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Judgment
PER: BENCH
This Petition is filed by M/s Arvensis Energy Private Limited under Section 9 of Insolvency and Bankruptcy Code (hereinafter to be referred as “Code”), read with Rule 6 of Insolvency and Bankruptcy seeking initiation of Corporate Insolvency Resolution Process (CIRP), granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon, contending that the Respondent defaulted in the payment of alleged debt of Rs. 1,80,61,387 (Rupees One Crore Eighty Lakhs Sixty-one Thousand Three Hundred Eighty seven only).
The averments in brief are: -
M/s Arvensis Energy Private Limited, (herein after referred to as Operational Creditor) is an MSME and is engaged in the planning, design, execution of various transmission and telecom projects.
M/s Lakshmi Transcon Private Limited (herein after referred to as Corporate Debtor) is primarily engaged in the business of construction and execution of Transmission lines and substation projects in the states of Andhra Pradesh and Telangana.
It is stated that the Transmission Corporation of Andhra Pradesh Limited (APTRANSCO) issued notice inviting tenders for the competitive bidding for supply, erection, testing and commissioning of (i) 220 KV, 2-Phase DC/SC line from the existing 220 KV Somayajulapalli Switching station to the proposed RTSS Rangarpuram (27.5 kms), (ii) 1 no. 220 KV SS Somayajulapalli Switching Station and (iii) 1 No. 220 KV Bay at proposed RTSS Rangapuram with metering in Kurnool District on turnkey basis. The
It is stated that the Corporate Debtor and Operational Creditor entered into a Joint Venture Agreement dated 24.11.2016 and as agreed upon by both the parties, the Corporate Debtor would act as the Lead Partner and the Operational Creditor would act as a member. Subsequently, a Memorandum of Understanding dated 26.11.2016 was executed whereby it was agreed upon that the Corporate Debtor would be responsible for the execution of the project and the Corporate Debtor would be responsible for supplies and providing technical guidance. Pursuant thereto, the said bid submitted vide proposal No. AP-e-35/2016 dated 28.11.2016, was accepted by the Chief Engineer Construction, Hyderabad vide Letter of Intent dated 21.03.2017. Further, a Letter of Award dated 08.12.2017 was executed wherein the Contract Order for the project was awarded for Rs. 12,64,48,544/-.
It is averred that as per the terms of MOU, the payment has to be made on back-to-back basis and all the payments received from APTRANSCO would be received in an escrow account or alternatively a specific account to be opened for the said purpose with a signatory from each party for disbursement of payment as per Clause 4.1 of the agreement. However, due to paucity of time, the Corporate Debtor informed the Operational Creditor that its bank account details and escrow account would be opened at a later point of time after execution of Letter of Award with APTRANSCO. The Operational Creditor opened an escrow account at Yes Bank, Secunderabad, and the same was informed to the Corporate Debtor with a direction to issue a letter to APTRANSCO requesting to disburse all payment relating to supply and services to the said escrow account, but the same was refused by the Corporate Debtor who guaranteed that all the payments due to the Operational Creditor would be disbursed on a timely basis and as such all the payments were remitted to the bank account solely operated by the Corporate Debtor.
The Operational Creditor submits that they raised several invoices on several dates as detailed at page 7 of the petition, after commencement of the project amounting to Rs.10,23,14,389, which are annexed and marked as Annexure-7 (i-ix colly).
It is further stated that due to financial constraints, the Corporate Debtor requested the Operational Creditor to make such payments as required under Clause 2.2. of the Agreement with an assurance that the said payments would be made to the Operational Creditor at subsequent time. The Corporate Debtor, therefore, is liable to pay Rs. 3,15,118/- and Rs. 21,284/- along with interest towards cost incurred by the Operational Creditor for Insurance Premium and extension of the Insurance Policy.
The Operational Creditor allege that they were compelled to extend the bank guarantee by incurring additional cost of Rs. 17,884/- owing to the delay in completion of the project, solely attributable to the Corporate Debtor.
It is stated that the Corporate Debtor avoided payment of the outstanding amount to the tune of Rs. 1,80,61,387/- under the invoices raised by the Operational Creditor and for other expenditures viz. insurances, extension of bank guarantees etc. Despite issuing reminders, the Corporate Debtor failed to discharge the debt in spite of receiving amounts from APTRANSCO. The Corporate Debtor admitted its liability towards the outstanding payments vide email dated 01.07.2019. Further the Corporate Debtor vide letter dated 13.08.2018 certified that the Operational Creditor had completed the work including supply of all materials, execution of bank guarantees etc. within the time frame.
Despite reminders when the Corporate Debtor failed to discharge the debt, the Operational Creditor issued demand notice dated 30.06.2021 which was served on the Corporate Debtor on 02.08.2021, however, the Corporate Debtor failed to respond to the demand notice. Thus, submitting, the Operational Creditor prayed the Tribunal to allow the Petition and place the Corporate Debtor under CIRP.
We have heard the Ld. Counsel for the Operational Creditor and perused the averments made in the application as well as the documents enclosed with the application. Ld. Counsel for the Operational Creditor submitted that although the notice was delivered upon the Corporate Debtor but none appeared on behalf of the Corporate Debtor and therefore, vide order dated 06.10.2021, the Corporate Debtor was proceeded ex-parte and the case was fixed for ex-parte hearing against the Corporate Debtor. Ld. Counsel for Operational Creditor submitted that even after delivery of Demand Notice, neither any replay received from the Corporate Debtor nor any payment was made by the Corporate Debtor. In view of Section 8 (2) of the Code, the Corporate Debtor is required to raise a dispute or make payment within 10 days after the receipt of the Demand Notice. Since, the Corporate Debtor neither raised the disputes nor made payment and the defaulted is more than Rs. 1 crore, being the minimum threshold limit fixed under IBC, 2016, hence, under the circumstances, the Adjudicating Authority is inclined to admit the petition and put the Corporate Debtor into Corporate Insolvency Resolution Process.
Hence, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code, with following directions:
ORDER
The Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority; Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002 (54 of 2002); the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate Debtor;
That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.
That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
That the order of moratorium shall have effect from date of this order till the completion of the Corporate Insolvency Resolution Process or until this Bench approves the Resolution Plan under Sub-Section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33, whichever is earlier.
That this Bench hereby appoints Shri Suresh VS, having IBBI Registration No. IBBI/IPA-002/IP-N00500/2017-2018/11616 as Interim Resolution Professional, whose contact details are: e-mail : [email protected] Address: Plot No 15, Sitaram Nagar, Near Diamond Point, Sikh Village, Secunderabad, West Marredpally, Telangana ,500009 as Interim Resolution Professional to carry the functions as mentioned under the Insolvency & Bankruptcy Code. Proposed IRP to file Form-2 within 2 days of receipt of this order. Authorisation for Assignment is valid to 09.11.2022. This information is also available in IBBI Website. Thus, there is compliance of Regulation 7A of IBBI (Insolvency Professionals) Regulations, 2016, as amended. Therefore, the proposed IRP is fit to be appointed as IRP since the relevant provision is complied with.
That the Public announcement of Corporate Insolvency Resolution Process shall be made immediately as specified under section 13 of the Code.
The Applicant/Operational Creditor is directed to deposit an amount Rs. 2,00,000/- with the IRP to meet the initial CIRP expenses including the fee of IRP.
The Operational Creditor is directed to communicate this order to the IRP appointed in this case.
The Registry of this Tribunal is directed to send a copy of his order to the Registrar of Companies, Hyderabad for marking appropriate remarks against the Corporate Debtor on website of Ministry of Corporate Affairs as being under CIRP.