Mr. Ashwini Mehra vs Rajasthan Rajya Vidyut Utpadan Nigam Limited & Anr

The Liquidator has filed the present application seeking the following reliefs:

The Corporate Insolvency Resolution Process (CIRP) for M/s Punj Lloyd Corporate Debtor (CD) commenced vide order dated 08.03.2019 passed by this Adjudicating Authority (AA).

The CoC of the Corporate Debtor had in its 27th meeting held on 30.03.2021 recommended the liquidation of the Corporate Debtor on a going concern basis. This AA on an application filed by the Applicant directed liquidation of the CD as a going concern vide order dated 27.05.2022.

Pursuant to the above, an application bearing IA(IBC) 5391/2025 was filed seeking sale of the CD as a going concern to M/s Adani Infra (India) Limited, the successful bidder for the acquisition of the CD and the same was allowed by this AA vide order dated 12.02.2026.

Pursuant to the above, a letter placed on record shows that the total sale consideration of INR 281.10 crores has been paid by the successful bidder.

Pursuant to the above, the Liquidator has executed the sale certificate dated March 10, 2026, for the sale of the Company on a going concern basis to the Successful Bidder.

The instant case is based on an Agreement for Civil & ETC Contract dated 15.09.2006 was executed between Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (RRVUNL – Respondent No. 1) and the CD for civil and ETC works of balance of plan on EPC basis for 2x250 ‘MW Chhabra Thermal Power Project (the Contract).

RRVUNL, through its letter dated 16.12.2019 (i.e., during the CIRP), informed the Corporate Debtor that it would release the outstanding payment of Rs. 67,82,93,637/- in its favor of the CD with the request to the Corporate Debtor to provide an undertaking accepting the said amount as full and final settlement, so that the payment could be released.

Applicant, vide its letter dated 16.01.2020, accepted the above request. The Applicant furnished bank account details of the Corporate Debtor to enable the release of the payment, and it was expressly agreed that upon receipt of the said amount, no further claims would remain in relation to the project.

Despite the above, RRVUNL, through its letters dated 19.03.2020 and 11.06.2020, informed the Corporate Debtor, inter alia, to settle outstanding dues payable to subcontractors, suppliers, individuals, and M/s BHEL.

The Resolution Professional, through letters dated 20.03.2020 and 12.06.2020, replied to RRVUNL’s letters dated 19.03.2020 and 11.06.2020 respectively. In these communications, it was stated, inter alia, that the payment of Rs. 67,82,93,637/- (Rupees Sixty-Seven Crores Eighty-Two Lakhs Ninety-Three Thousand Six Hundred and Thirty-Seven only) towards the full and final settlement under the BOP contract was still awaited for release. Further upon receipt of the said full and final payment, the Resolution Professional/Applicant would be engaging with the sub-vendors, subcontractors, suppliers, and other individuals, including BHEL, for settlement of their outstanding dues.

RRVUNL, vide its letter dated 11.02.2021, requested the Resolution Professional to settle outstanding liabilities amounting to approximately Rs. 14.31 crores payable to sub-vendors and subcontractors of the Corporate Debtor, as a precondition for initiating the release of the balance payment.

In reply to the letter dated 11.02.2021, the Resolution Professional, through its letter dated 17.02.2021, reiterated, inter alia, that it would engage with sub-vendors, subcontractors, suppliers, and other parties, including BHEL, to settle their dues upon receipt of Rs. 67,82,93,637/-(Rupees Sixty-Seven Crores Eighty-Two Lakhs Ninety-Three Thousand Six Hundred and Thirty-Seven only). No reply was received from the Respondent. Resolution Professional issued another letter dated 21.09.2021 reiterating its position.

Respondent No. 1 issued another letter dated 16.11.2021 asking for payment to suppliers and vendors, further expressing inability to remit the balance dues to the CD, if payments are made to the suppliers and vendors. Applicant in response vide letter dated 17.11.2019, reiterated its stand as stated above.

