Paramount Communications Limited vs Neccon Power & Infra Limited

The Present Application has been filed by the Operational Creditor- Paramount Communications Limited, under section 9 of the Insolvency and Bankruptcy Code, 2016 (“Code”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, seeking to initiate Corporate Insolvency Resolution Process (“CIRP”) with respect to the Corporate Debtor-Neccon Power & Infra Limited.

Brief facts as stated by the Petitioner are as follows:

The Petitioner/Operational Creditor submitted that on 03.07.2021, the Respondent had entered into an Agreement and issued a Work Order to the Petitioner, subcontracting part of the underground cable laying work awarded to the Respondent by Power Grid Corporation of India Limited (PGCIL), wherein the Petitioner executed part of the subcontracted work and raised several invoices upon the Respondent between February 2022 and August 2023.

Each invoice categorically records that monthly interest @18% p.a. shall be payable for the overdue period if payment is not received within the due date or 30 days of despatch.

The Petitioner further submitted that the Respondent has admittedly accepted the invoices and made part payments. However, a principal sum of Rs. 1,84,00,853/- remains unpaid. The Copy of invoices are annexed herewith as “ANNEXURE 6” to “ANNEXURE-15” to the Petition.

The Petitioner contends that the principal debt of Rs. 1,84,00,853/- stands admitted by the Respondent on multiple occasions, presented as seven admissions:

A Demand Notice in Form 3 was issued by the Counsel for the Operational Creditor to the Corporate Debtor on 22.04.2024 which was duly received by the Respondent/Corporate Debtor on 02.05.2024 and the Corporate Debtor had not replied to the said Demand Notice.

The Petitioner submits that based on the material on record, the requirements under Section 8 of the Code are satisfied: statutory demand notice issued and received; and Respondent has not brought to notice any pre-existing dispute nor responded to or challenged the demand notice. Additionally, the Respondent has failed to pay the operational debt.

The Petitioner further submits that the Triple Test laid down in Mobilox Innovations Private Limited Vs Kirusa Software Private Limited (2018) 1 SCC 353 stands satisfied. The debt is admittedly more than the threshold of 1 Crore (Rs. 1.84 Crores) and the debt has admittedly not been paid. Additionally, there is no pre-existing dispute, evident from repeated admissions, undertakings, and admittedly no notice invoking arbitration being issued by the Respondent in terms of the agreement dated 03.07.2021.

Petitioner contends that the defenses raised by the Respondent, including claims of direct payments to subcontractors, are frivolous, vexatious, and an afterthought to create a false dispute after breaching payment undertakings.

Regarding the Respondent's claim of direct payments to subcontractors, the Petitioner asserts that the Minutes of Meeting dated 24.08.2023 specifically record that the final amount payable to the Petitioner includes Paramount Sub-contractor's liabilities, meaning the Respondent should pay the Petitioner, who would then pay its subcontractors. They further state that the Respondent has no privity of contract with the Petitioner’s subcontractors.

The Petitioner disputes the documents submitted by the Respondent concerning the purported direct payments, asserting that these documents are false, conflict with acknowledged facts, or pertain to unrelated parties, work, or dates prior to the Minutes of Meeting dated 24.08.2023. The Petitioner specifically denies that entities such as Roopchand, Third Wave Services, or Laxmi Associates have ever been their subcontractors.

On the other hand the Respondent/Corporate Debtor vide its reply and written submissions contends that:

The present company petition under Section 9 of the Code, filed by the Petitioner is not maintainable in law and liable to be dismissed as the same has been filed by suppressing material facts and by concealing an already existing settlement and understanding between the parties.

A detailed Minutes of Meeting dated 29.12.2022 (Annexure R-3) was executed between the parties outlining mutual obligations including disbursement of payments by the Respondent and performance by the Operational Creditor. The Petitioner has failed to disclose this material document, thereby misleading this Tribunal.

It is submitted that the Petitioner has failed to perform as per the awarded contract and repeatedly failed to mobilize the workforce, settle subcontractor dues, and obtain necessary statutory permits. This non-performance is documented in Respondent's letters dated 15.09.2022, 30.08.2023, 06.11.2023, 09.11.2023, and 02.12.2023 (Annexures R-2, R-4 to R-8).

The Respondent has already paid Rs. 11,53,81,887/- out of the alleged principal claim of Rs. 13,37,82,740/-. The balance sum is not payable as it is contingent on statutory approvals and completion certification by PGCIL, which is still pending.

Furthermore, the Petitioner has failed to implead PGCIL, the principal employer, despite the fact that the release of payments and completion certification rests solely with PGCIL. The petition is therefore defective for non-joinder of a necessary party and is liable to be dismissed on this ground alone.

