Rajeswara Rao Vittanala, Member - (1.) The Company Petition bearing C.P(IB) .No.226/09/HDB/2017 is filed by M/s. Tata Power Company Limited u/s 9 of the IBC Code, 2016 R/W Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by seeking to initiate Corporate Insolvency Resolution Process in respect of M/s. Meenakshi Energy Limited under IBC,2016.
(2.) Brief facts, leading to the filing of present Company petition are as follows: 1) M/s. Meenakshi Energy Limited, (which is herein after referred to as Corporate Debtor) was initially incorporated on 21st August, 1996 under the Indian Companies Act, VII of 1913. 2) The Corporate Debtor has approached Operational Creditor for services of Operation t Maintenance for its Power Plant. Pursuant to discussions, Minutes of Meetings were held from 26.07.2011 to 29.07.2011 and during the period 02.08.2011 to 12.08.2011, Corporate Debtor and Operational Creditor finalized terms and conditions. Thereupon, Corporate Debtor issued a Letter of Intent (LOl) dated 24.08.2011 to the Operational Creditor for Operation Et Maintenance (O & M) Contract Services of its 2 x 150 MW (Unit#1 & Unit #2) Coastal Thermal Power Project at Thamminapatnam Village, near Krishnapatnam Port, Nellore District, Andhra Pradesh. 3) The Operational Creditor rendered services to Corporate Debtor for Operation and Maintenance of Thermal Power Project as per the terms & conditions described in the O&M Contract and raised Invoices in accordance thereto from 2011 to 2016. 4) The Corporate Debtor has issued a letter dated 06.10.2016 for short closure of the Operation and Maintenance Service Agreement for 2x150 MW, Phase-I and all its subsequent amendments as per clause 16.3 of the O&M Contract i.e. Termination for Convenience, as energy sector has been experiencing severe hardships for its day to day survival and informed the Operational Creditor to treat the said letter as notice. Further, instead of giving 180 days' notice period, Corporate Debtor has cut short the notice period to 45 days in view of their precarious financial situation. 5) The Operational Creditor, vide letter dated 13.10.2016 raised its objection to the notice issued by Corporate Debtor for short closure of the 0 & M Contract and cut short the notice period. Further to the discussions between the parties, Corporate Debtor requested Operational Creditor to provide confirmation of the Balance outstanding. Therefore, Operational Creditor issued a letter dated 23.11.2016 to Corporate Debtor confirming the balance amount due and payable of Rs. 22,05,30,359/- as of 31.10.2016 towards the O&M Contract of 2x150 MW (Unit # 1 a 2) MEL. 6) As no payments were received from the Corporate Debtor, Operational Creditor issued various letters protesting the short closure of O&M Contract and requested for payment of the outstanding amount of Rs. 22.05 crores as on 31.10.2016 along with interest. Despite issuing various letters and requests, there was no proper response from the Corporate Debtor. The Operational Creditor has handed over the charge of the complete O&M Services (including all services in the scope of the O&M Contract) of the 2x150 MW (Phase - I) power plant to the Corporate Debtor with effect from 24:00 hrs of 30th November 2016 under protest and at the risk and cost of Corporate Debtor. Simultaneously, the Operational Creditor was compelled to issue letter dated 30.11.2016 to the Corporate Debtor raising the following points: i) Termination of the O&M Contract without giving mandatory notice period of 180 days is in complete breach of the O&M Contract and the same is not acceptable. ii) Not provided the payment plan for outstanding receivable of Rs. 22.05 crores which was equivalent to nearly 6 months of 0& M Fees. iii) Ignored the request to suspend the notice for termination and terminate the contract without compliance to the dispute resolution process as per clause 15 of the contract. 7) In view of the above mentioned concerns raised between the parties, the Operational Creditor invoked the arbitration clause in terms of clause 15.3 of the Annexure - I of the O&M Contract, nominating Mr. Justice (Retd.) Vilas Afzalpurkar and requested the Corporate Debtor to appoint its Arbitrator within 30 days. 8) After handing over the 0 & M charge of 2 x150 MW Phase - I to the Corporate Debtor on 30.11.2016, both Corporate Debtor and Operational Creditor have held joint meetings on various dates to settle the claims and dues. Despite the reconciliation talks were going on, Corporate Debtor however vide letter dated 29.12.2016 nominated Mr. Chief Justice (Retd.) V. Eswaraiah of Andhra Pradesh High Court as its arbitrator. 