The Respondent No. 1 issued a letter dated 18.11.2021 to the Applicant wherein the Respondent No. 1 stated that in case the pending liabilities of subvendors/ sub-contractors are not settled by the Applicant, the Respondent No. 1 might face legal proceedings from the sub-vendors/ sub-contractors for which any additional interest/ tax labilities may also arise. In such event the Respondent No. 1 shall recover the liabilities from the Applicant. In the said letter the Respondent No. 1 also mentioned that an additional recovery towards audit para and additional GST on interest on advance is amounting to Rs. 1.34 Crores, thus the net releasable amount is Rs. 66.48 Crores instead of Rs. 67.82 Crores (Approx.). The same was followed by another letter from the Applicant dated 25.11.2021, requesting Respondent No. 1 to provide break-up/ necessary documents for the claim of INR 1.34 crores.

The Applicant issued another letter dated 03.07.2024, wherein it proposed that Respondent No. 1 may keep dues payable to vendors and sub-vendors aside and pay the remaining INR 53 crores to the CD.

Surprisingly, Respondent No. 1 sent a letter on 07.08.2024, which included a formal notice from the Ministry of Corporate Affairs (MCA) stating that the Serious Fraud Investigation Office (SFIO) is conducting an inquiry into the Applicant's business dealings. And has also asked Respondent No. 1 to submit all relevant documentation concerning the contract with the Applicant. Due to the ongoing SFIO investigation, no further requests of payment from the Applicant would be considered until formal clearance is granted by the MCA. Applicant vide a letter dated 02.09.2024, expressing opposition to the above communication.

In view of the non-payment of dues by the RRVUNL to the CD, the Applicant has filed present Application.

The Respondent, vide letter dated 19.03.2020, directed the Applicant to address the issue of outstanding payments due to various subcontractors, suppliers, and individual workers engaged in the execution said contract, despite repeated written correspondence, however, no response or remedial action was taken.

The Respondent is encountering considerable impediments at the CTPP, Chhabra site, owing primarily to the non-cooperation of one of the key subcontractors, namely M/s BHEL, Bhopal, is not willing to provide offers for spare parts of the BHEL equipment supplied there. This is because a long-pending outstanding payment for the supply of the Generator Transformer remains unpaid.

The Ministry of Corporate Affairs (MCA) has invoked an SFIO investigation against the Applicant and is seeking extensive documentary evidence of the transactions undertaken with the Applicant. Respondent has been called upon to furnish exhaustive documentary evidence pertaining to the transactions undertaken with the Corporate Debtor. Respondent is presently incurring significant expenditure in terms of time, manpower, and financial resources to comply with the extensive and ongoing requirements of the SFIO investigation. It is further submitted that the pendency of the investigation may give rise to unforeseen contingencies, as Respondent may be burdened with additional costs arising from potential litigation and claims, which are a direct consequence of and solely attributable to the acts and omissions of the Corporate Debtor. In light of the above, the Answering Respondent, vide its letter dated 07.08.2024, clearly stated that the issue of the balance payment shall be considered only upon receipt of a clean chit from the Serious Fraud Investigation Office (SFIO), Office of the Ministry of Corporate Affairs, Government of India.

Heard Ld. Sr. counsel and other counsels appearing for the parties and perused the record.

This Adjudicating Authority, based on submissions of the Ld. Counsels, on 30.07.2025, passed the following directions:

Pursuant to the above, certain affidavits have been filed by the Respondent. Relevant portion of the affidavit filed on 22.11.2025 is extracted hereinbelow:

Another affidavit has been filed on 13.02.2026, relevant portion of which is extracted below:

On 17.02.2026, Ld. senior counsel for the Liquidator submitted that the Respondent is unfairly opposing the withdrawal of funds so deposited in the escrow account and in view thereof, the following order was passed:

Pursuant to the above directions, an affidavit has been filed on 06.04.2026 on behalf of the Respondent. Relevant portion of which is extracted hereinafter:

It is evident from the affidavit filed by the Respondent No. 1 pursuant to the order dated 17.02.2026 that the Respondent No. 1 has expressed concerns regarding possible misuse of the funds, non-payment to vendors and subcontractors, and the likelihood litigation at the instance of these vendors and subcontractors against the Respondent No. 1. In case such exigency arises, the same will cause huge loss to the Respondent No. 1 who is already in running in a dire financial situation. The Respondent has, therefore, requested that an amount of Rs. 14.31 crore be earmarked for payment to sub-vendors/contractors and appropriate steps be taken for its distribution.