The present petition is a gross abuse of the IBC process and has been initiated with malicious intent for recovery of money, which is beyond the scope of this Code. Such misuse is expressly barred under Section 65 of the Code.

It is pertinent to mention herein that damage to the underground cable was caused by third-party government contractors. The Respondent has duly filed claims with the insurance company and relevant authorities, but statutory approvals are still awaited. Hence, full performance of the contract remains hindered due to factors beyond Respondent’s control (Annexures R-11 to R-13).

Respondent states that, in accordance with the approved estimated receivable specified in the Minutes of Meeting dated 24.08.2023, the total payable amount upon completion of the work stands at Rs. 1,84,00,853/–, which encompasses the liabilities owed to Paramount subcontractors. They further assert that payments were made directly through the POWERGRID facilitation process. Respondent claims that direct payments were issued to downstream contractors or subcontractors—namely Brahmani Infracon Private Limited (Rs. 29,72,255/–), Roopchand (Rs. 2,79,000/–), and TWS Pvt. Ltd. along with Laxmi Associates (Rs. 5,18,954/–), on the grounds that the Petitioner had failed to repair faults and cable damages, necessitating the Respondent to cover these repairs at its own cost.

Respondent claims that as per the 24.08.2023 Minutes of Meeting, route damage repairing and joining chamber for cable fault repairs were to be performed by the Petitioner, but it was ultimately done by the Respondent at its own cost, leading to a deduction of Rs. 10,00,000/- and Rs. 3,50,000/, which was allegedly accepted by the Petitioner in the said Minutes of Meeting.

Respondent also claims 5% liquidated damages have been deducted (Rs. 14,01,835/-) as the Petitioner allegedly breached the contract by not completing the work within the stipulated time frame. After deductions, the remaining debt is claimed to be Rs. 73,78,808/- payable by the Respondent.

Respondent provides annexures including alleged payment proofs (ANNEXURE R-28), a letter dated 04.03.2025 (ANNEXURE R-29), and a letter dated 29.04.2025 (ANNEXURE R-30). Hence, petition is liable to be dismissed.

Heard the learned Counsel for the Operational Creditor/Petitioner as well as learned Counsel for the Corporate Debtor/Respondent and perused the records.

The present petition has been filed by the Operational Creditor under Section 9 of the Code, seeking initiation of CIRP against the Corporate Debtor due to default in payment of operational debt. As per the framework under Sections 8 and 9 of the Code, the Operational Creditor must first serve a demand notice or invoice under Section 8(1). In response, the Corporate Debtor may, within ten days, inform the creditor of any existing dispute or pending litigation under Section 8(2). If neither payment nor notice of dispute is received, the creditor is entitled to file an application under Section 9. As per Sections 8 and 9 of the Code and the principles laid down in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. [(2018) 1 SCC 353], the Adjudicating Authority must ascertain if a demand notice was served and if a pre-existing dispute was brought to the notice of the Operational Creditor prior to the receipt of the demand notice. If a pre-existing dispute is evident, the application must be rejected.

Petitioner has placed on record Minutes of Meeting dated 24.08.2023 which records the final payable amount to the Applicant as Rs. 1,84,00,853/-. Crucially, this amount is recorded as including Paramount subcontractor liabilities, implying the Respondent's obligation was to pay the Petitioner this consolidated amount, leaving the Petitioner to settle with its own sub-contractors. The Petitioner also relies on subsequent Minutes of Meeting dated 08.04.2024 reiterating this amount as net payable upon conclusion of the Petitioner’s obligations. Relevant portion of the Minutes of Meeting dated 08.04.2024 is reproduced below:

Petitioner issued the statutory demand notice on 22.04.2024 which was duly received by the Respondent on 02.05.2024. Petitioner asserts that the Respondent did not reply to this notice nor raised any dispute but only raised issues regarding work performance communicated for the first time vide letter dated 15.09.2022.

It is clear from the records that the purported issues raised on 15.09.2022 precede the significant Minutes of Meeting dated 24.08.2023, wherein the final payable amount of Rs. 1,84,00,853/– was expressly acknowledged, inclusive of subcontractor liabilities. The Minutes dated 24.08.2023 and 08.04.2024, which the petitioner relies upon, appear to consolidate and override prior discussions or contentions concerning subcontractor liabilities and completion of work, thereby affirming a mutually agreed final payable amount to the Petitioner. The Respondent’s contention that payment is contingent upon completion of the scope of work is inconsistent with the Petitioner’s claim that the said minutes confirm the full discharge of the Petitioner’s contractual obligations.

