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TMI Blog2023 (5) TMI 249X X X X Extracts X X X X X X X X Extracts X X X X ..... tted the application filed under Section 9 of the IBC filed by the Operational Creditor and initiated Corporate Insolvency Resolution Process ('CIRP' in short) against the NTPC BHEL Power Projects Ltd. - Corporate Debtor with immediate effect. Aggrieved by this impugned order, the present appeal has been preferred by the ex-director of the Corporate Debtor. 2. Stating the factual background of the present matter, the Learned Senior Counsel for the Appellant submitted that the Corporate Debtor had entered into a contract with Wipro Enterprises Pvt. Ltd - Operational Creditor for supply of material for water system, EPT and CW treatment system which is hereinafter referred to as the Project. The date of completion of the project was 09.06.2012 with purchase order issued on 10.08.2011 for a total value of Rs.7.86 cr. It has been further submitted that the Operational Creditor/Respondent No.1 had sought several extensions of time and in spite of time extensions having been allowed at regular intervals, the Operational Creditor failed to adhere to the timelines both in respect of supply of delivery as also commissioning of the project. It was further contended that the ground of non-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted dues. In support of their contention, the Learned Counsel for the Appellant relied on the judgment of the Hon'ble Supreme Court in M/s S.S. Engineers v. Hindustan Petroleum Corporation Ltd. 2022 SCC Online SC 1385. 6. Refuting the submissions made by the Learned Senior Counsel for the Appellant, it was stated by the Learned Counsel for the Respondent No.1 that the Operational Creditor having performed its obligations under the contract, 36 invoices and 27 Material Receipt Certificates (MRC) were submitted. It was claimed that the execution of contract was delayed for reasons attributable to the Corporate Debtor since it failed to perform crucial reciprocal promises and obligations namely the timely release of funds for supplies made and works executed. Moreover, the Operational Creditor had sent 29 emails from 02.06.2018 to 08.01.2019 seeking payment of its outstanding dues. As against gross billing of Rs.7.63 cr the Corporate Debtor had released payment of Rs.5.78 cr. Further, in various minutes of the meeting including the meeting held on 28.09.2015, it was clearly recorded that the Operational Creditor had requested the Corporate Debtor to release the outstanding payment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing Operational Debt. Section 8(2) lays down that the Corporate Debtor within a period of 10 days of the receipt of the Demand Notice would have to bring to the notice of the Operational Creditor, the existence of dispute, if any. From a plain reading of the above provision, it is clear that with regard to an Operational Creditor, the existence of dispute and its communication to the Operational Creditor is therefore statutorily provided for in Section 8. In the present case, it is an undisputed fact that the demand notice was issued by the Operational Creditor on 16.09.2019 and notice of dispute was raised by the Corporate Debtor on 07.11.2019 but beyond the prescribed period of ten days. 12. We notice that the Adjudicating Authority has returned the finding that the Corporate Debtor having failed to reply within 10 days, the Operational Creditor has successfully proved that Corporate Debtor has not complied with Section 8(2)(a) of the IBC. We however like to make it clear that it is now settled law as laid down by this Tribunal in Company Appeal (AT) (Ins.) No.958 of 2020 that even if reply notice is not submitted within ten days, it does not preclude the Corporate Debtor f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 09.01.2019 wherein an amount of Rs.87,01,843/- has been admitted by the Corporate Debtor as per their own reconciliation statement. While admitting these liabilities, no conditionalities of risk and costs adjustment or LD deduction were made out and therefore it has been contended by the Learned Counsel for Respondent No.1 that this defence was created as an afterthought. 17. It is also submitted that requests for expeditious payments were made by the Operational Creditor during meetings held on 28.09.2015 and 04.10.2016 and even by way of communications issued on 04.05.2018 and 14.02.2019 but to no avail. Hence the Demand Notice under Section 8 was issued on 16.09.2019 demanding the admitted sum of Rs.87,01,843/- being the amount in default. It was further added that even in the notice of dispute on 07.11.2019, an amount of Rs.5,39,414/- has been admitted as a liability which was also above the prescribed threshold. 