In the context we make it clear that there is no impediment in withdrawal of the sum deposited by the Respondent as stated in the compliance affidavit, in the escrow account. At this stage, it is also relevant to highlight the observation made by this bench in paragraph 7 of this order dated 20.07.2025:

The above observation is in the context that, payment was to be paid on behalf of the CD to vendors and sub-vendors out of the consideration paid by the Respondent to the CD. Thus, it is clear that the payment can be released to vendors and sub-vendors, only after receiving dues from the Respondent.

It has been categorically agreed as recorded in our order dated 17.02.2026 that the Applicant has no objection if dues payable to the vendors and sub-vendors to the tune of INR 14,31,00,188/- (Rupees Fourteen Crores, Thirty-One Lakh, One Hundred and Eighty Eight only) are retained in the escrow account of the SBI bearing account no. 44413522217 until final disposal of the present application. Accordingly, there is no dispute between the parties with respect to the retention of the said amount. The Respondent’s affidavit does not raise any objection to the release of the remaining amount in favour of the Applicant.

Thus, in view of the above, we permit the Applicant to withdraw a sum as deposited in the escrow account with SBI bearing account no. 44413522217 by the Respondent No.1 after deducting above earmarked sum for vendors and sub-contractors to the tune of INR 14,31,00,188/- (Rupees Fourteen Crores, Thirty-One Lakh, One Hundred and Eighty Eight only).

Further, claims of the vendor, sub-vendors and suppliers, filed or may be filed, to be decided and honoured in accordance with section 53 of the IBC. Till then amount to the tune of INR 14,31,00,188/- (Rupees Fourteen Crores, Thirty-One Lakh, One Hundred and Eighty-Eight only), as claimed by the Respondent No. 1 to be payable to vendor, sub-vendors and suppliers, shall be retained in the escrow account of the SBI bearing account no. 44413522217.

The present Application, I.A.331/2025 stands disposed of with the above directions.

The present Interlocutory Application bearing I.A. No. 1781/2023 has been filed by M/s SN Space Developers Private Limited (Applicant herein) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC/Code”), seeking, inter alia, treatment of an amount of Rs. 74,71,635/- arising from invoices raised between 10.03.2019 and 30.12.2019 against M/s Punj Lloyd Limited (Corporate Debtor herein) as CIRP Cost/Liquidation Cost and for payment thereof in priority, along with re-admission of the remaining claim amount. The prayers made in the application are extracted below:

Before adverting to the controversy involved in the present application, it would be apposite to briefly notice the facts giving rise to the filing of the same, as averred in the application and submitted by the parties:

The Applicant is a private limited company incorporated on 04.10.2016. It is the case of the Applicant that the Corporate Debtor, i.e., M/s Punj Lloyd Limited engaged it for execution of electrical/erection works in relation to the Rural Electrification Project at Jeypore, Koraput District, Odisha, and an umbrella contract/terms and conditions dated 01.09.2017 came to be executed between the parties. The work description relied upon by the Applicant includes HT line, LT line, DTR installations, BPL connections and augmentation substations.

CIRP against the Corporate Debtor came to be initiated by this Adjudicating Authority vide order dated 08.03.2019 in CP (IB) No. 731(PB)/2018. Public announcement followed on 14.03.2019. Thereafter, vide order dated 22.05.2019, Mr. Ashwini Mehra (Respondent No. 1 herein) came to be appointed as the Resolution Professional.

