Overseas Infra NCLAT
Overseas Infra NCLAT
Overseas Infra NCLAT
[Arising out of Order dated 26th July, 2018 passed by the Adjudicating
Authority (National Company Law Tribunal), Mumbai Bench in Company
Petition No. CP(IB)-20(MB)/2018]
Present:
For Appellant: Mr. Amir Arsiwala, Advocate.
For Respondent: Mr. Ajay K. Jain and Mr. Atanu Mukherjee,
Advocates.
J U D G M E N T
order dated 26th July, 2018 passed by the Adjudicating Authority (National
‘I&B Code’) against Respondent - ‘M/s Kay Bouvet Engineering Ltd.’ for
on the ground that there was existence of a dispute between the two parties
assailed the impugned order on various grounds set out in the memo of
appeal.
State, Sudan with capacity of crushing 8750 tons of sugarcane per day
commissioning of the sugar plant right from the stage of its designing till
have paid 10% of the contract value to the Respondent as advance payment.
contracts were signed between the Mashkour and the Appellant respectively
on 14th April, 2010 and 9th February, 2014. Appellant paid an advance
(10% of the contract value) to the Respondent through Demand Draft dated
30th August, 2011 towards performance of its obligations under the said
was that the first tranche contract between Mashkour and the Appellant
the EXIM Bank did not release the payment under second tranche
agreement dated 9th February, 2014 executed between Mashkour and the
Appellant, Mashkour terminated the contract vide its letter dated 15th June,
prompted the Appellant to file suit no. 382 of 2017 before the Hon’ble High
Mashkour appointing the Respondent as its EPC contractor for the said
project in terms of EPC contract dated 5th July, 2017, the earlier Tripartite
Agreement dated 18th April, 2010 became invalid and incapable of being
Mashkour. In its reply to the demand notice issued by the Appellant, the
claimed that subject matter of the suit was completely different from the
subject matter of the petition under Section 9 of the I&B Code and pendency
4. The Adjudicating Authority found that the Appellants suit for specific
instance could not run side by side. The Adjudicating Authority, while
due to this reason such person cannot step into the shoes
contract.”
holding that there was an existence of a dispute prior to filing of the petition.
The finding has been assailed by the Appellant on the ground that the
admitted by the Respondent and the suit filed by the Appellant is on the
basis of a Bilateral Agreement dated 27th March, 2014 executed between the
EXIM Bank and the Appellant wherein the Respondent figures as Defendant
No. 3 with no substantial relief claimed against it. It is the further case of
Appellant that the liability to pay the ‘Operational Debt’ by the Respondent
to the Appellant arose on or around 5th July, 2017 which was after the filing
of the suit. Hence, the impugned order was liable to be set aside.
6. Learned counsel for the Appellant would submit that in terms of the
Mashkour terminated the bilateral EPC contract with the Appellant on 15th
June, 2017, the Tripartite Agreement itself stood terminated in terms of its
counsel for Appellant would further submit that the debt owed to the
He further submits that the suit filed by the Appellant cannot be considered
the Appellant under Section 8(1) of I&B Code nor the petition filed by it
the Appellant has neither provided any goods nor services to the Respondent
which was funded by EXIM Bank and the Respondent has received interest
It is further submitted by learned counsel for the Respondent that the suit
filed by the Appellant before the Hon’ble High Court of Bombay shows
April, 2010 and 9th February, 2014 executed in relation to Mashkour sugar
project. Therefore, the Appellant was not entitled to raise the same dispute
under the garb of petition under Section 9 of I&B Code. The suit filed by
Appellant on 22nd June, 2017 was prior in point of time as the demand
notice under Section 8(1) of I&B Code was issued by the Appellant on 23rd
November, 2017. Further pleas have been raised in the written submissions
limitation though the same were not pressed during oral hearing.