18. Rivalling the above arguments advanced by the Learned Counsel for the Respondent No. 1, it is the case of the Appellant that in their reply to the demand notice dated 07.11.2019, they had disputed the liability to pay the amount claimed by the Operational Cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... damages at a later date in terms of clause 14.2.1 of the GCC. 21. Advancing further points of substantiation, it was submitted that apart from the above email correspondences, in a meeting held on 28.09.2015 between the Corporate Debtor and Operational Creditor with respect to reconciliation of materials supplied for the project, it had been recorded that Operational Creditor had failed in timely execution of tank fabrication. The Operational Creditor had also agreed during the meeting to provide the complete master list of the project as placed at page 158 of APB. In a subsequent meeting held on 04.10.2016, the Operational Creditor had again sought time extension to complete the tank fabrication work as at page161 of APB. However, delay in the execution of the projects persisted. The Corporate Debtor sent emails on 13.12.2017 and 04.05.2018 for supply of certain specific materials as per scope of work for work completion at Namrup site as at pages 165-166 of APB. Another email of balance material was sent to the Operational Creditor on 02.02.2019 which preceded the Section 8 notice as placed at page 168 of APB. It may be helpful to reproduce the said communication as: - "From V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Garg (WFO1 - WIN - Water) Cc:[email protected]; [email protected]; [email protected]; Goyal.A.N; nrpp.pmg; Sajan Kumar (WF01 - WIN - Water); Nagendra Gupta (WF01 - WIN - Water); [email protected]; Pramod Vishwakarma (WF01 - WIN - Water) Subject: Re: NBPPL - Namrup - Supply and supervision control of Water system at NBPPL Namrup site (OLD PROJECT) Dear Madam, Due to delay in supply of balance items from M/s Wipro, BHEL project was getting delayed, hence BHEL is executing the balance work on risk & cost to NBPPL, the same shall be passed on to you as per order terms & conditions. As the BHEL is still executing balance Wipro supply, I have discussed with our site in-charge at NAMRUP site, you may please depute your representative at NAMRUP for the meeting with BHEL & NBPPL site incharge and action plan for supply of balance items, so that risk and cost can be minimized. We are awaiting amount of risk and cost executed by BHEL as on today, till that we may not be in position to release any amount of M/s Wipro. Regards, Ashok Gupta" (Emphasis supplied) 24. It was further contended that in their subsequent letter on 06.07.2019 it was categorically clarified that since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials/requirement is under procurement stage by BHEL for completing the water system and the same shall be intimated to you on completion of E&C and PG test. In view of above, since the risk & cost value is yet to get finalized, all payments can be finalized only after completion of commissioning of water system. As such nothing is payable as on date. Therefore, NBPPL disputes your all claim. With best regards Ashok Gupta Sr. DGM (Project)" (Emphasis supplied) 25. It was therefore asserted by the Learned Senior Counsel for the Appellant that the above communications dated 29.05.2019 and 06.07.2019 clearly showed that there was allegation of delay by the Operational Creditor in completing supplies and in the erection and commissioning of water system besides need to make adjustments of LD and risk and costs of BHEL which clearly signifies pre-existing disputes. Moreover, the very fact that requests were made by Operational Creditor seeking waiver of liquidator damages in itself manifests dispute. 26. Challenging the impugned order, the Learned Senior Counsel for the Appellant mentioned that the Adjudicating Authority has failed to note that there was a pre-existing disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Apex Court in M/s S.S. Engineers v. Hindustan Petroleum Corporation Ltd. (supra). The common thread in both the judgments is that the CIRP can be triggered only if there is a default in the payment of an undisputed debt and all that the Adjudicating Authority has to see at this stage is whether there is a plausible contention which requires further investigation. We are of the considered view that Adjudicating Authority has referred to both these judgments but failed to correctly appreciate and apply the ratio in the facts of the present case. 29. Perusal of the impugned order makes it clear that the Adjudicating Authority simply relied on the email dated 09.01.2019 to come to the conclusion that there was debt and default and admitted the Section 9 petition. The satisfaction of the Adjudicating Authority is sans consideration of the reply to the demand notice and the voluminous exchange of correspondences which has taken place between the two parties relating to supplies, delay in completion of project, pendency of risk and cost account of BHEL and LD related issues. The tone and tenor of these protracted correspondences clearly manifest existence of dispute prior to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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