National Company Law Appellate Tribunal
M/S New Engineering Works vs Ntpc Ge Power Services Private Limited on 12 November, 2021
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Company Appeal (AT) (Insolvency) No. 126 of 2020
[Arising out of order dated 24.10.2019 in Company Petition No. (IB)-1722 (PB)
/2019 passed by the Adjudicating Authority (National Company Law
Tribunal), Principal Bench at New Delhi.]
IN THE MATTER OF:
Shri Utpal Kumar Guha
(Sole Proprietor)
M/S New Engineering Works
144, Narasingha Dutta Road,
1st Floor, Block-C, P.O. Kadamtala,
Howrah - 711101
.... Appellant.
(Original Operational Creditor)
Versus
NTPC GE Power Services Private Limited
(formerly known as NTPC ALSTOM
Power Service Private Limited),
Having its Registered Office at NTPC Bhawan,
Scope Complex 7 - Institutional Area,
New Delhi - 110003.
....... Respondent.
(Original Corporate Debtor)
Present:
For Appellant: Mr. Susheel Cyriac, Mr. Ankur S. Kulkarni, Mr.
Nirnimesh Dube and Ms. Uditha Chakravarthy,
Advocates.
For Respondent: Mr. Alok Kumar Kunchhal, Advocate.
2
JUDGMENT
(12th November, 2021) Justice Anant Bijay Singh;
This Appeal has been preferred by the Appellant aggrieved and dissatisfied by the order dated 24.10.2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Principal Bench at New Delhi in Company Petition No. (IB)-1722 (PB) /2019 whereby and where under the application filed by the Appellant (herein) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for short IBC) was rejected.
2. The facts giving rise in the instant Appeal are as under:
i) That the Appellant is a Sole Proprietor construction firm, engaged in the mechanical construction work in projects since its inception in the year 1984, with specialisation in air pollution control technology and effluent treatment technology and others.
ii) The Respondent - Corporate Debtor was formerly known as NTPC ALSTOM Powers Service Pvt. Ltd. and pursuant to acquisition of former company by GE Power System was changed to NTPC GE POWER SERVICES PRIVATE LIMITED with effect from 02.02.2017, having registered office at NTPC Bhawan, Scope Complex, 7 Institutional Area, Lodhi Road, New Delhi -
110003.
iii) Further case of the Appellant is that the Respondent Company issued a work order, inter-alia, on 10.06.2015 bearing Work Order No. WO/15- Company Appeal (AT) (Insolvency) No. 126 of 2020 3 16/28.0 (Annexure A-2 at page 65 of the Appeal Paper Book) for carrying out Electrical Erection Works and electrical works with Project Name GSECL UKAL ESP 2x200 MW.
iv) The Respondent Company issued another work order bearing work order No. WO/15-16/0029.0 (Annexure A-3 at page 66 to 68 of the Appeal Paper Book) for carrying out Mechanical Erection Work at UKAI TPS 2x200 MW, for Unit # 3 & 4, as per enclosed scope of services for a total price of Rs. 6,75,00,000/- (Rupees Six Crore Seventy-Five Lakhs only).
v) Further case is that an amendment was carried out to the aforesaid Work Order bearing work order No. WO/15-16/0029.0. The said amendment dated 07.12.2015 bearing work order No. WO/15-16/0029.1 was communicated to the Appellant vide letter dated 10.12.2015 (Annexure A-4 at page 69 to 76 of the Appeal Paper Book).
vi) Further, another amendment was carried out bearing in Work Order No. WO/15-16/0029.2 dated 23.09.2016 which was communicated vide and email dated 23.09.2016. The amended work order was for carrying out mechanical erection work at UKAI TPS 2x200 MW, Unit # 3 & 4, for a total price of Rs. 7,65,14,594/- (Rupees Seven Crore Sixty-Five Lakh Fourteen Thousand and Five Hundred Ninety-Four Rupees only). The copy of the amendment to Work Order is Annexure A-5 at page 77 to 79 of the Appeal Paper Book.