It is the Applicant’s case that it continued rendering services even after the insolvency commencement date. The Applicant filed two Form-B claims on 01.12.2019 aggregating to Rs. 1,06,85,532.12, and thereafter filed an updated Form-B on 31.08.2020 for Rs. 2,58,27,454/-. It is further the Applicant’s case that the Corporate Debtor, by email dated 14.03.2020, acknowledged liabilities of Rs. 1,06,85,532.15/- towards the GST amount payable to the applicant for pre-CIRP works and Rs. 46,51,911.24/- towards the GST amount payable to the applicant for post-CIRP works.

The Applicant has relied on a notice dated 16.01.2021 issued on behalf of the Corporate Debtor stating that the work done by the Applicant under the Koraput project from 13.12.2016 to 16.01.2021 was satisfactory, and also relied on letters dated 23.02.2021 seeking release of GST/holding amounts.

Upon failure of resolution, liquidation of the Corporate Debtor was directed vide order dated on 27.05.2022 and Respondent No. 1 was appointed as Liquidator. Thereafter, the Applicant filed Form-C dated 21.06.2022 claiming Rs. 2,74,03,727/- comprising principal and interest.

The case of the Applicant is that, out of its total admitted claim, a sum of Rs. 74,71,635/- relates to invoices raised for the period after commencement of CIRP. According to the Applicant, this amount consists of Rs. 58,81,227/- as reflected in Annexure-A of the application and Rs. 15,90,408/- as reflected in Annexure-B of the application. On that basis, the Applicant contends that the said sum, being attributable to post-CIRP work, ought to be treated as CIRP Cost / Liquidation Cost. It is further stated that the Applicant issued a legal notice dated 24.01.2023 to the Liquidator requesting that the aforesaid amount be so treated and paid accordingly, however, since no favourable action followed, the present application came to be filed.

Learned counsel for the Applicant has submitted that the services in question were admittedly rendered during the CIRP period and were availed by the Corporate Debtor. That the principal claim of about Rs. 2.41 crore already stands admitted; and that, therefore, the post-CIRP component of Rs. 74,71,635/- ought to be treated as CIRP Cost under Section 5(13)(c) of the Code. Reliance has been placed on the decision of the NCLT in Southern Engineers v. Innoventive Industries Ltd., (MA 441/2018 in CP (IB)- 01(MB)/2016) in support of the proposition that amounts due for goods / services supplied during CIRP for keeping the Corporate Debtor as a going concern should form part of CIRP costs.

Learned counsel for the Applicant has further submitted that the objection raised by the Liquidator regarding alleged GST non-compliance on the part of the Applicant does not, by itself, extinguish or wipe out the liability of the Corporate Debtor towards the invoices already raised for the work executed by the Applicant. It has been argued that once the work was carried out, the invoices were raised, and the claim itself stood admitted to a substantial extent, the Corporate Debtor cannot avoid its payment liability merely by referring to disputes relating to filing of GST returns or deposit of GST. According to the Applicant, such GST-related objections may at best give rise to separate issues, but they do not by themselves destroy the underlying claim for the work admittedly performed.

It has also been contended that the satisfactory notice dated 16.01.2021, issued on behalf of the Corporate Debtor, clearly records that the work executed by the Applicant was satisfactory. On the strength of this document, the Applicant seeks to contend that the allegations now raised by the Liquidator regarding pending issues of materials, reconciliation, or other unresolved disputes are not tenable. The Applicant’s case is that, had there in fact been serious disputes regarding material reconciliation or shortages, the Corporate Debtor would not have issued such a satisfactory certificate in favour of the Applicant. It is in this background that the Applicant argues that the later stand of the Liquidator, whereby the amount allegedly payable was reduced to Rs. 5,99,945/-, is arbitrary, unsupported, and contrary to the earlier admitted position.

