- (1.) The present Company Petition bearing CP (IB) No.l00/9/HDB/2017 is filed by Vijay Nirman Company Private Limited, (here in after referred to as Petitioner/Operational Creditor) U/s 9 of the IBC, 2016 R/w Rule 6 of I&B (Application to Adjudicating Authority) Rules, 2016 by seeking to initiate a Corporate Insolvency Resolution Process in the case of Ksheeraabd Constructions Private ' I J Limited, (herein after referred to as Respondent/Corporate Debtor)
(2.) Brief facts, leading to filing of present petition, are as follows: a) Ksheeraabd Constructions Private Limited ("Corporate Debtor") , a Private Limited Company, registered, and incorporated in the erstwhile combined State of Andhra Pradesh and now located in the State of Telangana, after the demarcation of the two States, vide Certificate of Incorporation No. 01-47066 issued by the then Registrar of Companies, Andhra Pradesh at Hyderabad on 05.08.2005. Its Registered Office is situated at 8-2-120/114/1, Plot No.96, Road No.2, Banjara Hills, Hyderabad-500 034. b) The Corporate Debtor and Operational Creditor entered into a sub-contract agreement dated 01.02.2008. Accordingly, Corporate Debtor has to undertake 50% of Section 2 work of "Construction and widening of existing 2 lane highway to 4 lane on NH-67 at KM 190,000 to KM 218.215 (Total 28.215 Km) " for and on behalf of Operational Creditor. The date of commencement of work was 12.01.2008 and the work was to be completed within 27 months from thereon. c) There was a delay caused in execution of the said project by the Corporate Debtor and its employees by nearly 47 months resulting in heavy losses to the sub contractor VNCPL and disputes arose between the two. Further, under the agreement, Operational Creditor has to raise Running Account Bills once in every month towards the work completed in the previous month quantifying the work and the rates to be applied thereof. Corporate Debtor will then scrutinize the said bills, verifies with the site engineers and makes necessary corrections in the Running Account bills and then issues Interim Payment Certificate specifying the amounts payable to the Contractor against the Running Account Bills and various accounts. The Interim Payment Certificate is issued for every Running Account Bill which also mentions the total amount cleared upto the previous bill and amount for the current month and finally certified the total amount cleared to date. d) Accordingly, the Corporate Debtor issued Interim Payment Certificate - 47 (IPC) certifying payments caused upto 30th June, 2012 against work done by the Operational Creditor. Corporate Debtor corrected the bill amount payable for June 2012 from Rs.2,78,04,599/- to Rs. 1,79,00,166/- and corrected the total bill amount to be paid as Rs. 130,06,50,559/- as against the total bill amount claimed for Rs. 132,05,54,993/- by Corporate Debtor. e) Total amount paid upto the previous month was Rs. 128,27,50,393/- as against the total amount of Rs. 130,06,50,559/- up to June 2012. Corporate Debtor admitted that the bill amount for the current month of June 2012 cleared for payment as Rs.l, 79,00,166/-,which stands unpaid till the date of filing application by Operational Creditor. f) The Bank statements issued by IC1CI Bank and Axis Bank shows that only Rs.128, 34,52,257/- has been received so far into the bank accounts of Operational Creditor as against the above work. As such Rs.l,71,98,302/- is the balance amount is to be paid, and it becomes an undisputed ij ; Operational Debt payable by Corporate Debtor for the services received by them from Operational Creditor. Thus, the said amount has become an "Operational Debt" to be paid by the Corporate Debtor as defined under section 3(11) of I&B Code 2016. Hence, this Application. g) The claims raised in the present petition along with the other claims was referred to Arbitral Tribunal at Hyderabad, consisting of Hon'ble Justices Shri D Reddeppa Reddi, Presiding Arbitrator, Justice Shri R Bayapa Reddy, Arbitrator& Justice Shri T Ranga Rao, Arbitrator. After considering the issue in depth, the learned Tribunal passed an award dated 21.01.2017. Broadly, there are two claims for sum of Rs.21,49,02,054/- and Rs.2,77,51,503/-. So far as second claim (Rs.2,77,51,503/-) is concerned, a statement of learned counsel for Respondent therein, is recorded under para 32 of the said Award, which reads as under:- . "Learned Counsel for the 1st Respondent, Mr. Jeorge Thomas, having thoroughly gone through Ex.R-21 and R-22, was fair enough to admit that the claimant is entitled to a sum of Rs. 1,71,98,302/-" The award also rejected, counter claims made by the Respondent therein. So far as the question of limitation is concerned, the Tribunal, under para 23 held as follows: "Issue No.5 is whether the claims raised by the claimant are tt barred by limitation; Learned Counsel for Is- respondent ij does not press this issue. It is, accordingly, held that the claims are not barred by limitation." Ultimately, the award dated 21st January, 2017 is passed directing as follows:- "In the result, we direct the 1st Respondent to pay the claimant, a sum of Rs.15,28,96,926/- (Rupees fifteen crore twenty eight lakh ninety six thousand nine hundred and twenty six only) i.e. Rs. 1,71,98,302 + Rs. 13,56,98,624, with interest thereon @ 6% per annum from the date of commencement of the arbitral proceedings i.e. 25.07.2014 till the date of payment" h) It is contended that the said Arbitral Award has become a Decree on 21.04.2017, as per the Section 36 of Arbitration and Conciliation Act, 1996. Accordingly, the petitioner has also filed execution petition. They have also filed a Caveat Application No. 93 of 2017 before the Learned Commercial Court cum XXIV Addl. Chief Judge, City Civil Court at Hyderabad, inter-alia seeking prior notice before passing any exparte order(s) in any petition that may be filed by the Respondent against the petitioner. However, by an affidavit dated 7th August, 2017, the petitioner has stated that they have not received any notice of stay of operation of award in question till date. i) Since the said admitted amount was not paid by the ' Corporate Debtor, the petitioner issued a statutory demand notice dated 06.02.2016, under prescribed Form-3 under Rule 5 of I & B (Application to Adjudicating Authority) Rules, 2016. However, the respondent, by its reply dated 16.02.2017, has denied the outstanding amount inter-alia contending that it was under dispute. j) Therefore, the present Company petition is filed by seeking the relief as mentioned above. 3. A Counter dated 01.08.2017 is filed by Capt. K Krishna, on behalf of Ksheeraabd Constructions Private Limited (Respondent) .And the following are the main contentions, which are relevant to the present case:- (a) The present Company Petition is misconceived and barred by section 9 of IBC. A demand notice dated 06.02.2017 issued by the Petitioner, was replied by the Respondent on 16.02.2017 i.e. within 10 days, notifying the existence of the disputes. (b) They have stated that 2nd Demand Notice dated 25.07.2017 was also issued by the Petitioner claiming an amount of Rs.13, 56,98,624/- plus interest. This demand notice was also replied on 05.06.2017 within 10 days, duly notifying the existence of dispute. Since the 2nd demand notice is not the subject matter in the Company Petition, the contentions raised in the reply are not referred here. It is stated that claim in question relates to the completion of work done and quality of work made by the Petitioner. The Petitioner has abandoned the work in 2012, thus Respondent itself has incurred losses, giving rise to counter claim. (c) Though admitting that award has been passed, it is contended that the issue is again sub-juidice before Hon'ble Commercial Court, City Civil Court, Hyderabad, as they have filed an Application, which is numbered as 168 of w 2017, under section 34 of Arbitration and Conciliation Act, 1996, challenging the award dated 21.01.2017, and the same is pending, being the next date of hearing was 29.08.2017. Therefore, it is contended that arbitral award in question is un executable, and in support of it, they have relied upon the Judgment of Hon'ble Supreme Court passed in Civil Appeal No.4130 of 2003 vide para -16 records that, Section 36 of the Arbitration & Conciliation Act, 1996 ,which is in pari material with section 15 of the 1899 Act, is set out herein below: "36. Enforcement - Where the time for ' making an application to set aside the arbitral award under section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Code of Civil Procedure, 1908 in the same manner as if it were a decree of the Court". In fact, section 36 goes further than section 15 of the 1899 Act and makes it clear beyond doubt that enforceability is only to be under the CPC. It rules out any argument that enforceability as a decree can be sought under any other law or those initiating insolvency proceedings is as manner of enforcing a decree under the CPC. (d) They have also disputed the contention of the Petitioner that Arbitration Proceedings have come to an end on publication of award. It is also stated that the Hon'ble NCLAT held in so many cases that insolvency resolution process, under section 7 or section 9 of I&B Code, 2016 have serious civil consequences not only on the Corporate Debtor Company, and also its Directors and Shareholders, in view of the fact that once the application under section 7 & 9 of the I&B Code of 2016 is admitted, it is followed by appointment of an "Interim Resolution Professional" to manage the affairs of the Corporate Debtor, instant removal of the Board of Directors and imposition of moratorium for a period of 180 days. It is also further held that for the said reason, the Tribunal should be cautious while admitting the application. (e) They have also relied upon order of the Hon'ble NCLAT passed in CA No.29 of 2017 in the matter of MCL Global Steel Private Limited & another vs. Essar Projects India Limited. It is further contended that in the light of the fact of pendency of Section 34 application ,and in the light of dispute with regard to the payment of the alleged amount of Rs. 1,71,98,302/- in one case and Rs. 13,56,98,624/- in other case is only a fraction of the total amount. The credibility of the Respondent is evident from the fact that the Respondent has paid Rs.128 Crores to the Petitioner. (f) It is also submitted that the Petitioner has not filed the Company Petition in accordance with the Procedure prescribed under Insolvency and Bankruptcy Code.
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