The Present Petition is led by M/s. Enexio Power Cooling Solutions India Private Limited (formerly known as GEA Cooling Tower Technologies (India) Pvt.Ltd.] / Operational Creditor alleging that M/s, MSR Mega Bio Power Limited, Corporate Debtor had defaulted an amount of Rs.35,02,500/ alongwith interest @ 24% p3. from respective due date of payment until 29.102018 is Rs,53,34,037/-, thus, total defaulted amount is Rs,88,36,537/. Hence this petition is filed under Section 9 of Insolvency and Bankruptcy Code, 2016, r/w Rule 6 of Insolvency 85 Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, seeking admission of the Petition, initiation of Corporate Insolvency Resolution Process, granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon. The averments of the petition filed by the Petitioner/Operational Creditor in brief are described hereunder: It is averred that M/s. Enexio Power Cooling Solutions India Private Limited/ Operational Creditor and MSR Mega Bio Power Limited / Corporate Debtor had entered into a contract dated 1812.2010 for design, engineering, manufacturing, procuring, testing and supplying 1 No. Air Cooled Condenser with all auxiliaries in relaon to l x 7.5 MW Power Project set up by MSR Bio Power Limited / Corporate Debtor situated at Warangal, Telangana State, India, at a total contract price of Rsi3,75,00,000/, It is averred that project commenced during February, 2011 and raiscd various Debit Notes / Invoices against the Corporate Debtor according to the works done. As per the Contract, the payment schedule is mentioned as follows: /, /, w 2 /; I
iii. NcLT HVD BENCH CP {Isl No. 155/9/Hos/2019 SiNo. Description Claim of Payment made Operational by Corporate Creditor made Debtor on on
1. 1St Advance 19.12.2010 20.12.2010 10% of the Order Value
2. 2mi Advance e 15% 02.03.2011 17.05.2011 of the Order Value
3. 3m Advance 22.07.2011 16.08.2011 15% of the Order Value
4. Remaining 60% of the basic value alongWith taxes 86 duties to be paid against despatch documents for the supplies on proirata basis It is averred that subsequent to the receipt of advances, Operational Creditor started the supplies from 14.09.2011 and received adhoc payments against the dispatches till 16.06.2012 and later on Corporate Debtor failed to make further payments but Operational Creditor continuously made supplies and completed the supply and erection by 29.072012. The details of the unpaid invoices and the interest amount due as on 29.10.2018 are described hereunder: 35,02,500 NELT an BENCH CF (IE) No. 155/9/HDB/1015 It is averred that despite repeated reminders; no payment was made by Corporate Debtor after 16.062012. The Operational Creditor issued a Demand Notice on 29032018 to the Corporate Debtor under Section 8 of the Insolvency and Bankruptcy Code, 2016. It is averred that Demand Notice sent to the registered office address 0f the Corporate Debtor which was delivered and filed proof of service. Hence petition is liable to be admitted for default of operational debt by Corporate Debtor.
3. Counter led by the Corporate Debtor in brief arc as follows: It is submitted that the averments made by the Operational Creditor in the aforesaid petition are false, fraudulent, frivolous and mischievous and therefore ought not to be considered at all and the Operational Creditor is not entitled to claim the relief prayed for as the sarno is not only unwarranted, unsubstantiated and unjustified but has also been made with an ulterior motive to cause irrevocable damage to the Corporate Debtor company It is averred that no money is due and payable to the Operational Creditor and even if the Operational Creditor has a claim, the same is hopelessly time barred and therefore the instant Section 9 petition led by the Operational Creditor cannot stand since the invoices alleged to be unpaid were raised by the Operational Creditor in the year 2012, the date of invoice was 20072012 and the default alleged t0 have taken place on 19.082012 It is also averred that the claim now being made by the Operational Creditor clearly arose in the year 2012 and therefore the claim is clearly beyond limitation and is hopelessly time barred / (/1
iii. vi. th'r HVD amen L'P (m) Na. 155/9/HDB/2019 lt is averred that various mails on which the Operational Creditor is relying on cannot be claimed to have extended the period of limitation as these mails were sent by the Operational Creditor and not by the Corporate Debtor. Since these mails relate to for the period from 2011 to 2015 which would not help the case of Operational Creditor as evcn the extended period of limitation would have expired in February, 2018. As such, demand notice issued under section 8 of IBC is clearly beyond the period of limitation. It is also averred that vide letter dated 03.06.2014, the Corporate Debtor requested the Operational Creditor to visit the site and complete the pending works and the balance amount payable to the Operational Creditor shall be paid only after commissioning of the Plant which clearly proves that the Operational Creditor has failed to complete the works it had taken up under the aforesaid contract. But the Operational Creditor neither refuted the contents of the aforesaid letter nor raised any invoices either for supply or work rendered after the date of the letter dated 03.06.2014, which clearly shows that it had not completed the unnished work under the contract. It is averred that the last invoice raised on 20.07.2012 by the Operational Creditor and the letter sent by the Corporate Debtor requesting the Operational Creditor to complete the pending works was on 03.06.2014. The Operational Creditor had not raised any Invoice subsequent to the letter dated 03.06.2014 and it clearly proves that it did not take up the pending works and complete the same. It is also averred that if the Operational Creditor claims extension of limitation from the date of the letter dated 03062014, the same would also be beyond the period of limitation since more than four years have passed. 