National Company Law Appellate Tribunal
The Geron Engineering Pvt. Ltd vs M/S Ecogreen Energy Lucknow Pvt. Ltd on 4 February, 2022
Author: Ashok Bhushan
Bench: Ashok Bhushan
NATIONAL COMPANY LAW APPELLATE TRIBUNAL,
PRINCIPAL BENCH, NEW DELHI
Comp. App. (AT) (Ins.) No. 115 of 2022
In the matter of:
M/s. Geron Engineering Pvt. Ltd. ....Appellants
Vs.
M/s. Ecogreen Energy Lucknow Pvt. Ltd. ...Respondent
For Appellant: Mr. Saurabh Jain, Mr. Prayag Godha, Advocated.
For Respondent: Mr. Anand Chhibbar, Senior Advocate with Mr.
Vaibhav Sahni, Advocate.
ORDER
(Through Virtual Mode) 04.02.2022: Heard Learned Counsel for the Appellants.
2. This Appeal has been filed against the order dated 16.07.20221 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, by which Application filed by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 has been rejected. The Application was filed by the Appellant claiming the outstanding payment amounting to Rs. 134.72 Lakhs including interest. The Adjudicating Authority issued notice to which Reply was filed by the Corporate Debtor. In the reply, Corporate Debtor has stated that there were pre-existing disputes between the parties and in support of the said, the Warning Notice dated 06.12.2018 and Legal Notice issued on 07.01.2019 were also brought on record. The Adjudicating Authority after considering the submissions of the Learned Counsel for the parties has rejected the Application. The reasons given by 2 the Adjudicating Authority are reflected in paragraph 13 of the order which is to the following effect:-
"13. The next issue is whether the petitioner has proved the existence of an enforceable debt and the liability to pay the same by the corporate debtor. The corporate debtor while not disputing the various transactions between the parties, however, while drawing our attention to Annexure 5 warning notice dated 06.12.2018 and Annexure 6 legal notice dated 07.01.2019 submitted that there was a pre-existing dispute between the parties and hence, the CP is liable to be dismissed. The petitioner-operational creditor while not disputing the fact of receipt of Annexure 5 warning notice dated 06.12.2018 Even before issuance of the statutory demand notice dated 02.01.2019 to the corporate debtor, however, submits that the said warning notice was duly answered by the petitioner and hence, it cannot be said that there was a pre-existing dispute between the parties. It is not in dispute that the respondent-corporate debtor vide Annexure 5 warning notice has raised serious allegations of breach of the contract, malpractice, defective and substandard supply of machinery and threatened to revoke/cancel the contract between the parties. The petitioner failed to show the settlement of those disputes either before issuance of the demand notice or thereafter. In the absence of the same, it is to be concluded that there is a pre-existing dispute between the parties and that the CP is liable to be dismissed on this ground. Hence, there is no necessity to go into other allegations and counter allegations made in the CP."
3. Learned Counsel for the Appellant submits that there was no letter issued by the Corporate Debtor regarding any deficiencies in the service with regard to Company at Lucknow and several letters were issued for demanding payments. The Adjudicating Authority has referred to the Warning Notice dated 06.12.2018 which has also been brought on the record at Page 83 of the paper book. The said Warning Notice was much before Comp. App. (AT) (Ins.) No. 115 of 2022 3 issuance of Section 8 notice by the Appellant. In the Warning Notice which was issued, there were serious allegations made against the Appellant. It is useful to extract the relevant part of the notice dated 06.12.2018 which is to the following effect:-
"We are constrained to serve you with this warning notice as your conscious and willful attempt to breach the contract is causing hardships, inconvenience to us and is hampering our day to day work.
The manner in which you have proceeded to execute the contracts shows utter dishonesty, malpractice and an endeavor to indulge in unjust and unfair enrichment at our cost and detriment.
The Machinery supplied by you are defective, substandard with the result that time and again we are facing breakdown, Moreover even after completion of the fabrication works, the Machinery etc are not being delivered back to us.
Severe Manufacturing defects and defects in design as well, have been noticed and your team has been apprised of the same from time to time.
However, no remedial & corrective measures have been taken at your end for rectifying the defects. It seems that you have no intention to honour the contracts in the manner committed by you. We have taken a strong exception to your various acts of omission and commissions relating to the execution of the contract as a consequence of which we are suffering day to day hardship in our operation.
Therefore, consider this letter as a warning notice to you that in case all the defects relating to the machinery, fabrication work and supply is not rectified and the balance material is not supplied at the site within 48 Hours from the date of receipt of this letter, we shall be constrained to revoke/cancel the contracts and seek legal recourse against you by way of appropriate Civil and Criminal Proceeding, which in that even shall be entirely at your cost and risk."
Comp. App. (AT) (Ins.) No. 115 of 2022 4
4. The notice under Section 8 was issued on 02.01.2019 and immediately thereafter Legal Notice dated 07.01.2019 was issued by the Corporate Debtor giving details of shortcoming at different places and making serious allegations against the Appellant. We are satisfied that there is pre-existing dispute between the parties. Serious allegations have been made against the Appellant by the Corporate Debtor and the Adjudicating Authority did not commit any error in rejecting the Application under Section 9. There is no merit in this Appeal. The Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson [Dr. Ashok Kumar Mishra] Member (Technical) [Dr. Alok Srivastava] Member (Technical) Anjali/nn Comp. App. (AT) (Ins.) No. 115 of 2022