TMI Blog2023 (9) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor to the Operational Creditor, with regard to which RA Bill Nos.49 and 50 final bills were issued. Present is not a case that Corporate Debtor denied his liability to pay the bills rather during pendency of earlier Section 9 Application entered into settlement dated 16.12.2017 for payment of the amount. The above Judgment fully support the submissions of Appellant. The judgment of this Tribunal in AMRIT KUMAR AGRAWAL VERSUS TEMPO APPLIANCES PVT. LTD. [ 2020 (11) TMI 993 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] was a case where this Tribunal was examining the Application on the issue whether it is financial debt. In the said background, it was held that Settlement Agreement subsequently entered between the Financial Creditor and the Corporate Guarantor does not contain any element of financial debt, hence, its breach was not financial debt. The judgment of this Tribunal in Amrit Kumar Agrawal was entirely on different facts and circumstances and has no application in the present case - In the present case the nature of the operational debt was payment of RA Bills submitted by Operational Creditor and Settlement Agreement was entered for payment but paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation, a Term Sheet of Settlement was recorded between the parties where Corporate Debtor admitted liability of paying unpaid amount of Rs.19.81 Crores. In lieu of the Settlement amount, the Respondent has offered securities. In view of the Settlement dated 16.12.2017, Section 9 Application was dismissed as compromised between the parties on 18.12.2017. The Operational Creditor could not receive the amount as stipulated in the Settlement Agreement. A letter was issued to the Corporate Debtor to comply the Terms of the Settlement Agreement, failing which demand notice under Section 8 was issued on 28.05.2019 by the Operational Creditor and an Application under Section 9 was filed on 01.08.2019. Corporate Debtor filed a reply to Section 9 Application and the Adjudicating Authority by the impugned order dismissed Section 9 Application. The Adjudicating Authority held that mere breach of terms of any agreement including a settlement agreement by a party, whereby some payment is due cannot take colour of an operational debt. Application was dismissed as not maintainable. 3. We have heard Shri Anil Airi, Learned Senior Counsel for the Appellant and Shri Sumant Batra, Learned Counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the Section 9 Application holding that debt claimed is not the debt owed for the supply of goods or rendering of services, it is a debt which has arisen from the breach of the Settlement Agreement. In paragraph 13 of the judgment, following has been held:- 13. Having regard to the conspectus of all relevant facts and circumstances and the judgments cited supra, we are of the view that the outstanding debt as claimed in the present application does not fall under the definition of Operational Debt as defined under Section 5(21) of the Code, 2016 as the debt claimed is not the debt owed for the supply of goods or rendering pf services, it is a debt which has arisen from the breach of the Settlement Agreement. Accordingly, the present application being not maintainable stands dismissed. No orders to cost. 8. We need to first notice the claim of the Operational Creditor as is reflected from Application under Section 9. Application under Section 9 which was filed on 01.08.2019 by the Operational Creditor. Part-IV gives particulars of operational debt . It is useful to extract Part-IV, Item No.1 where details of operational debt have been mentioned: PART-IV ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended with the application. Due Date: 16.12.2018. The said amount in toto further fell due when JBPL admitted the outstanding amount to the tune of INR 19,81,00,000 (Nineteen Crore Eighty One Lakhs Only). Furthermore, the said amount fell due again when M/s Ahluwalia Contracts (India) Ltd. issued a Statutory Notice dated 31.07.2017, under section 8 of the Insolvency Code, 2016 and called upon the JBPL to make payment of the outstanding operational debt of INR 19,81,00,000 (Nineteen Crore Eighty One Lakhs Only) and has been due since then. The said amount further fell due on 16.12.2017, the Corporate Debtor has entered into Settlement Agreement with the admission to pay the Outstanding amount. The said amount further fell due on 18.12.2017 when the settlement deed dated 16.12.2017 was placed before the NCLT, Principal Bench in the IB-488(PB)/2017. The said amount again fell due when after the expiry of 12 months of the settlement arrived at between the Operational Creditor and Corporate debtor, the Corporate Debtor failed to clear the outstanding dues. Again the amount fell due and payable on 16,04.2019 when the Arbitration Petition filed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor, hence the application is not maintainable. 9. Present is a case where the Appellant was awarded the contract to carry on construction and structural work and the dues claimed by the Appellant are operational debt. The Memorandum of Understanding entered between the parties was only with regard to mode and manner of payment, that too after final bill certificate which was duly signed by both the parties. 10. Adjudicating Authority did not consider the nature of transaction between the parties and has erroneously come to the conclusion that section 9 application was not maintainable. The judgement of Adjudicating Authority cannot be sustained. 11. Learned Counsel for Respondent has also fairly submitted that Corporate Debtor is unable to make payment. 12. In view of the above, we allow the appeal by setting aside the order of Adjudicating Authority directing the Adjudicating Authority to pass an order of admission and other consequential order within a period of four weeks from the date of receipt of this order. The appeal is allowed accordingly. 11. In the above judgment, it is clearly held that Memorandum of Understanding entered between the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f default in regard to financial debt. 13. The judgment of this Tribunal in Amrit Kumar Agrawal (supra) was a case where this Tribunal was examining the Application on the issue whether it is financial debt. In the said background, it was held that Settlement Agreement subsequently entered between the Financial Creditor and the Corporate Guarantor does not contain any element of financial debt, hence, its breach was not financial debt. The judgment of this Tribunal in Amrit Kumar Agrawal (supra) was entirely on different facts and circumstances and has no application in the present case. In the present case, as noted above, the nature of the operational debt was payment of RA Bills submitted by Operational Creditor and Settlement Agreement was entered for payment but payment having not been made in pursuance of the Settlement Agreement, liability of the Corporate Debtor to make the payment continues and Operational Creditor was well within its right to file Section 9 Application. 14. Learned Counsel for the Respondent has placed reliance on the judgment of this Tribunal in Company Appeal (AT) (Ins.) No.742 of 2020- Trafigura India Private Limited vs. TDT Copper Ltd. f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor who was liable to pay the dues and debt of the Appellant. We, thus, are of the view that the judgment of the Hon ble Supreme Court in Ghanshyam Mishra and Sons (P) Ltd. (supra) does not help the Appellant in the present case. 18. We are of the view that filing of claim in the CIRP of VentaRealtech Pvt. Ltd. has no effect on maintainability of Section 9 Application. In the CIRP what amount Operational Creditor i.e. Appellant is entitled or receives are different issues, any amount received by the Appellant in CIRP of VentaRealtech Pvt. Ltd. may be adjusted but that itself cannot be a ground to not proceed with Section 9 Application filed by the Operational Creditor. We, thus, are of the view that the Adjudicating Authority committed error in rejecting the Application of the Appellant on the ground that there is no operational debt. The issue is fully covered by judgment of this Tribunal in Ahluwalia Contracts (India) Limited vs. Logix Infratech Pvt. Ltd. . 19. In view of the foregoing discussions, we are of the view that impugned order of the Adjudicating Authority is unsustainable. In result, the Appeal is allowed. The order dated 12.01.2023 is set as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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