Per contra, Respondent’s objection regarding non-joinder of PGCIL, alleging that payment release and completion certification lie solely with it, is untenable. The Petition cannot be dismissed on this ground, as the Respondent independently executed an Agreement and issued a Work Order to the Petitioner on 03.07.2021, wherein PGCIL was not a party.

The Petitioner has furnished evidence of repeated acknowledgments of debt by the Respondent, including specific undertakings given before this Tribunal on 23.01.2025 and 13.02.2025 to make full payment. These admissions strongly indicate the absence of any genuine pre-existing dispute at the time the demand notice was received. The Respondent’s commitments to pay the full amount on two separate occasions subsequent to the issuance of the demand notice and even after filing reply affidavits significantly weaken the credibility of their claims regarding a pre-existing dispute, unauthorized direct payments to subcontractors, or any alleged incomplete work affecting the final payable amount.

The Respondent’s claim of having made direct payments to entities such as Roopchand, Third Wave Services, Laxmi Associates, Brahmani Infracon, and North East Infrastructure is disputed by the Petitioner, who asserts that these were not its subcontractors and no such payments were authorized. The Petitioner argues that the documents relied upon by the Respondent pertain to unrelated third parties, works outside the scope of agreement, or are dated prior to the 24.08.2023 Minutes of Meeting, which recorded the final payable amount inclusive of subcontractor liabilities. The Petitioner maintains that any such liabilities were its own to discharge. Hence, the Respondent’s defense of settling dues through unauthorized third-party payments post the 24.08.2023 Minutes of Meeting lacks merit and fails to establish a pre-existing dispute or discharge of debt.

The Petitioner has clearly demonstrated the existence of an operational debt amounting to INR 1,84,00,853/-, which is above the minimum threshold for initiating CIRP. Default in payment is evident from the non-payment of this amount despite repeated demands and undertakings. The Respondent's defenses, raised after the demand notice, undertakings, and completion of pleadings, do not constitute a pre-existing dispute as contemplated by the Code and settled law [Triple Test laid down in Mobilox Innovations Private Limited Vs Kirusa Software Private Limited (2018) 1 SCC 353].

In view of the above, the Tribunal holds that the Petitioner, Paramount Communications Limited, has duly established the existence of an operational debt and the Corporate Debtor, Neccon Power and Infra Limited, has defaulted in its payment obligations. The Respondent has failed to establish any genuine pre-existing dispute under Section 9(5)(ii)(d) of the Code. The defenses raised appear to be afterthoughts, inconsistent with prior admissions and undertakings. As the petition is complete, and both debt and default stand established with no credible dispute shown, the Company Petition is maintainable and liable to be admitted.

For the aforesaid reasons, the above Company Petition No. CP (IB) No.16/GB/2024 is hereby allowed and initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against M/s Neccon Power and Infra Limited, under Section 9 of the Code, read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016, with the following orders:

As the Operational Creditor has not proposed any individual to serve as the Interim Resolution Professional (IRP) in the petition, this Bench hereby appoints Manish Agarwalla, bearing Registration No: IBBI/IPA-001/IP-P-02082/2020-2021/13198, having address at Room No. 9, 5^th floor, Parmeshwari Building, Chatribari Road, Chatribari, Guwahati–781001, Assam, email id– camanishagarwalla@gmail.com, as the Interim Resolution Professional to carry out the functions as mentioned under the Code.

The Operational Creditor shall deposit an amount of Rs. Two(2) Lakh only, towards the initial CIRP costs by way of a Demand Draft drawn in favour of the Interim Resolution Professional appointed herein, imediately upon communication of this Order. The IRP shall spend the above amount only towards expenses and not towards his fee.

As per Section 14 of the Code, and by the operation of law, a moratorium is hereby imposed on the Corporate Debtor with immediate effect, which will remain in force during the insolvency resolution process. Accordingly, this Bench prohibits initiation or continuation of suits or proceedings against the Corporate Debtor, including execution of judgments or orders by any Court, Tribunal, or Authority; transfer, encumbrance, or disposal of the Corporate Debtor’s assets or rights; enforcement of any security interest, including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002; and recovery of property by owners or lessors in possession of the Corporate Debtor.

The supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.

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.

The order of moratorium shall have effect from the date of pronouncement 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, as the case may be.

The public announcement of the corporate insolvency resolution process shall be made immediately as specified under Section 13 of the Code.

During the CIRP period, the management of the Corporate Debtor will vest in the IRP/RP. The suspended directors and employees of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP/RP.

Registry shall send a copy of this order to the Registrar of Companies, Guwahati, for updating the Master Data of the Corporate Debtor.

Accordingly, with the above observations and directions, CP (IB) No. 16/GB/2024 is admitted.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Certified Copy of this order may be issued, if applied for, upon compliance of all requisite formalities.

File be consigned to records.