9) Pursuant thereto, on 12.01.2017, the Corporate Debtor and Operational Creditor recorded Minutes of Meeting that the Corporate Debtor had accepted all the invoices of the Operational Creditor in final reconciliation. As the parties resolved and settled all issues and disputes between them, they gave a go-bye to arbitration, by settlement arrived between them. Accordingly, after considering the final reconciliation as per Annexurel the total outstanding payment agreed by both the party is Rs.15,96,19,780/-. This however excludes the following: a) Applicable interest due to late payment; b) Any claims from the sub-contractors arising out due to short closure; c) House rent reimbursement to sub-contractor (which stands due more than INR 18 lacs approx.., final figure to be reconfirmed from subcontractors as same is directly reimbursed to subcontractor by MEPL) ; d) Amount of Rs. 1,42,60,000/- which is Cost for December'2016 including service tax; The above points at a) and d) shall be discussed at Senior Management level. These shall be paid by MEPL at actuals over and above the mentioned total outstanding amount. 10) Further, it was agreed that the Corporate Debtor shall return the CPBG to the Operational Creditor, immediately after signing the Minutes of Meeting and submit a payment plan within 10 days of signing the Minutes of Meeting. Despite having assured and promised to adhere to the agreed terms given in writing, the Corporate Debtor has not submitted the payment plan, even as of date. 11) It is contended that though the Operational Creditor has invoked the arbitration clause and has nominated its Arbitrator in November 2016 and the Corporate Debtor has nominated its Arbitrator in December 2016, both the Arbitrators have failed to appoint the third Arbitrator, since their appointment from December 2016 to till date. As both the parties have settled the dispute through conciliation and has entered into a Minutes of Meeting dated 12.01.2017 whereby both the parties have given a go-bye to the arbitration invoked. 12) Since no payments were forthcoming, the Operational Creditor sent an email dated 09.02.2017 requesting to release the payment for agreed installments without any further delay. In reply to Operational Creditor's email, the Corporate Debtor on even date (09.02.2017) whilst admitting its liability towards the outstanding payment acknowledged its inability to pay the installment due to the Operational Creditor in January 2017 on the ground that the Corporate Debtor did not have adequate cash inflow due to an unprecedented situation. 13) Thereafter, the Corporate Debtor whilst acting upon the Minutes of Meeting dated 12.01.2017 has paid an amount of Rs. 2.00 crores to the Operational Creditor on 06.03.2017. The Operational Creditor vide letter dated 21.03.2017 has acknowledged receipt of payment of Rs. 2 crores on 06.03.2017 from the Corporate Debtor towards the outstanding dues and requested to release the balance outstanding payments. In response thereto, the Corporate Debtor vide email dated 28.03.2017 informed its inability to clear the dues as per the commitment given of 3-4 months starting from February 2017due to very severe cash crunch from the state Governments and debtors. 14) After waiting for a period of five (5) months, the Operational Creditor has issued demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016 (IBC) on 17.08.2017, and the same has been served on the Corporate Debtor on 22.08.2017.In response to the demand notice, the Corporate Debtor vide reply letter dated 26.08.2017 has falsely denied its liability towards the outstanding payment, in spite of having admitted execution of contract, services rendered and invoices raised by the Operational Creditor from time to time. The ground of pending of arbitration proceedings as alleged by the Corporate Debtor in their response of 26.08.2017 is nothing but a ruse to avoid payment of the dues and / or frustrate these proceedings, particularly when there is no arbitral dispute pending between the parties consequent to the settlement arrived between the parties on 12.01.2017. 15) Thereafter, the Operational Creditor has filed present Company Petition, duly serving copies of the petition with documents to Corporate Debtor in September 2017. Thereafter, the Corporate Debtor, through its Arbitrator has issued a letter dated 14.10.2017 for appointment of the Presiding Arbitrator and recommended Mr. Justice P. Venktram Reddy, after a lapse of nine (9) months in order to stall the proceedings before NCLT. The Arbitrator of Operational Creditor has not given any concurrence to the said appointment as recommended. 16) Therefore, the Operational Creditor insist the Tribunal/Adjudicating Authority to initiate CIRP since it is a case of admitted debt having paid part payment of it and it falls within extant provisions of IBC, 2016.
(3.) Heard Shri R.Raghunanda Rao, Senior Counsel along with Ms. B.Saroj and Kajal Kumari for the petitioner/Operational Creditor and Shri Deepak Bhattacharjee, Senior Counsel with Ms.Vinita R. Thakur for the Respondent/Corporate Debtor, and have carefully perused all pleadings of both the parties along with material papers and extant provisions of IBC, 2016.;