The Applicant has further submitted that the Liquidator has attempted to justify such deductions by relying upon Clause 2 and Clause 10 of the tripartite agreements, which deal with direct payment to sub-agencies and debit/recovery in relation to unreturned materials. However, according to the Applicant, the Liquidator has selectively referred only to those clauses which support the case of deductions, while completely omitting Clause 9 of the same agreements. It is the Applicant’s specific case that Clause 9 limited the validity of the tripartite agreements up to 31.12.2019. Therefore, the Applicant contends that the terms of the tripartite agreements cannot be selectively read in part and ignored in part; rather, the agreements must be read as a whole, including the clause prescribing their duration. In essence, the Applicant seeks to argue that the Liquidator cannot rely only upon the burdensome clauses of the tripartite agreements for the purpose of making deductions, while disregarding the clause which, according to the Applicant, restricts the operation of those agreements till 31.12.2019.

The Liquidator, in reply dated 24.08.2023, has not disputed that the Applicant continued to provide services even after initiation of CIRP. However, he has disputed the quantification and classification of the amount claimed. It is stated that two purchase orders, being PO No. 502204 dated 12.09.2017 and PO No. 512419 dated 21.06.2018, governed the arrangement, and that under PO No. 502204 the Applicant had engaged sub-agencies pursuant to tripartite agreements.

It is specifically the case of the Liquidator that, under Clause 2 of the tripartite agreements, the Corporate Debtor was authorised to make payment directly to the concerned sub-agencies on behalf of the Applicant, subject to the bills being duly certified. Further, Clause 10 of the tripartite agreements provided that the materials required for execution of the work would be issued directly by the Corporate Debtor to the concerned sub-agencies. The said clause also contemplated that, at the stage of reconciliation, if any material so issued was found to be short, unreturned, lost, damaged, or otherwise not properly accounted for, the value thereof would be liable to be debited to the account of the Applicant. In the present case, the Liquidator seeks to rely upon this clause to contend that certain materials issued for execution of the work were not returned or remained unreconciled, and therefore the corresponding value is recoverable from the Applicant and liable to be adjusted against its claim.

The Liquidator has disputed the Applicant’s claim of Rs. 74,71,635/-, which has been asserted by the Applicant as the amount due towards post-CIRP invoices. According to the Liquidator, the said amount is liable to be reduced on account of various deductions and adjustments.

It is the Liquidator’s case that:

On the basis of the above deductions and adjustments, the Liquidator has taken the stand that only a sum of Rs. 5,99,945/-remains payable to the Applicant.

The Liquidator has relied upon the email dated 04.08.2023 sent after the meeting held between the parties on 26.07.2023, in which the same deductions were set out and a without-prejudice settlement proposal of Rs. 4,00,000/- was made, while maintaining that the net figure payable, according to the Liquidator, was Rs. 5,99,945/-.

It is further the Liquidator’s stand that the Applicant’s claim is not eligible for priority treatment as CIRP cost, and that at best only a much smaller amount survives after adjustment and reconciliation. In the written submissions dated 13.04.2026, the Liquidator has additionally raised a contention regarding multiple GSTIN numbers appearing on invoices, and has reiterated that the claim is inflated and non-compliant.

We have heard learned counsel for the parties and perused the material available on record. The controversy in the present application lies in a narrow compass, namely: Whether the amount of Rs. 74,71,635/- claimed by the Applicant in respect of post-CIRP invoices is liable to be treated as CIRP Cost / Liquidation Cost and directed to be paid in priority?

Before proceeding further, it would be useful to notice the relevant statutory framework:

Section 5(13)(c) of the Code includes within insolvency resolution process costs “any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern.” Regulation 31 CIRP Regulations, 2016, further includes “other costs directly relating to the corporate insolvency resolution process and approved by the committee.”

Regulation 31 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 stands as under:

It is also relevant to refer to Section 14(2) and Section 14(2A) of the Code. Section 14 of the code is produced below for ready reference:

Further it is to be noted that, Section 53(1)(a) accords priority to insolvency resolution process costs and liquidation costs in the waterfall mechanism.

