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Judgment
O R D E R
Per: Justice Rakesh Kumar Jain (Oral)
22.02.2024: This appeal is directed against the order dated 27.01.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) by which an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (In short ‘Code’) by the Operational Creditor / Respondent herein (HM Construction) has been admitted for the resolution of an amount of Rs. 3,16,37,481/-.
Shorn of unnecessary details, the Operational Creditor filed an application under Section 9 on 03.03.2021, on the prescribed form, for the default stated to have occurred on 05.01.2018 in payment of the debts.
The application is contested by the Corporate Debtor/Appellant herein, inter alia, on the ground that there is a pre-existing dispute, therefore, the application is not maintainable. In order to substantiate his claim of a pre-existing dispute, the Appellant relied upon letters dated 28th July, 2020, 27th January, 2021 and email dated 28th January, 2021. In so far as the letter dated 28.07.2020 is concerned, it is regarding poor performance of the Operational Creditor in respect of the work order whereas the letter dated 27.01.2021 which has also been incorporated in the email dated 28.01.2021 is in respect of the levy of exorbitant rates.
The Adjudicating Authority rejected both the letters with a finding in recorded Para 16 of the impugned order which read as under:-
“16.It is seen that the Corporate Debtor has not filed any evidence to refute the Engineer Certificate and Architect Completion Certificate. Further, the service of letter dated 28.07.2020 and 27.01.2021, issued prior to issuance of demand notice, upon Operational Creditor remains unsubstantiated.”
Thereafter, it has been recorded in Para 18 of the impugned order that:-
“The Corporate Debtor has failed to prove the existence of the dispute prior to issuance of the demand notice. Hence, the plea of the Corporate Debtor is rejected.”
Counsel appearing on behalf of the Appellant has argued that the Adjudicating Authority has committed an error in appreciating all the documents on record. It is submitted that in so far as the letter dated 28.07.2020 is concerned, the Respondent has categorically denied the same in Para 6(b) of the rejoinder filed before the Adjudicating Authority which read as under:-
“b. With reference to paragraph 4 to 6, the Operational Creditor denies the same in toto. I say and submit that the letter dated 28thJuly, 2020 is forged and fabricated. I say that the Caproate Debtor has never addressed any such letter, I say and submit that such letter has never been issued by the Corporate Debtor as the same docs not bear any acknowledgement of the Operational Creditor. I say and submit the Operational Creditor have never: received t1e sa.me. It is apparent that the letter is a forged letter as photos shown are undated photographs of unfinished building when work was in progress, which has been duly completed by the Operational Creditor (the photographs annexed hereto), which is a contrary stand as the building was completed in June, 2020. I further say that the Corporate Debtor has made a false submission and concocted a false document before this Hon'ble Tribunal to mislead this Hon'ble Tribunal into believing of there being a pre-existing dispute. As the said project has received Completion Certificate on 26thJune, 2020. The said project was complete in all aspects and the same has been certified by the Architects and Engineers of theCorporate Debtor itself in June, 2020. Therefore, the issue of pre-existing dispute raised by the Corporate Debtor is illusory and spurious. Hereto annexed and marked as Exhibit "D" are the photos of the duly completed work.”
However, in respect of letter dated 27.01.2021, there is no categoric denial about its receipt. In this regard, reference may be had to para 6(c) as well as (q) which read as under:-
“c. With reference to paragraph 7 and 8, the Operational Creditor denies the same in toto. It is submitted that the project 81 Aureate is termed as a "luxury project" of the Corporate Debtor which consists of 81 Flats each costing about Rs.25 crores, wherein on demand/ Work Orders of the Corporate Debtor, the Operational Creditor has used high end materials and customized solution as per pricing which has been d·.1ly agreed by the Corporate Debtor in its work Order, the Corporate Debtor to avoid its liability is using every excuse available to delay the payment of the Operational Creditor. The Corporate Debtor cannot subsequently deny its liability, after completion of work, after the Corporate Debtor itself certifying the completion of the said project in all respect before the authorities. It is apparent that the Corporate Debtor has suppressed material facts and is making illusory excuses to avoid payment of its outstanding liabilities. I say that the work order has been shared with the Corporate Debtor on email on 11th October, 2017.
q.With reference to paragraph 28 and 29, the Operational Creditor repeats and reiterates what has been stated hereinabove and deny what is contrary thereto and/ or inconsistent therewith. The letter dated 271h January, 2021 is nothing but a vain attempt of the Corporate Debtor seeking to create pre-existing dispute where there is none. The rates were agreed by the Corporate Debtor while issuing the work Order as the same were a customized solution as per requirement of the Corporate Debtor, and after completion of the transaction the raising of such dispute is an afterthought and clearly shows the malafide intent of the Corporate Debtor to evade payment of the operational debt.”
During the course of hearing, Counsel for the Respondent submitted that in so far as the letter dated 28.07.2020 is concerned, it has been categorically denied to have been received but the receipt of letter dated 27.01.2021 is not denied as it also forms part of email dated 28.01.2021. However, he has vehemently argued that even from the contents of the letter dated 27.01.2021, no case of pre-existing dispute is made out.
We have heard Counsel for the parties and perused the record with their able assistance.
The case of the Appellant is based upon two letters dated 28.07.2020 and 27.01.2021. In so far as the letter dated 27.01.2021 is concerned, a categoric finding has been recorded by the Adjudicating Authority that the issuance of this letter, before the demand notice was issued on 11.02.2021, is not proved by the Appellant (CD). This finding of the Adjudicating Authority is patently erroneous. There is no specific denial in the pleadings of the receipt of this letter which tantamounts to admission and even otherwise, Counsel for the Respondent is candid enough to admit at the bar that the letter dated 27.01.2021 was duly received by the Operational Creditor/Respondent and also the email dated 28.01.2021, therefore, the fact of having issued the letter on 27.01.2021 and received by the Respondent herein is established. If this fact is established then the finding recorded in Para 16 in respect of the letter dated 27.01.2021 is patently erroneous and accordingly reversed.
In so far as, the contents of the letter dated 27.01.2021 are concerned, it may be raised by the parties before the Tribunal, who would after taking into consideration the contents, shall decide as to whether any pre-existing dispute is still made out for the purpose of defeating the right of the Operational Creditor for the admission of the application filed under Section 9 of the Code.
With these observations, the appeal is hereby allowed. The impugned order is set aside. The parties are directed to appear before the Adjudicating Authority on 11th March, 2024. It is also made clear that the Tribunal shall now decide the issue, on the basis of the letter dated 27.01.2021, as to whether the pre-existing dispute, raised by the Appellant, is still made out or not for the purpose of the admission of the application filed by the Respondent. It is needless to mention that the amount deposited by the Appellant in terms of the order dated 02.02.2023 shall be refunded to it by the Registry within 15 days from the date of passing of this order on the presentation of a certified copy of this order.