Company Appeal (AT) (Insolvency) No. 126 of 2020 4
vii) The work was completed by the Appellant in terms of the said Work Orders and amended Work Orders and accordingly Invoices were raised during the period 19.04.2016 to 20.04.2018. The total bill of Rs. 9,22,22,917/- was raised out of which Rs. 7,76,50,619/- was paid and a balance amount of Rs. 1,33,40,071/- is still due and payable to the Appellant. Additionally, two separate bills of Rs. 1,19,12,821/- and Rs. 23,59,966/- both aggregating to Rs. 1,42,72,787 was also raised for additional work done. The copy of which is Annexure-A-6 (Colly.) at page 80 to 177 of the Appeal Paper Book.
viii) Further case is that the Appellant approached the Respondent Company by way of several emails and telephone calls for the release of its outstanding payment but to no avail (Annexure A-9 at page 120 to 124 of the Appeal Paper Book).
ix) The Appellant served a Demand Notice dated 08.03.2019 in Form 3 in accordance with Section 8 of the IBC, 2016 read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 on the Respondent Company. The Respondent Company has neither responded to the said notice with regard to the existence of a dispute etc. nor paid the unpaid operational debt within the given stipulated time period of 10 days from the receipt of the said notice (Annexure A-10 at page 125 to 207 of the Appeal Paper Book).
Company Appeal (AT) (Insolvency) No. 126 of 2020 5
x) The Appellant, thereafter, filed application under Section 9 of the IBC before the Ld. Adjudicating Authority bearing Company Petition No. (IB)- 1722(PB) / 2019 for initiation of Corporate Insolvency Resolution Process. The Ld. Adjudicating Authority after hearing the parties vide order dated 24.10.2019 rejected the aforesaid application. Hence the Appeal.
Submissions on behalf of the Appellant
3. The Learned Counsel for the Appellant during the course of argument and his memo of Appeal while assailing the impugned order submitted that the Ld. Adjudicating Authority erred in not acknowledging the fact, that the admitted debt of Rs. 1,33,40,071/- which forms only part of the claimed amount is not under dispute. The dispute if any has been raised only against the additional debt of Rs. 1,42,72,787/- and that too only on the ground that the quantum and the rate of the additional work was not agreed upon prior to the issue of the Invoice. In light thereof, the entire amount of operational debt could not have been said to be in dispute.
4. It is further submitted that the Ld. Adjudicating Authority erred in not giving opportunity to the Appellant to file a Rejoinder to the Reply filed by the Respondent and in the impugned order wrongly been recorded that the Appellant chose not to file a Rejoinder.
5. It is further submitted that the Ld. Adjudicating Authority erred in treating he entire operational debt as disputed, when admittedly three is no Company Appeal (AT) (Insolvency) No. 126 of 2020 6 dispute in terms of the work carried out in terms of the Work Order amounting to Rs. 1,33,40,071/-.
6. It is further submitted that the Ld. Adjudicating Authority erred in finding that there is a pre-existing dispute when no such issue was raised by the Respondent. The Appellants have been continuously claiming the said amounts for a long time and never have the Respondents disputed the same or made a claim that they dispute such amounts. The Ld. Adjudicating Authority erred in not holding that a case of existing dispute was made by the Respondent only at the time of filing reply to the Section 9 application which was way belated.
7. The Learned Counsel for the Appellant further submitted that these facts are not considered by the Ld. Adjudicating Authority while passing the impugned order. So, based on these submissions the impugned order is fit to be set aside and the Appeal be allowed.
Submissions on behalf of the Respondents
8. The Learned Counsel for the Respondent during the course of argument and his Reply Affidavit submitted that the Respondent had issued work orders No. WO/15-16/0028 dated 10.06.2015 for carrying out Electrical Erection Works and electrical works with project name GSECL UKAL ESP 2x200 MW at Unit 3 and 4 for a total price of Rs. 50,00,000/- and work order No. WO/15- 16/0029 dated 12.06.2015 for carrying out Mechanical Erection Work at UKAI TPS 2x200 MW for Unit 3 and 4 at a price of Rs. 6,75,00,000/-. Company Appeal (AT) (Insolvency) No. 126 of 2020 7
9. It is further submitted that on 07.12.2015 further amendment was made in work order dated 12.06.2015 wherein order was amended to incorporate BOQ for Mechanical Erection of Unit 3 & 4 and other terms and conditions and value of the contract had remained same.
