TMI Blog2024 (4) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... to the claimant intimating that vide earlier letter dated 02.12.2016 and 05.12.2016 the representative of claimant has already been informed that revised BOQ for Kopaganj Project and Ghosi Project has been approved along with terms and conditions as per agreement - Clearly, both the statement recorded in the Impugned Order as submitted by the Respondent are contradictory. The fact is that the Respondent has accepted and communicated to the Appellant regarding acceptance of the revised BOQ and the same should have been dealt with by the Adjudicating Authority suitably. We feel that it will be travesty of justice, if the claims of the Operational Creditor like the Appellant herein are refuted and denied by Public Sector Undertakings like Respondent herein in such casual, catastrophic and unfortunate manner. Afterall it is the faith on such PSUs, Operational Creditors like the Appellant here in start the execution of the work immediately, sometimes even without for formal contract, based on LOI. Hence, the ground of alleged lack of proper approval by the committee of the Respondent and therefore, the Respondent is not bound to make the payment is just not acceptable and stand rejecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent never participated in the proceedings. In this connection, it is noted that in the first order sheet dated 18.12.2023, no one had appeared on behalf of the Respondent. Similar position persisted on 06.02.2024 and since then the Respondent did not appear even on 15.03.2024, therefore it was decided to proceed ex-parte against the Respondent and the matter was listed for hearing on ex-parte basis on 08.04.2024 and on the same date the order was reserved. 3. It is noted that petition was filed by the Appellant under Section 9 of the Code against the Respondent for initiation of Corporate Insolvency Resolution Process (in short CIRP ) for amount of Rs. 4,43,42,607/- inclusive of interest on the date of filing of petition before the Adjudicating Authority on 31.08.2019. 4. The Appellant is involved in business of supply of electrical equipment, components, servicing and providing allied services thereof, whereas the Respondent is the company engaged in distribution of electric power in Eastern area of Uttar Pradesh. 5. Shorn of unnecessary details, it is suffice to note that the Appellant got awarded two tenders by the Respondent for work of system improvement, strengthening and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod as stipulated under the Code. 12. It is the claim of the Appellant that on 06.09.2019, he sent letter to the Superintending Engineer Mau of the Respondent and in respect thereto, Superintending Engineer replied vide letter dated 11.09.2019 confirming the details of outstanding payment to the Appellant vide e-mail dated 31.07.2019. 13. The Appellant pleaded that he filed CP (IB) No. 486/ALD/2019 on 26.11.2019 before the Adjudicating Authority for initiation CIRP against the Respondent and post initiation of CIRP, the Respondent raised alleged disputes regarding amount of work done and due payment. 14. As per the Appellant the main reason for alleged dispute by the Respondent was word done over and above contracted amount and lack of proper sanction by the competent authority of the Respondent for such excess work. 15. It is the case of the Appellant that he was communicated for the revised BOQ and was also issued accounts confirmation letter dated 03.10.2017 and work completion certificate dated 23.12.2017, hence the plea of the Respondent that lack of competent authority the approval is moon shine defense. 16. The Appellant submitted that after filing the Section 9 application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... few judgments in the matter of Ivalue Advisors Pvt. Ltd. vs. Srinagar Banihal Expressway Ltd. [Company Appeal (AT) (Ins.) No. 1142 of 2019] and Dena Bank vs. C. Shivakumar Reddy [C.A. No. 1650 of 2020] in support of his points, discussed above. 24. Concluding his remarks the Appellant requested to allow his appeal and set aside the Impugned Order. 25. As already noted the Respondent never appeared before this Appellate Tribunal in the present appeal and on 08.04.2024, it was decided to hear the Appellant on ex-parte basis as such we did not have the pleadings of the Respondent as well as reply of the Respondent in the present appeal. Hence, we relied upon the Impugned Order and the original application of the Appellant before the Adjudicating Authority under Section 9 of the Code, to understand the pleadings of the Respondent as stated in the Impugned Order and logic and reasoning of the Adjudicating Authority while the passing the Impugned Order. 26. From the Impugned Order it is seen that the following pleading of the Respondent were made before the Adjudicating Authority :- (i) The Respondent is the Government company and therefore exempted from the purview of the Code and had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffective order which can be relied for the existence of the debt. 30. The Respondent also taken the plea regarding absence of privity of contract for the additional work between the Appellant and the Respondent and stated that the Respondent has already paid amount of Rs. 12,33,48,188/- and pleaded that Section 9 application has been filed only for recovery. 31. The Respondent again took a plea before the Adjudicating Authority of non approval/ sanction by the competent committee in asking the Appellant to do additional work and contested accordingly the claims of the Appellant. 