Mistcold Sales and Services Pvt. Ltd. vs Nayati Healthcare and Research Pvt. Ltd. & Anr.

Per: Justice Rakesh Kumar Jain:

17.10.2023: This appeal is directed against the order dated 16.09.2019 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench, Chandigarh) by which CP (IB) No. 147/Chd/Hry/2018 filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) by Mistcold Sales and Services Pvt. Ltd. (Operational Creditor) against Nayati Healthcare and Research Pvt. Ltd. (Corporate Debtor) has been dismissed.

In brief, the Appellant is a company engaged in the business of supply, installation, testing and commissioning of heating, ventilating and Air Conditioning (HVAC) systems for industrial, commercial, hospitals, hospitality & Instructional Buildings/structures whereas the Respondent company is a multi-super-specialty healthcare/hospital chain predominately operating in Tier II and Tier III Cities. The Corporate Debtor issued a letter of award on 24.11.2014 to the Appellant/OC for the purported work of HVAC at their 200 Bed hospital at Mathura. The hospital was commissioned on 28.02.2016. It is alleged that a consolidated bill of Rs. 7,37,43,278/- was raised on 11.06.2016 but the payment was not made alleging weak financial position of the Respondent. According to the Appellant, the Respondent did not make the following payments: -

It is further submitted that the Corporate Debtor made the payment of entire period of the contract to the tune of Rs. 6,86,18,779/-. Thus, the amount of default was to the tune of Rs. 57,24,195/-(principal), interest amount Rs. 19,04,390 and grant total Rs. 76,29,585/-.

It is further submitted that the Respondent (CD) had also given a completion certificate on 27.12.2017 for an amount of Rs. 7 Crores though the Appellant requested for the entire amount of Rs. 7,37,43,278/-. In the reply, the payment was stopped because as per the bill approved by the project manager the Appellant was entitled to Rs. 6.81 Crores and the CD had already paid an excess amount of Rs. 6,24,143/- because the Appellant did not complete the work within the stipulated period of six months and took more than two years as the completion certificate was issued on 27.12.2017.

On the other hand, in rejoinder, the Appellant submitted that Respondent had issued certificate of completion of works done to their satisfaction amounting to Rs. 7 Crores only on 27.12.2017 making the total payment of entire project of Rs. 6,86,18,779/-, therefore, even according to the Respondent, net outstanding amount of Rs. 13,81,221/- plus interest was there to be paid by them. It is submitted that the Respondent has never raised any dispute before the date of demand notice by the Operational Creditor and also gave completion certificate on 27.12.2017, therefore, the application should have been admitted on the basis of the admission of the Respondent.

On the other hand, Counsel for the Respondent has submitted that service rendered by the Appellant was sub-standard and incomplete, handing over of documentation was never done in spite of regular reminders and there were snaping of duct, leakages at various locations. The Adjudicating Authority dismissed the application, inter alia, on the ground that no evidence has been led by the Appellant that after issuance of completion certificate, the Corporate Debtor had confirmed that any amount remains due to the Operational Creditor.

We have heard Counsel for the parties and perused the record with their able assistance.

The basic facts of this case are that as against the total dues of the Appellant of Rs. 7,37,43,278/-, the Respondent allegedly paid Rs. 6,86,18,779/- and there was a difference of amount of Rs. 57,24,195/-. The Appellant claimed this amount with interest of Rs. 19,04,390/- and thus a total sum of Rs. 76,28,585/-was sought to be resolved through this application. There is no dispute that the Respondent never raised any dispute in regard to the performance of the Appellant rather issued a completion certificate on 27.12.2017 which read as under;-

According to the Respondent, the Appellant has completed and commissioned the HVAC works for an amount of Rs. 7 Crores to their entire satisfaction. It is argued that if the Appellant has performed his part of the contract to the entire satisfaction of the Respondent as per the completion certificate even of a sum of Rs. 7 Crores then having been paid Rs. 6,86,18,779/- by the Respondent a sum of Rs. 13,81,229/- with interest is still due which has not been paid by the Respondent, therefore, the observation made by the Adjudicating Authority that the Appellant has not led evidence that after the issuance of competition certificate, the Corporate Debtor has confirmed that any amount remains due to the Operational Creditor is patently erroneous. The law is well settled that the Applicant has to show the debt and default for the purpose of initiation of CIRP and for the purpose of holding that there is a pre-existing dispute, the Respondent has to lead evidence that it had ever raised a dispute before replying to the demand notice. The fact remains that the Respondent has issued certificate dated 27.12.2017 that the Appellant has successfully completed and commissioned the HVAC Work to the entire satisfaction would speak volumes towards the fact that there was no pre-existing dispute between the parties and it has been reked up only when the application has been filed. In such circumstances, the cause shown by the Appellant in this appeal is genuine and logical and thus the impugned order is set aside while allowing the appeal. Since, declaration u/s 14 of the Code and the appointment of the IRP is to be done by the Adjudicating Authority, therefore, the case is remanded back to the Adjudicating Authority. The parties are directed to appear before the Adjudicating Authority on 04^th December, 2023.