10. It is further submitted that subsequently a further amendment was carried out in work order dated 12.06.2015 where the total price of the contract was increased to Rs. 7,65,14,594.04.
11. It is further submitted that paragraph 5 of the Reply Affidavit few important clauses of the work orders executed between the parties is hereunder:
a. Terms & Conditions of Work Order (refer work order No. WO/15-16/0029 dated 12.06.2015 (at page 66 of the Appeal Paper Book) - Para titled as Change order: During the execution of the contract, NASL reserves the right to increase or decrease the scope of work envisaged under the contract. Such increase or decrease in the scope shall be covered under change order or a contract amendment.
b. Standard Terms & Conditions of Work Order (refer clause No. 8 of amendment work order No. WO/15-16/0029.1 dated 07.12.2015 (at page 71 of the Appeal Paper Book) Para titled as Time Schedule: Time schedule is the essence of contract and must be adhered to. If the contractor/agency fails to complete Company Appeal (AT) (Insolvency) No. 126 of 2020 8 job in time, the Purchaser may solely cancel the order at his discretion:
i. Levy penalty at the rate of one per cent of the Contract price for each week's delay or part thereof subject to a maximum of 10% of the contract price or ii. Treat the order as cancelled and recover any loss or damage from the Contractor/Agency and/or.
Get the complete job done or any part thereof from other source on Contractor/ Agency's account, in which case the Contractor/ Agency shall be liable to pay the Purchaser not only the difference between the price at which such job has been completed and the price calculated at the rate set out in order but also any other loss or damage the purchaser may suffer, including penalty for the delay in completion of work. c. Standard Terms & Conditions of Work Order (refer clause no. 8 of amendment work order no. WO/15-16/0029.1 dated 07.12.2015- Page no 71 of the appeal) - Para titled as Right to set off: The purchaser shall be entitled to recover from the Contractor/ Agency any sum as may be due to it on account of damage otherwise in respect of services rendered under this contract. The purchaser also reserves the right to cancel this Company Appeal (AT) (Insolvency) No. 126 of 2020 9 contract or any part thereof, in case of stoppage arising due to fire, strike, lockout, riots, force majeure or any other cause beyond purchaser's control.
d. Terms & Conditions of Work Order (refer work order no. WO/15-16/0028 dated 10.06.2015- Page no. 21 of original application) - Para titled as Liquidated Damages: 1% per day of the total order value maximum upto 10% of the order value. e. Terms & Conditions of Work Order (refer work order no. WO/15-16/0029 dated 12.06.2015 - page no 66 of appeal) - Para titled as Liquidated Damages: Rs. 25,00,000 per day after 90 days from shutdown max. upto 20% of contract price for each unit separately.
12. It is further submitted that the Respondent Company had never changed work order(s) so far to incorporate any additional work, Respondent Company had never communicated and agreed for the additional work but considering the ground realities and actual performance of additional work done by the appellant the Respondent had as a good gesture and as a prudent businessman shown his willingness to pay for additional work and had called the appellant in his office for quantifying and calculating the value of additional work. But the appellant had categorically refused to discuss regarding the additional work and had raised the bill as per his whims and wishes.
Company Appeal (AT) (Insolvency) No. 126 of 2020 10
13. It is further submitted that the Appellant just to avoid his liabilities as per the contract and to misguide the court, had concocted a fake story before the Hon'ble Principal Bench and before this Hon'ble Appellate Bench which can be inferred from the fact that the appellant had mentioned before the Hon'ble Principal Bench that "first time the respondent had raised a dispute vide their letter dated 20.03.2019 and that's too was came to his knowledge after receiving the reply to the petition before the Hon'ble Principal Bench while the notice of demand was raised by the appellant on 08.03.2019 and before that the Respondent Company had never raised any dispute which in itself is a complete false statement as there was a pre-existing dispute between the parties which can be substantiated from the below mentioned facts:
a. That on completion of project by the appellant, the respondent had received the final bill amounting to Rs. 1,33,40,071 for which the Respondent had assured him to make the payments (after calculating all the financial liabilities from both the sides) as soon as their payment gets released from ultimate service holder i.e. Gujarat State Electricity Corporation Limited (GSECL). Thereafter the Respondent Company had called the appellant to their office for having discussion to resolve the issues relating to outstanding amount and settling of amount of liquidated damages via email dated 07.08.2018 to which the appellant had given his consent for the meeting on 21.08.2018 (Annexure- 1 at page 20 to 21 of the Reply Affidavit).