32. The Respondent has taken plea before the Adjudicating Authority that the Appellant sought a reference under provisions of MSME Act, 2006 and thus stand debarred to use the IBC. 33. The Respondent strongly took up plea before the Adjudicating Authority that the Respondent being a Government Company whose 100% of the share are held by the State Government makes it instrumentality of state and therefore insolvency proceedings cannot be initiated against it. 34. Another argument the Respondent has taken before the Adjudicating Authority that the Respondent had annual turnover of Rs. 11,000 Crores and employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een paid Rs. 11,81,08,663/-. 41. We also note that the Appellant conceded before the Adjudicating Authority that the default amount was actually of Rs. 1,76,89,875/- which was wrongly mentioned as Rs. 4,43,42,607/- in their application along with non disclosure of date of default and this was mentioned by the Appellant before the Adjudicating Authority much earlier to passing of the Impugned Order and during pleadings itself brought to the notice of the Adjudicating Authority of these facts through MA No. 02/2023, which was disposed off by the Adjudicating Authority vide order dated 07.08.2023. Hence, the amount claimed by the Appellant as default amount was to be treated as Rs. 1,76,89,875/- along with the date of default 24.04.2018. 42. Since, the Respondent did not appear before this Appellate Tribunal we have taken the help of the Impugned Order to understand their point of view which we noted in the preceding discussions. 43. The Respondent also doubted regarding existence of letter dated 02.12.2016 and 05.12.2016 since they could not trace these letters in their files. In this connection, we would like to take into account the exact wording as recorded in the Impugned Order w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le. We wonder how this impacts the claims of the Appellant as the approval by the committee or the Managing Director, at the best is outlook and process of the Respondent and subject to doctrine to indoor management and by this cannot adversely impact and impair the rights of the Appellant. 46. In the aforesaid discussions, we note that the Impugned Order records that the Respondent doubted existence of letter dated 02.12.2016 and 05.12.2016 as these were not available in the files of the Respondent. We find it strange to note that the same Impugned Order, observed in Para 3(vii) of the Impugned Order, where it has been mentioned that the Respondent has stated that a letter dated 11.01.2017 was issued to the claimant intimating that vide earlier letter dated 02.12.2016 and 05.12.2016 the representative of claimant has already been informed that revised BOQ for Kopaganj Project and Ghosi Project has been approved along with terms and conditions as per agreement. Clearly, both the statement recorded in the Impugned Order as submitted by the Respondent are contradictory. The fact is that the Respondent has accepted and communicated to the Appellant regarding acceptance of the revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in concluding that because Operational Creditor had moved the MSME Authorities, it showed pre-existing dispute. The Appellant had a relief open under the MSME Act and only because the Appellant moved the Authority under MSME Act, it does not mean that there is a pre-existing dispute. The dispute raised by the Appellant before the MSME was that it had dues to recover and that the Respondent has not paid. This by itself does not mean that there is pre-existing dispute as far as the Respondent is concerned. Under the IBC Section 5 Sub-Section (6), the dispute is defined as under:- (6) dispute includes a suit or arbitration proceedings relating to (a) the existence of the amount of debt; (b) the quality of goods or service; or the breach of a representation or warranty 10. Section 17 of MSME Act reads as under:- 17. Recovery of amount due. For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16 Sub-Section (1) of Section 18 of that Act reads as under:- (1) Notwithstanding anything contained in any other law for the time being in force, any party to a dispute may, with regard to any amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate such decision to the operational creditor and the corporate debtor, if (a) the application made under sub-section (2) is incomplete; (b) there has been 1 [payment] of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or (e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the Adjudicating Authority. ( Emphasis Supplied ) 55. From it is clear that the Adjudicating Authority has jurisdiction to reject the application being incomplete but is also obligated that before such rejection has to give a notice to the Applicant to rectify the defects in his application within seven days of the date of receipt of such notice from the Adjudicating Authority. 56. We note that no notice seems to have been issued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/CHE)/2022 in IBA/491/2020, by the Adjudicating Authority / Tribunal, on 26.07.2023 is free from any legal flaws. Accordingly, the Appeal sans merits. 44. In fine, the Company Appeal (AT)(Ins.) No.325/2023 is dismissed by this Tribunal, for the reasons ascribed in this Appeal. No Costs. The connected IA 991/2023 (for stay) is closed. ( Emphasis Supplied ) 58. In this connection, we would also refer to judgement of Hon ble Supreme Court of India has passed in the matter of Dena Bank v. C. Shivakumar Reddy C.A. No. 1650 of 2020. The relevant paras are read as under :- 144. There is no bar in law to the amendment of pleadings in an application under Section 7 of the IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 of the IBC in Form-1. In the absence of any express provision which either prohibits or sets a time limit for filing of additional documents, it cannot be said that the Adjudicating Authority committed any illegality or error in permitting the Appellant Bank to file additional documents. Needless however, to mention that depending on the facts and circumstances of the case, when there is inordinate delay, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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