M/s Liberium Global Resources Private Limited vs M/s Amritsar MSW Limited

The Concession Agreement was entered into between the Municipal Corporation of Amritsar ("Concessioning Authority"), Amritsar MSW Limited ("Concessionaire"), Essel Infraprojects Limited ("Selected Bidder") and the Department of Local Punjab Government, Punjab.

The Concessioning Authority was desirous of establishing a suitable mechanism on regional basis to scientifically manage the collection, transportation processing and disposal of municipal solid waste generated from residential and other areas with a view to meet environmental regulations and for health and hygiene.

Following the issuance of the Letter of Intent, the Concessionaire and the Selected Bidder made the payment of required fees and performance security upon which the implementation of the project was awarded to the Concessionaire subject to compliance with the terms and conditions in the Concession Agreement.

For purpose of implementation of the project, Amritsar MSW Limited, the Concessionaire herein, entered into a Sale Agreement with the Applicant which was to be effective from 01st April, 2018 with retrospective effect for the purpose and on terms and conditions as set out in the said Agreement.

Averda Waste Management Investments India Private Limited ("Averda"), was a member of a multinational group of companies undertaking and implementing waste management projects in Europe, Asia, and Africa. The Selected Bidder sought Averda's participation to enable the due implementation of certain projects and Averda agreed to the same with the intention of taking over the ownership, management, and control of the concessionaire and/ or the projects.

A conditional approval to Averda was granted to acquire the control, operation and management of the Collection and Transportation Project and bioremediation project with the replacement of the ownership / control of the Concessionaire based on which a Supplemental Concessionaire Agreement dated 19'" June 2020 was entered into between the original parties of the Concessionaire Agreement and Averda.,

In accordance with the Supplemental Concession Agreement, inter alia, the responsibilities of the Concessionaire which was taken over by Averda on 19th June 2020 include payment of all charges, taxes, fines in relation to the use of utilities and services by the Concessionaire or its contractors including any increase effected from time to time by any governmental authority. Further, in terms of the Confidential Agreement, the liability of payment on account of enhancement in minimum wages or statutory labour charges was to be paid by Amritsar MSW Limited only which was under the control and management of Averda from 19th June 2020 onwards.

In November 2021, the Minimum Wages Act as applicable in the State of Punjab was amended. As the communication relating to the Sale Agreement executed with AMSW was being carried out through Averda accordingly, vide email of 16^th December 2021, the revised salary structure of employees was sent by the Applicant to Averda for confirmation which was replied by Averda vide email dated 17th December 2021 with some revisions. Thereafter, a final email dated 17th December 2021 was sent by the Applicant, to Averda attaching the revised salary structure of Amritsar employees with effect from 01st September 2020. Vide email dated 22nd December 2021, the liability for such enhanced payment on account of increase in minimum wages was duly accepted, admitted, and confirmed by the Averda and Applicant, was advised by Averda to proceed with the revised CTC structure.

On March 2, 2022, the Applicant sent Averda the register for the Concessionaire for the month of January 2022 in accordance with the revised structure. Without any reason, however, vide email dated 4^th March 2022, Averda wrote to the Applicant stating that the minimum wages notification had been challenged before the Punjab and Haryana High Court and the matter is sub judice, hence, they would continue with the old wages and compliances which were processed for October 2021, i.e., prior to the notification of escalation of minimum wages.

Despite regular follow ups, Averda refused to release payments or process the invoices. Thereupon, Averda unilaterally terminated the agreement vide letter dated 24th March 2022 erroneously stating that the same will be terminated on 24th August 2022 in terms of the Agreement which was thereafter corrected to 24th September 2022 after 5 months vide letter dated 26th August 2022. The aforementioned correspondences have been collectively annexed with the Petition.

The liability to pay any increase in statutory dues was squarely on Averda through Amritsar MSW in terms of the Concession Agreement, Sale Agreement and Supplementary Concession Agreement. Averda duly admitted and confirmed its liability to pay the same vide email dated 7th December 2021 only to do an absolute volte face on 4th March 2022. Averda has also duly paid the invoices of December 2021 with the revised increased minimum wages for the months of December 2021, however, that was the only invoice processed in full and inclusive of the revised wages. Further, invoices of April to September 2022 were not demurred to within 2 days of receipt and Averda deliberately shirked off its responsibility to pay the outstanding invoices from April 2022 on the sham of the notification regarding statutory revision of minimum wages being challenged despite no stay or any legal impediment to its compliance. Notwithstanding the termination of the Agreement and in terms thereof, Averda was legally bound to pay its unpaid operational debts to the Applicant for the months of November 2021- September 2022.

