TMI Blog2022 (9) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... ound that 15% payment was to be released after installation and 5% amount as defect liability to be released after 6 months - Respondent No.1 was entitled to receive 62% payment from out of the retained amount, on pro-rata basis for the completed installations. If that be the case, then payment to the tune of Rs 14.70 lakhs had become due and payable as per payment terms and for which invoices had also been raised. The contention of the Appellant that payment was to be made only after full installation was completed in the respective towers and not on flat-wise completion cannot be acceded to for the following reasons. Firstly, it fails to explain why composite payment was not insisted upon tower-wise for the 80% amount for material delivery and RA bills were accepted. Secondly, from a plain reading of the payment terms, we do not find any embargo having been placed on the Operational creditor from claiming flat-wise payments as long as the installation was complete. Merely placing of conditions prior to release of payment, does not alter the colour and character of the operational debt and does not detract from its having become due and payable. Whether there is existence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er sq. ft. in the Regency Park Project of the Corporate Debtor/Appellant. This work order was issued on 10.06.2016. (b) The Corporate Debtor issued another work order on 05.05.2017 to supply and install UPVC Profile of doors and windows including toughened glasses for Tower-D (60 Units) of the above project @ Rs. 333/- per sq. ft. (c) On 16.08.2017 another work order for additional work at Tower-A and Tower-D was also issued. (d) The payment terms for the work orders are as follows:- a) 30% advance along with order; b) 50% after delivery of material at site; c) 15% after installation at site; d) 5% retention after six months of completion of installation; e) Work Contracts Tax (WCT) and Tax Deduction at Source (TDS) to be deducted as per Rules; and f) Service Tax to be paid extra as applicable. (e) The details of the Purchase Orders Invoices, Debit Notes and RA bills alongwith Invoice nos. as raised by Respondent No. 1 have been taken due note of by the Adjudicating Authority in Para 1 (iii) of the impugned order. (f) The present Respondent No. 1 filed an application before the Adjudicating Authority under Section 9 of the Insolvency and Bankruptcy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has contended that without ascertaining the debt being due and payable, the Corporate Debtor has been wrongly subjected to the rigors of CIRP. 4. It has been further submitted that against bills for Rs. 1,18,61,393/- (Rupees one crore eighteen lakhs sixty one thousand three hundred ninety three only) raised by the Respondent No. 1, the Appellant has already paid a sum of Rs. 92,62,856/- (Rupees ninety two lakhs sixty two thousand eight hundred fifty six only) which roughly accounts for 80% of the invoice amount which corresponds with the payment terms. The remaining 20% amount of Rs. 23,72,279/- (Rupees twenty three lakhs seventy two thousand two hundred seventy nine only) was withheld because installation work was not completed and that the amount so withheld was in consonance with the terms of payment which provided for 15% payment to be made after installation and 5% payment after 06 months of installation. Further stating that the amount payable to the Respondent No. 1 is only Rs. 2,26,258/- (Rupees two lakhs twenty six thousand two hundred fifty eight only), it has also been added that this amount however has neither been accepted nor demanded by Respondent No. 1 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r hundred seven only). Explaining that further payments could not be made because of non-reconciliation of accounts and submission of final invoices, reliance has also been placed on judgment of this Tribunal in Amitabh Roy Vs. Master Development Management(India)Pvt. Ltd. in Company Appeal (AT)(Ins.) No. 274 of 2022 that default in WCT and TDS payment cannot be a ground for invoking Section 9 of IBC. 7. Refuting the submissions of the Appellant, the Learned Counsel for Respondent No.1 has claimed that against total invoices raised amounting Rs. 1,18,61,078/- (Rupees One crore eighteen lakhs sixty one thousand seventy eight only), a total of Rs. 94,88,862/- (Rupees ninety four lakhs eighty eight thousand eight hundred sixty two only) being 80% of the work order amount had become due and payable as material had already been delivered on site as per payment terms. As against this, payment received was Rs. 83,93,717/- (Rupees eighty three lakhs ninety three thousand seven hundred seventeen only) only which accounts for only 70% of invoices raised. It has therefore been claimed that payment of Rs. 10,95,145/- (Rupees ten lakhs ninety five thousand one hundred forty five only) was du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Counsel for the Respondent No.1 relied on the ratio of the Mobilox judgment (supra) that dispute raised should not be an assertion of fact unsupported by evidence or a feeble legal argument. 