10 June 2024



Kuntal Construction Pvt. Ltd. Vs. Bharat Hotels Ltd.




IBC is not a substitute to a recovery forum and whenever there is existence of real dispute, the IBC provisions cannot be invoked

The present appeal has been preferred by Kuntal Construction Pvt. Ltd. ('Operational Creditor') under Section 61 of the Insolvency & Bankruptcy Code 2016 ('I&B Code') challenging the impugned order passed by the National Company Law Tribunal, ('Adjudicating Authority') under Section 9 of I&B Code, for the initiation of Corporate Insolvency Resolution Process against Bharat Hotels Ltd. ('Corporate Debtor') for the outstanding of amount of Rs. 14,89,966.

The brief facts of the case are that, the Appellant is engaged in the business of civil works, carrying out structural work for all types of building and water & sewerage treatment plants renovation works besides other civil construction and has catered to a vast and diverse clientele all over India. The Corporate debtor approached the Operational Creditor for availing its services and work orders were issued for Rs. 47,50,000 and Rs. 2,07,00,000 respectively. The averments were made by the operational creditor that, it raised invoices and maintained a running account with the corporate debtor. Partial payments were received from the corporate debtor from time to time and post adjustment operational creditor is claiming that, there is an outstanding liability of Rs. 14,89,967 including retention amount of Rs. 6,74,247 from the corporate debtor.

The Operational Creditor contended that, the main issue arrived from the mutual settlement letter dated 7th October, 2015. It is submitted that, operational creditor on 28th November, 2018 issued demand notice under Section 8 of I&B Code against the Corporate Debtor raising the outstanding dues of Rs. 14,89,967 including retention amount of Rs. 6,74,247 due from Corporate Debtor and on 24th December, 2018, the operational creditor filled the petition before the Adjudicating Authority for initiation of CIRP. It is further submitted on behalf of the operational creditor that after hearing both the parties the Adjudicating Authority passed the interim order.

The email correspondences clearly showed that, the operational creditor was intimated about the retention money being adjusted on account of defects in the Work Order. It is clearly laid down by the Hon'ble Supreme Court "IBC is not intended to be substitute to a recovery forum and whenever there is existence of real dispute, the IBC provisions cannot be invoked."

Since there was a dispute existing prior to the issuance of Section 8 notice, the insolvency provisions cannot be invoked. The email communication of the Operational creditor dated 23rd January, 2016 states about operational creditor having knowledge of retention money being adjusted. Whether the corporate debtor was entitled to adjust the retention amount are disputed question of law and fact and shall be decided by the appropriate forum.

No one can take recourse that they have not been communicated the Judgment. It should be the duty of the counsel to keep a track after the matter is reserved for pronouncement. This is not a valid ground for requesting the condonation of delay. There should be a sufficient cause for the delay and no one can claim condonation as a matter of right. There is no merit so as to interfere in the impugned order passed by the Adjudicating Authority. Appeal dismissed.

Tags : CIRP Initiation Legality

Share :