Through the Demand Notice dated 28th July, 2023, an operational debt of Rs. 2,43,01,006/- was claimed by the Operational Creditor as against the Corporate Debtor, which, however, erroneously included invoices raised on Averda based on a Confidential Agreement between the parties. Upon obtaining the reply dated 29th July, 2023, a demand notice under Section 8 of the Code was sent to the Corporate Debtor based solely on the invoices raised only on the Corporate Debtor in terms of the Agreements between and binding them as stated hereinabove. The Operational Creditor received the reply on behalf of the Corporate Debtor which denied the existence of operational debt on the purported basis of existence of sham and illusory disputes and relying upon the Confidential Agreement, which was not at all the subject matter of the operational debt claimed vide demand notice dated 23rd July, 2023. xiii. The amount claimed now in present case is a result of non-payment of the invoices raised pursuant to the services extended by the Operational Creditor and such, non-payment is a breach of the Concession Agreement, Supply Agreement, and the Supplementary Concession Agreement. The limited payment made in respect of the transaction clearly demonstrates that there is no legal or procedural issue in the payment, however, payment has admittedly not been made solely due to the pending challenge to increase the minimum wages.

In light of the above, an operational debt of Rs. 2,28,65,774.00 (Two Crores and Twenty-Eight Lakhs and Sixty-Five Thousand Rupees and Seven Hundred and Seventy-Four Rupees) along with interest @ l2% only is due and payable by the Corporate Debtor to the Operational Creditor on account of the unpaid invoices.

The Petitioner and the Respondent had entered into a Sale Agreement dated 1.2.2019 whereby the respondent was purchasing MSW from Petitioner for the purpose of setting up a plant for converting the waste into electricity. This agreement was for 5 years period and had retrospective effect from 1st April 2018 to 31st March 2023. The Sale Agreement was executed when the respondent was a subsidiary and under the management of Essel Infraprojects Ltd. (EIL). (Liberium and EIL are both part of same Essel Group with EIL being the infrastructure and utilities arm of the Essel Group, Liberium is the human resource management arm of Essel group)

Monthly sales invoices were raised by the Petitioner, and which were paid by the Respondent. Each invoice was a function of INR 525 per tonne plus an incentive or a discount depending upon achievement of monthly plan for waste pick up. During the period January 2021 to December 2021, the Respondent received a total of 18 invoices. Pertinently, all the 18 invoices have been duly paid and nothing remains due against the Respondent. The statement detailing the invoices received along with the true copy of the invoices and proof of payment is annexed with the reply.

During 2021, total invoices in the sum of INR 8,97,69,008/- were raised by the Petitioner and the Respondent has in fact made an excess payment of INR 9,00,87,241 /- This excess payment was adjusted in the next billing cycle after taking into account the invoice.

Apart from the Sale Agreement dated 01st February 2019, no other agreement was executed between Petitioner and the Respondent and therefore the Sale Agreement dated 01.02.2019 comprises of the entire contractual agreement between both the parties.

The Petitioner falsely relies on admission by the Respondent. Firstly, there is no admission by the Respondent. The so-called admission by the related parties of the Respondent has no contractual basis to give rise to any cause of action against the Respondent. The email dated 17.12.2021, where admission is sought to be made out was followed by an email 22.12.2021 where it was made clear that any dues have to be agreed in writing. Further, under Section 31 of the Indian Evidence Act, 1872 (under Section 25 of Bharatiya Sakshya Adhiniyam, 2023), an admission can always be explained and does not create a liability without any proven underlying cause. Moreover, the said emails were an exchange of narratives without intervention and confirmation of Legal and Contracts team of either side. There was no discussion of email exchanges for making an amendment to the sale agreement. In para 24 and 25 of the petition, the Petitioner states that Averda Waste Management Investments India Pvt. Ltd. (Averda) did not make payment since November 2021. Notably, Averda is not a party in the petition.

The Petitioner then states that Averda through Respondent AMSW was liable to make payment of any statutory increase and paid invoices of December 2021. So therefore, the dues till December 2021 are also clear admittedly. The Petitioner then states that the invoices of April to September 2022 have not been paid. These invoices have not been annexed in the notice u/s 8 or in the petition.

The Petitioner also states that the invoices of April to September 2022 have not been paid by the Respondent, but the so called claimed invoices have not been annexed with the instant petition. It is also pertinent to mention that the Annexures 5 and 6 of Application contains only 4 invoices of the period November and December 2021 and one invoice is a proforma invoice. The proforma invoice which is Annexure 5 of Application at page no. 289 of the petition, as well as few other invoices which are annexed in Annexure 5 has also been disputed by the Respondent.

The Operational Creditor has not filed any information with Information Utility and thus the petition is defective.