10. The Learned Counsel for the Respondent No.1 has further contended that the Corporate Debtor/Appellant has clearly admitted that it owes an amount of Rs. 2,26,258/- (Rupees two lakhs twenty six thousand two hundred fifty eight only) to the Respondent No.1 and the said amount remains unpaid and being more than the minimum threshold of Rs. 1 lakh, default has been triggered. In support of his contention, he referred to the judgment of the Hon ble Apex Court in M/s Innoventive Industries Ltd. Vs. ICICI Bank Anr (2018)1 SCC 407 that default is defined in Section3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. 11. We have duly considered the detailed arguments and submissions advanced by the Learned Counsel for both the parties and perused the records carefully. 12. The short point for our consideration is whether payment to the Operational Creditor/Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us alongwith other material records. It is further noted that while the Corporate Debtor/Appellant has claimed that bills raised against these invoices amounts to Rs. 1,18,61,393/- (Rupees one crore eighteen lakhs sixty one thousand three hundred ninety three only) the Respondent No.1 has claimed an amount of Rs. 1,18,61,078/- (Rupees one crore eighteen lakhs sixty one thousand seventy eight only). The variance between the two figures being nominal, we choose to ignore the difference. We, however, find that while Corporate Debtor/Appellant has claimed to have paid Rs. 92,62,856/- (Rupees ninety two lakhs sixty two thousand eight hundred fifty six only), the Respondent No. 1 has claimed to have received only Rs. 83,93,717/- (Rupees eighty three lakhs ninety three thousand seven hundred seventeen only). It is pertinent to note that the Corporate Debtor/Appellant has admittedly held back an amount of Rs. 23,72,215/- (Rupees twenty three lakhs seventy two thousand two hundred fifteen only) on the ground that 15% payment was to be released after installation and 5% amount as defect liability to be released after 6 months. Again, by their own admission, we note that the Corporate Debtor/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties. Records reveal that no disputes were raised prior to the issuance of statutory demand notice on 03.06.2019 under Section 8 of the IBC. There is no exchange of correspondence raising any dispute prior to issue of demand notice. We note that three grounds have been raised but all post issue of demand notice. One ground is that there are defects in the work executed which was contained in the reply to the demand notice sent on 10.06.2019. However, it is a cryptic letter and does not flesh out any details and therefore lacks sufficient gravitas. The second ground as cited in the same reply dated 10.06.2019 is that 50% work is not completed but again no supporting documents are available on record to show exchange of any sustained correspondence with the Operational creditor having taken place in this regard prior to issue of demand notice. The other ground raised is that of exorbitant rates being charged by the Operational creditor but that too has also been raised post issue of demand notice. There is nothing on record to suggest that the Corporate Debtor/Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice. Thus e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Creditor than on a financial creditor. 79. As observed above, the financial strength and nature of business of Financial Creditors and Operational Creditors being different, as also the tenor and terms of agreements/contracts with financial creditors and operational creditors, the provisions in the IBC relating to commencement of CIRP at the behest of an Operational Creditor, whose dues are undisputed, are rigid and inflexible. If dues are admitted as against the Operational Creditor, the Corporate Debtor must pay the same. If it does not, CIRP must be commenced .. 17. From the aforesaid discussion and analysis of facts and circumstances, we are of the considered opinion that the Corporate Debtor/Appellant has defaulted in the payment of operational debt, of an amount exceeding Rs 1 lakh, which amount had clearly become due and payable, and further in the absence of any pre-existing dispute, we find that no error has been committed by the Adjudicating Authority in admitting the application under Section 9 of IBC and initiating CIRP. We find no merit in this Appeal. Appeal is dismissed. No Costs. A clutch of homebuyers in Aarcity Regency Park have filed I.A. No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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