Company Appeal (AT) (Insolvency) No. 126 of 2020 11 b. That thereafter having detailed discussion of everything, the Respondent Company had sent an email to the appellant for acknowledging the minutes of the meeting held on 21.08.2018 & 22.08.2018 with the appellant, on which the appellant via email dated 07.09.2018 had purportedly instead of accepting and rejecting the minutes of the meeting as an afterthought had categorically admitted and denied the facts and smartly answered by admitting/ denying the facts/ contents and had also mentioned some other issues which were never discussed and were not part of the minutes in the meeting dated 22.08.2018 [Annexure-2 (Colly) at page 22 to 29 of the Reply Affidavit].
c. That the existence of dispute can also be verified from the letter dated 24.07.2019 sent by the appellant to the respondent company wherein he had himself admitted the fact that there was a dispute between the parties pertaining to the calculation of additional work, liquidated damages and outstanding amount. Copy of Letters dated 18.07.2019 & its reply dated 24.07.2019 [Annexure-3 (Colly) at page 30 to 33 of the Reply Affidavit].
14. It is further submitted that the main plea of the Appellant is that the principal claim of Rs. 1,33,40,071 had never been disputed by the Respondent Company which is factually correct the respondent company had never denied of the claim of the appellant and even now also the respondent company is not denying of the fact that there were dues of Rs. 1,33,40,071 of appellant but the actual situation is that on delay of completion of project the Company Appeal (AT) (Insolvency) No. 126 of 2020 12 respondent company has the right (as per terms and conditions of work order) to charge the liquidated damages for each unit separately which in aggregate comes out to Rs. 1,58,02,918. Therefore, the claim of the appellant was adjusted against liquidated damages. It is further submitted that the act of the Respondent Company of deducting the liquidated damages is appropriate which can also be verified from the letter of the ultimate service holder i.e. Gujarat State Electricity Corporation Limited (GSECL) wherein the GSECL had also deducted the liquidated damages from the account of the Respondent Company because of delay in completion of the supply of material. Hence, the Respondent Company had also charged the liquidated damages from the Appellant. Copy of letter dated 29.07.2015 issued by GSECL is also attached as Annexure-4 at page 34 of the Reply Affidavit.
15. It is further submitted that the bills amounting to Rs. 1,42,72,787/- of additional work are fake bills as those bills was never part of work order and was allegedly raised unilaterally and was never been admitted by the Respondent Company and the same can be substantiated from the admission of appellant and his submission of certificate of CA of Respondent Company.
16. It is further submitted that there is a pre-existing dispute which was raised well within the time period between the parties and which comes within the definition of 'dispute' under Section 5(6) of the Code. The Hon'ble Apex Court in landmark judgement reported in "2018 (1) SCC 353 'Mobilox Innovations Private Ltd. Vs Kirusa Software private Ltd." had very well interpreted the term "dispute" and "existence of dispute". The Hon'ble Apex Company Appeal (AT) (Insolvency) No. 126 of 2020 13 Court ruled that the definition of 'dispute' is inclusive and not exhaustive. It must be given wide meaning. The 'dispute' is not limited only to pending suit or a pending arbitration. Therefore, "the definition of the term 'dispute' has been expanded and is not restricted to pending suits or arbitration. It includes correspondences exchanged between the parties showing a dispute relating to payment of the debt as well."
17. It is further submitted that the Ld. Adjudicating Authority has rightly held that the 'existence of dispute'. Based on these submissions there is no merit in the instant Appeal, the Appeal is fit to be dismissed.