The quantity of MSW mentioned in the invoices at page 286 and 287 of the petition for two consecutive months are same, the same is not possible considering the nature of materials, hence it is clear that invoices are fabricated. x. The invoice raised by the Operational Creditor/ Petitioner at page 287 of the petition invoice no LGRPLMSW2122023 for INR 1.5 crores approximately, cannot be raised by the Petitioner as per the contractual terms and conditions. As there is no contractual foundation for any arrear/wages statutory due as per the sale agreement date 01.02.2019. Moreover, the invoice for the same month was already raised and sent.

The Annexures 5 and 6 of the petition contains only 4 invoices of the period November and December 2021 out of which one of the invoices is a proforma invoice. It is well settled law that proforma invoices are not invoices and also the same is disputed by the Corporate Debtor/ Respondent on the very own existence of the proforma invoice. The Operational Creditor/ Petitioner has not annexed any proof of so called proforma invoice being acknowledged by the Corporate Debtor/ Respondent.

It is the case of the Operational Creditor/ Petitioner that the invoice of January 2021 is raised in December 2021 can be correlated from Annexure 6 at page 290 of the petition, which is also disputed by the Corporate Debtor/ Respondent on the grounds that the same had never been raised by the Operational Creditor/ Petitioner to the Corporate Debtor/ Respondent.

The application bearing CP (IB) No. 142/ND/2024 filed by of M/S M/s. Liberium Global Resources Private Limited, the Operational Creditor, under Section 9 of the Code read with rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against M/s. Amritsar MSW Limited, the Corporate Debtor, is admitted.

The Operational Creditor has not proposed any name for the Interim Resolution Professional (“IRP”). Therefore, we appoint name Mr. Deepak Kumar Goyal as Interim Resolution Professional (“IRP”) having address Flat no 101, Shridher Apartments 884/6, Ward-6, Mehrauli, State Bank of India, South, National Capital Territory of Delhi-110030.His Email id is [email protected] and his Contact No. is 9990045308. His registration number is IBBI/IPA-001/IP-P-02490/2022-2023/14143. Therefore, the IRP shall file a valid Authorization for Assignment along with Written Consent in Form-2 and Registration Certificate within 3 days of the pronouncement of this order.

Therefore, Mr. Deepak Kumar Goyal, Registration Number IBBI/IPA-001/IP-P-02490/2022-2023/14143, is hereby appointed as Interim Resolution Professional (IRP) of the Corporate Debtor to carry out the functions as per the Code, subject to submission of Form AA, Disclosure and a valid Authorization for Assignment in terms of regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016.

We direct the applicant to deposit a sum of Rs. 2 lacs with the Interim Resolution Professional, namely Mr. Deepak Kumar Goyal, to meet out the expense to perform the functions assigned to him in accordance with regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within one week from the date of receipt of this order by the Operational Creditor. The amount, however, be subject to adjustment by the Committee of Creditors, as accounted for by Interim Resolution Professional, and shall be paid back to the Operational Creditor.

We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d) of the Code. Thus, the following prohibitions are imposed:

It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14 (3) (b) of the Code.

Therefore, the IRP shall file a valid Authorization for Assignment along with Written Consent in Form-2 and Registration Certificate within 3 days of the pronouncement of this order.

In pursuance of Section 13(2) of the Code, we direct the IRP, as the case may be to make a public announcement immediately with regard to the admission of this application under Section 9 of the Code. The expression immediately means within three days as clarified by Explanation to Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

During the CIRP period, the management of the Corporate Debtor shall vest in the IRP/RP, in terms of Section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within one week from the date of receipt of this order, in default of which coercive steps will follow. There shall be no future opportunity given in this regard.

The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by Sections 15, 17, 18, 19, 20 & 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day-to-day affairs of the ‘Corporate Debtor’.

The IRP or the RP, as the case may be shall submit to this Adjudicating Authority periodical report with regard to the progress of the CIRP in respect of the Corporate Debtor.

In case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the ‘Corporate Debtor’ as a part of its obligation imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules and Regulations.

In terms of the Code, the Registry is hereby directed to communicate a copy of the order to the Operational Creditor, the Corporate Debtor, the IRP and the Registrar of Companies, NCT of Delhi and Haryana, by Speed Post and by email, at the earliest but not later than seven days from today. The Registrar of Companies shall update his website by updating the status of the Corporate Debtor and specific mention regarding admission of this Application must be notified.

The Registry is further directed to send a copy of this order to the Insolvency and Bankruptcy Board of India (“IBBI”) for their record.

A certified copy of this order may be issued, if applied for, upon compliance with all requisite formalities.