Godrej Projects Development Ltd. vs Mr. Kailash T. Shah

The Applicant is a leading and highly reputed company, inter-alia, involved in the business of Real Estate in India. The Applicant has considerable experience and expertise in development/ redevelopment of Real Estate projects and have earned a goodwill in the market of Real Estate by acting as a developer/redeveloper for various redevelopment and/or development projects across different cities in India.

The Applicant had undertaken a redevelopment project named as ''Godrej RKS, Chembur” (“Project”) at Sion Trombay Road, Chembur, Mumbai. The Applicant had floated a tender dated 20^th July, 2020 with the subject "Notice inviting tender for Shell and Core and Waterproofing Works". The Corporate Debtor submitted its bid and was selected as the successful bidder for the works. Accordingly, the Applicant and the Corporate Debtor entered into a Contract Agreement bearing Contract Reference No. GPDL/CRK/CIVILWORKS/2020/11/06 (''Agreement") dated 9th November 2020 ("Agreement") in respect of Civil Shell and Core Works at the said Project. The Corporate Debtor undertook to complete the Civil Shell and Core Works in respect of the said project as per the terms and conditions of the said Agreement. It is pertinent to note that the contract period was 17.9 months (including mobilization period) from the date of issuance of notice to proceed, which was issued on 9^th November, 2020. Therefore, the entire scope of Works was required to be completed by the Corporate Debtor by 9^th May, 2022 or thereabout. However, the Corporate Debtor failed to complete the work within the agreed timeframe.

The Corporate Debtor has from time to time issued 15 RA bills upon the Applicant. The Applicant had, after verification of the work done by the Corporate Debtor as per each RA bill, issued 15 Certificates of Payment from time to time and accordingly, the payments were made by the Applicant to the Corporate Debtor.

The Applicant states that on account of failure on the part of the Corporate Debtor to complete the Works in accordance with terms of the said Agreement, the Applicant was constrained to invoke the provisions of the said Agreement and levy debits upon the Corporate Debtor on account of non-performance, miscellaneous infra, material supply, steel wastage and liquidated damages as per the General Conditions of Contract ("GCC") and Special Conditions of Contract ("SCC") as per the said Agreement. The details of the debits levied upon the Corporate Debtor by the Applicant are as follows:

The Corporate Insolvency Resolution Process (‘CIRP’) against the Corporate Debtor commenced on 16.09.2022 pursuant to the Order passed by the Tribunal in the above-captioned Company Petition. Mr. Sitansh Magia was appointed as the Interim Resolution Professional (‘IRP’) of the Corporate Debtor.

The IRP made public announcement dated 17^th September, 2022 in FORM A as per Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations”) for inviting claims from the creditors of the Corporate Debtor.

The Applicant states that in view of the initiation of CIRP of the Corporate Debtor, the Applicant, through its Advocates, filed its claim of Rs. 3,81,83,960/- with the IRP in Form B vide email dated 15^th December 2022 and the hard copy thereof was also filed with the IRP.

The IRP had filed updated List of Creditors of the Corporate Debtor as on 11^th January 2023 with Insolvency and Bankruptcy Board of India. which reflected that the claim of the Applicant was under verification as on that date. The Applicant submits that meanwhile, vide an order dated 16^th January 2023 passed in IA 23/2023 filed by one Pro Fin Capital Services Limited, being a financial creditor of the Corporate Debtor, Mr. Kailash T. Shah was appointed as the Resolution Professional of the Corporate Debtor in place of Mr. Sitansh Magia.

On 17^th April 2023 i.e. after 4 months from the date of filing of claim by the Applicant, the Respondent addressed an email to the Advocate for the Applicant, the contents whereof read as follows:

The Applicant was completely shocked and surprised to note that the Respondent has, illegally, arbitrarily and without giving any opportunity to the Applicant to give any clarification or to substantiate its claim, rejected its claim as against the Corporate Debtor. The Respondent failed to give any substantial reason for such unilateral rejection of claim by the Respondent. The Impugned Email Communication has not even provided any detail about the records in the books of the Corporate Debtor and the amount reflecting in the books to be payable by the Corporate Debtor to the Applicant. The Impugned Email Communication is cryptic and provides no reasons and details for the alleged rejection of the claim filed by the Applicant. Hence this application.

The claim of the Applicant arises from the debits, recovery and Liquidated Damages levied by the Applicant amounting to Rs.6,05,51,252/-. The claim of the Applicant was rejected due to pending disputes with the Applicant. There are disputes between the Applicant and the Corporate Debtor with respect to the accounts regarding the Project and its reconciliation and the same is borne out by the correspondence between the officials of the Applicant and the Corporate Debtor.

An official of the Corporate Debtor sent an email dated 01.07.2023 to the Applicant informing them that the Corporate Debtor was awaiting details for settling the accounts for a long period of time. An official of the Applicant proposed for a meeting for discussion on debits and payables. The RP sent an email dated 24.07.2023 to the Applicant stating that he has gone through the communications between the Corporate Debtor’s employees and the project managers of the Applicant which have been continuing for a long time. However, the parties were not able to reach at any conclusion. Thus, the Respondent/RP requested the Applicant to sit with the managers of the Corporate Debtor and conclude the dispute and remit the final payment to the Corporate Debtor at the earliest. The emails placed on record clearly show that there is an unresolved dispute as to the accounts between the Applicant and the Corporate Debtor.

The Respondent submits that the Applicant, the Respondent and the employees of the Corporate Debtor are still making an effort to resolve the dispute and thus, it would be premature and undesirable to admit the claim of the Applicant. Hence, the claim rejection by the Respondent is fully justified and as such, it warrants no interference from the Tribunal.

The emails relied upon by the Respondent are addressed much after the date of rejection of Applicant’s claim and therefore, those emails are irrelevant for adjudication of the present IA.

Respondent has failed to establish any pre-existing dispute between the parties as on the date of filing of the claim by the Applicant. Therefore, in the absence of any pre-existing dispute between the Applicant and the Corporate Debtor, the claim of the Applicant cannot be termed as ‘disputed’ by the Respondent and thus, the claim of the Applicant is bound to be admitted by the Respondent as it is undisputed. The email communications held with a view to reconcile the accounts cannot be termed as an unresolved dispute.

The Applicant submits in its rejoinder that the Respondent, who happens to be the resolution professional of the Corporate Debtor, has no adjudicatory powers under the Code to reject the claim without verifying it first. In the present matter, the Resolution Professional/Respondent is yet to verify the claims and ultimately determine the amount of each claim. Without assigning any reason or giving any opportunity to provide clarifications, the Resolution Professional/ Respondent has rejected the claim of the Applicant as being disputed which manifests arbitrariness and non-application of mind.