FINDINGS
18. After hearing the parties and having gone through the Memo of Appeal along with Rejoinder and also Reply Affidavit filed on behalf of the Respondent, we are of the considered view that the following facts are admitted in the instant Appeal.
That on 10.06.2015 bearing Work Order No. WO/15-16/28.0 (Annexure A-2 at page 65 of the Appeal Paper Book) for carrying out Electrical Erection Works and electrical works with Project Name GSECL UKAL ESP 2x200 MW issued to the Appellant Company. The Respondent Company issued another work order bearing work order No. WO/15-16/0029.0 (Annexure A-3 at page 66 to 68 of the Appeal Paper Book) for carrying out Mechanical Erection Work at UKAI Company Appeal (AT) (Insolvency) No. 126 of 2020 14 TPS 2x200 MW, for Unit 3 & 4, as per enclosed scope of services for a total price of Rs. 6,75,00,000/- (Rupees Six Crore Seventy-Five Lakhs only).
Further, it is also admitted fact that an amendment was carried out to the aforesaid Work Order bearing work order No. WO/15-16/0029.0. The said amendment dated 07.12.2015 bearing work order No. WO/15- 16/0029.1 was communicated to the Appellant vide letter dated 10.12.2015 (Annexure A-4 at page 69 to 76 of the Appeal Paper Book). Further, it is also admitted fact that the another amendment was carried out bearing in Work Order No. WO/15-16/0029.2 dated 23.09.2016 which was communicated vide and email dated 23.09.2016 (Annexure A-5 at page 77 to 79 of the Appeal Paper Book). The amended work order was for carrying out mechanical erection work at UKAI TPS 2x200 MW, Unit 3 & 4, for a total price of Rs. 7,65,14,594/- (Rupees Seven Crore Sixty-Five Lakh Fourteen Thousand and Five Hundred Ninety-Four Rupees only).
It is also admitted fact that the work was completed by the Appellant in terms of the said Work Orders and amended Work Orders and accordingly Invoices were raised during the period of 19.04.2016 to 20.04.2018. The total bill of Rs. 9,22,22,917/- was raised out of which Rs. 7,76,50,619/- was paid and a balance amount of Rs. 1,33,40,071/- is still due and payable to the Appellant.
Company Appeal (AT) (Insolvency) No. 126 of 2020 15 Further, additionally two separate bills of Rs. 1,19,12,821/- and Rs. 23,59,966/- both aggregating to Rs. 1,42,72,787 was also raised for additional work done.
From the perusal of the Application bearing Company Petition No. (IB)- 1722 (PB) / 2019 filed by the Appellant which is Annexure A-13 total amount of debt mentioned in Part-IV "Particulars of Operational Debt"
is as under:
Company Appeal (AT) (Insolvency) No. 126 of 2020 16 It is also admitted fact that the Respondent in their Reply Affidavit filed before the Ld. Adjudicating Authority and also this Tribunal have observed that the bills amounting to Rs. 1,42,72,787/- are raised in lieu of doing additional work.
The Ld. Adjudicating Authority in paragraph 35 of the impugned order have rightly taken note of the facts and also in paragraph 40 have given finding that there is a pre-existing dispute between the parties. So, based on judgment passed by Hon'ble Supreme Court reported in "2018 (1) SCC 353 'Mobilox Innovations Private Ltd. Vs Kirusa Software private Ltd." (supra) the Ld. Adjudicating Authority has rightly rejected the Application filed by the Appellant under Section 9 of the IBC.
ORDER
19. In view of the above, we are of the considered view that there is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order therefore, we do not need to interfere in the impugned order.
The impugned order dated 24.10.2019 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in Company Petition No. (IB)-1722 (PB) /2019 is hereby affirmed. There is no merit in the Appeal. The Appeal is hereby dismissed. Company Appeal (AT) (Insolvency) No. 126 of 2020 17
20. Registry to upload the Judgment on the website of this Appellate Tribunal and send the copy of this Judgment to the Ld. Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, forthwith.
[Justice Anant Bijay Singh] Member (Judicial) [Ms. Shreesha Merla] Member (Technical) New Delhi 12th November, 2021 R. Nath.
Company Appeal (AT) (Insolvency) No. 126 of 2020