726 of 2019 & I.A. No.1975 of 2021 - - - Dated:- 14-7-2022 - ( Justice Rakesh Kumar Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been made and the operational creditor was willing to hand over a indemnity letter in the event any legal consequences/damages were faced by the corporate debtor in respect of the works carried out by the operational creditor. 3. As certain payments amounting to Rs.38,34,843.53 were due against invoices issued during the period 26.10.2013 to 6.9.2014, the operational creditor sent a section 8 demand notice dated 16.8.2017 to the corporate debtor (attached at pp.92-97 of the appeal paperbook), which was replied to vide letter dated 25.8.2017 by the corporate debtor wherein he pointed out that the operational creditor was required to fulfil all the labour law related and other statutory compliances, which were part of the Other Terms and Conditions of the work order and these documents were not submitted to the corporate debtor. 4. We heard the arguments advanced by the learned counsels for both the parties. The Learned Counsel for Appellant has argued that the Respondent has made vital admissions with regard to the existence of debt in various documents, as well as in reply to section 8 notice and in reply to the section 9 application, and a total amount of Rs. 39,14,843 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the judgment of the Hon ble Supreme Court in the matter of Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018) 1 SCC 353, wherein it is held that the defence put up by the Respondent which is hypothetical and moonshine, cannot help him evade his responsibility to pay the operational debt which is otherwise established as due and payable. 6. In reply, the Learned Counsel for Respondent has pointed out to the various communications made between the Appellant and the Respondent regarding non-submission of documents showing compliance of labour laws and other statutory compliances very clearly and unambiguously establish the existence of dispute between them. In proof, he has cited letters dated 31.8.2016 (attached at page 89 of the appeal paperbook), undated letter (attached at page 86 of the appeal paperbook), dated 26.9.2016 (attached at page 87 of the appeal paperbook), dated 3.10.2016 (attached at page 85 of the appeal paperbook) and dated 12.10.2016 and e-mail dated 12.10.2016 (attached at pages 88 and 90 of the appeal paperbook) and e-mail dated 12.11.2016 (attached at page 91 of the appeal paperbook) to argue that the respondent had been continu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 11 and 14 of the NCLT Rules, 2016, for filing additional documents before this tribunal. With this interlocutory application, the Appellant has placed Annexure A-16 (attached at pps. 249-314 of the appeal paperbook) in support of his claim that the work was completed in accordance with the terms and conditions of the work order and TDS was paid by the corporate debtor and labour laws compliances were also made by the appellant. He has placed documents regarding payments to the EPFO with copies of challans (attached at pp.283/296 of appeal paperbook) and reports of visits by EPFO officers (attached at pp.297-310 of the appeal paperbook). It is noted by us that these documents were not placed before the Adjudicating Authority, and the list of documents attached to section 9 application (attached at pp.121-126 of appeal paperbook) also shows that these documents were not part of the section 9 application. 10. Hon ble Supreme Court in the matter of Dena Bank vs C. Shivakumar Reddy, (2021) 10 SCC 330 has held as follows regarding filing of additional documents in a section 7 application:- 142. There is no bar in law to the amendment of pleadings in an application under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in 10 days. Other Terms and Conditions: xx xx xx xx (i) Contractor has to abide all the laws/Provisions of Central/State/Local authorities that may be related (whether directly or indirectly) to construction activity at the site. (j) Contractor will strictly follow the provisions of law related to labour, e.g. minimum wages, working hours and conditions, ESIS P.F provisions etc. 13. Clauses (i) and (j) contained in the Other Terms and Conditions are quite clear that the operational creditor has to comply with all the laws/provisions of Central/State/Local authorities that may be related to the construction activities at site and also to strictly follow the provisions of law related to the labour etc. It is also not denied by the parties that this work order relates to a labour contract where the material is being supplied by the corporate debtor and the labour is being arranged by the operational creditor. Therefore, the compliance of all the statutory requirements of Central/State/Local authorities regarding construction and following of provisions of labour laws squarely falls on the operational creditor, and in our view, are not just relevant bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed you that all labour compliances have been made and are even willing to hand over an indemnity letter from our end that no legal consequences/damages would be faced by you in respect of the works carried out by us in respect of the project. It is further stated that 3C has independent and distinct transactions with us and is no way related to our transaction. 15. We thus find that while the operational creditor claims to have submitted all the relevant documents regarding labour compliances, the corporate debtor has been repeatedly asking the operational creditor to submit the relevant documents. We also note that the operational creditor, in his e-mail dated 12.11.2016 states that the requirement of labour compliances as contained in (corporate debtor) previous communication as well as meetings are not relevant for the purposes of clearing outstanding dues payable to the operational creditor, but he is still willing to hand over an indemnity letter regarding no legal consequences/damages to be faced by the corporate debtor. No indemnity letter is also found to be handed over to the corporate debtor. 16. Hon ble Supreme Court, in its judgment delivered in the Mob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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