Under Section 5(13)(c) of the Code, what falls within insolvency resolution process cost is a cost incurred by the Resolution Professional in running the business of the Corporate Debtor as a going concern. Likewise, Section 14(2A) contemplates only such goods or services as the IRP/RP considers critical to protect and preserve the value of the Corporate Debtor and to manage its operations as a going concern. Further, Regulation 31 of the CIRP Regulations does not create an open-ended class of CIRP costs, but confines the same to the categories recognised under the statutory and regulatory framework, including, where applicable, costs directly relating to the CIRP and approved in accordance with the Regulations.

It is an admitted fact that the Applicant (Operational Creditor) continued to serve even during the CIRP. The same has been expressly admitted by the Liquidator.

Further, CD has issued a letter dated 16.01.2021 to the Applicant certifying its satisfactory services with effect from 13.12.2016 till 16.01.2021. The letter is extracted hereinafter:

In the Reply, Respondent has not denied the amount of INR 74,71,635/- (Rupees Seventy-Four Lakhs Seventy-One Thousand Six Hundred Thirty Five Only), is on account of invoices generated for services during CIRP.

Further, Respondent claims certain adjustment against the above amount on account of alleged payments to sub-agencies and non-return of material supplied to these sub-agencies. It is notable that there is no email or letter addressed on behalf of the CD to the Applicant informing them about these adjustments. There is only one email on record that i.e., email dated 04.08.2023 which is extracted below:

The email above is although in sync with the reply filed by the Liquidator, however this email is an afterthought to the filing of the present application. The Application has been filed in March 2023 while email has been sent in August 2023. There is no single record prior to the filing of an application, to support the alleged adjustments sought to be made by the Liquidator.

Furthermore, it is also undisputed that a claim of the Applicant to the tune of Rs. 2,41,05,277/- (Rupees Two Crores, Forty-One Lacs, Five Thousand, Two Hundred and Seventy seven only) has already been admitted by the Liquidator. This admitted amount includes Rs. 74,71,635/- (Rupees Seventy Four Lacs Seventy One Thousand Six Hundred Thirty Five Only) on account of invoices generated for services by the Applicant during CIRP. In view of the same, the alleged adjustments now sought to be made by the liquidator as an afterthought to the Application cannot be sustained.

In the present case, two crucial facts are undisputed and support the case of the Applicant. The claim of Rs. 2,41,05,277/- (Rupees Two Crores, Forty-One Lacs, Five Thousand, Two Hundred and Seventy seven only) of the Applicant has already been admitted by the Liquidator and this is inclusive of Rs. 74,71,635/- (Rupees Seventy Four Lacs Seventy One Thousand Six Hundred Thirty Five Only) on account of invoices generated for services by the Applicant during CIRP. Therefore, evidentially there can be no dispute to the above amount as dues after its admission. Secondly, the certificate issued on behalf of the CD further supports that there were no disputes or set-offs or adjustments against the claim of the Applicant. Therefore, as per the law, the outstanding amount on account of invoices generated for services by the Applicant during CIRP, being towards running the CD as going concern, shall be treated as CIRP cost.

In view of the above we are inclined to allow the Application. The Liquidator is directed to treat the admitted dues of Rs. 74,71,635/-(Rupees Seventy Four Lacs Seventy One Thousand Six Hundred Thirty Five Only) as CIRP cost and pay the same in priority in accordance with section 53 of the IBC.

In view of the foregoing discussion, I.A. No. 1781/2023 is disposed of in the following terms:

Prayer clauses (i) and (ii) seeking declaration of the amount of Rs. 74,71,635/- as CIRP Cost / Liquidation Cost and payment thereof in priority are allowed in the terms above.

Prayer clause (iii) seeking re-admission of the balance claim is dismissed, the principal reason being that the Applicant’s own case is that its principal claim already stood admitted and the dispute raised in the present application is essentially one of classification / quantification.

The In view of the above, I.A.(IBC)/1781(PB)2023 is Disposed of in terms above.