Under Section 3(11) of the I&B Code ‘debt’ means a liability or obligation n
Debt’ which is defined under Section 5 (21) of the I&B Code as follows:
law for the time being in force and payable to the Central
authority;”
transferred;”
the repayment of dues arising under any law and payable to the Central
given case, the claim is in respect of the provision of goods or services has to
such person and the Corporate Debtor in regard to a transaction which may
have been executed under the agreement. Thus, reference to the Tripartite
18th December, 2010 would reveal that the Appellant, who was appointed as
EPC Contract dated 11th October, 2009 with the Appellant. Such an
US$.10.62 Million to the Appellant which had become due and payable. It
emerges from the Tripartite Agreement that the Respondent was engaged as
and completion of factory plant for ‘Mashkour Sugar Co. Ltd.’ in Sudan while
completion of the project lay on the shoulders of the Appellant. The works
were to be completed within thirty months from the time the contract
became effective. Viewed thus it is manifestly clear that the Appellant, who
in holding that the Tripartite Agreement provided for supply for goods and
without any hesitation that the Appellant having advanced 10% of the
that he had received the advance money from EXIM Bank on the
Advance money was admittedly paid under the Tripartite Agreement dated
18th December, 2010 well before the Tripartite Agreement got superseded.
The Adjudicating Authority declined to address this issue on the ground that
the matter was sub-judice before the Hon’ble High Court ignoring its own
observation that the suit filed by the Appellant sought the relief of specific
cannot be appreciated as the nature of relief claimed in the suit was distinct
and same could not operate as bar for seeking remedy in the nature of
I&B Code. Admittedly, the issue whether the debt in question qualifies as an
‘Operational Creditor’ was not sub-judice before the Hon’ble High Court. It
further emerges from record that in the Civil Suit filed before the Hon’ble
High Court, EXIM Bank figures as Defendant No. 1 against whom inter-alia,
2014 has been sought as the primary relief while no primary relief is sought
against the Respondent who figures as Defendant No. 3 in the Suit. Whether
pendency of the aforesaid Suit on the date of filing of petition under Section
Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407”. Para 28 and 29 of the
The dictum of law is loud and clear that when the Operational Creditor
delivers the demand notice of the unpaid debt to the Corporate Debtor in
prescribed manner, the Corporate Debtor can bring to the notice of the
regard to a pre-existing dispute. The Hon’ble Apex Court, while dealing with
of the I&B Code in “Mobilox Innovations (P) Ltd. v. Kirusa Software (P)
has in his demand notice dated 23rd November, 2017 at page 253 of the
contract dated 5th July, 2017 and thereby the Tripartite Agreement dated
18th April, 2010 stands superseded and in view of the same Respondent,
being unable to perform under the Tripartite Agreement was liable to refund
into fresh contract with the Respondent. Respondent further stated that it
the Appellant. The Respondent raised the dispute by denying the status of
Appellant as ‘Operational Creditor’ and further stated that the Appellant had
elsewhere in this judgment that the suit filed by the Appellant primarily
with the Respondent eliminating the Appellant from the project. No primary
notice that the Hon’ble High Court of Bombay declined the interim relief on
the ground that the original contract for which the line of credit was to be
made available by the EXIM Bank, no more subsisted and no effective final
relief prima facie could be granted in the suit for specific performance of the
contract. In view of this finding of the Hon’ble High Court recorded on 27th
June, 2017, which is exactly six months before the filing of Section 9 petition
and having regard for the fact that no substantive relief in the nature of
Respondent in the lis filed at the instance of Appellant (who was virtually
non-suited by the Hon’ble High Court), it can be said without hesitation that
not supported by evidence. Given the frame of the suit and the nature of
relief claimed therein coupled with the fact that no relief with regard to the
subject matter of petition under Section 9 of I&B Code was claimed therein
against the Respondent, we are of the considered view that the contention
raised by the Respondent does not require further investigation and the
the same is set aside. The appeal is allowed. The matter is remitted back to
the Adjudicating Authority to admit the petition filed by the Appellant under
Section 9 of the I&B Code after giving limited notice to the Respondent –
NEW DELHI
AM