0%, // 5 I viii, Xi, um an amen CP (I8) Na 155/5/HDB/2l719 It is also averred that the demand notice issued under Section 8 of the IBC is clearly beyond the period of limitation even if limitation had been extended by the letter dated 03.0620144 It is averred that the Corporate Debtor company commenced setting up of bio power generating plant at Nieligonda Village in Warangal District and had availed various loans including term loan of Rsi25.50 erores from the then State Bank of Hyderabad. It commenced setting up its bio power generating plant but due to various issues, the bio power plant was not completed and not commissioned. Consequently, started to default on its nancial commitments and sometime thereafter, the bank classified it as a Non-Performing Asset. It is averred that the Corporate Debtor company has paid all amounts due and payable and it does not owe any amount in relation to the Contract dated 18.l2.2010. It is averred that the ledger accounts of Operational Creditor at pages 82 85 83 show that they had received an amount of Rs.2,39,00,000/- and Rsll,37,60,000/ respectively. Thus, the total amount received Rs.3,76,60,000/- Which is in excess of the contracted price of Rs.3,75,00,000/-. It is averred that the Operational Creditor had caused an inordinate delay in supply of the material contracted, complete the erection of the material and commission the plant and incurred additional expenditure for taking the third-party contractors to supply the material, complete the pending works and commission the plant. My, J / Z1 ucu' HVD semen CP (IE) Nu. 155/9/HDE/2019
4. Rejoinder led by Operational Creditor and the averments therein, in brief are as follows: It is averred that the Operational Creditor has produced all the proofs and evidence to support the claims but the Corporate Debtor miserably failed to produce any cogent evidence to prove that it is not liable to make the payment to the Operational Creditor. Hence, the allegations that the claims are unwarranted and unjustified are false. It is averred that the Corporate Debtor in their letter dated 03.062014 mentioned that the balance amount will be credited to the account of the Operational Creditor after commissioning of the Plant and also mentioned as follows: till date the project is not yet commissioned due to power evacuation problem and shortage of funds, we are really appreciating to your management for a great support to MSR either supply and Erection. Please see our credentials and Track records of the payment. Unfortunately, our company was in deep trouble to get the ROW of Transmission tower and mobilizing the funds, we will overcome and complete the project. It is seen from the above statement that the project could not be commissioned due to the power evacuation problem and shortage of funds faced by the Corporate Debtor. It is also averred that the Project was not held up due to delay of the supplies / erection work, it is due to the inabilities and difficulties faced by the Corporate Debtor. Hencc, the allegation made by the Corporate Debtor in its counter are false, baseless and is frivolous. we // J
iii. NCLT an amen CF (IBI No. 165/s/Hus/2019 It is averred that the management of the Corporate Debtor was changed in the year 2016-17. After constant oral communications, the new management of the Corporate Debtor company given assurances for payment, Believing and trusting the assurances made by the new management of the Corporate Debtor company, Operational Creditor did not issue any demand notice. But after failing to adhere to the assurances repeatedly, the Operational Creditor issued a Demand Notice on 29.03.2018 to the Corporate Debtor and hence the contention of the Corporate Debtor that the application is barred by limitation is false and baseless It is averred that Operational Creditor received an amount of Rs.3,76,60,000/- from the Corporate Debtor which is in excess of the Contracted Price of Rs13,75,OO,OOO/. The clause Contract Price in the Agreement dated 18.122010 states as follows: 3.1 Contract Price agreed for designing, engineering, manufacturing, procuring, inspecting, testing supplying and erection and commissioning of the machinery and equipment including packing and forwarding is Rsl3, 75, 00, 000/ -4
312 Above price excludes all taxes, duties except excise duty and transit insurance. Applicable duty be charged as per MNRE guidelines as this project is Excise Duty exempted as per MNRE Notication No.33/2005-Central Excise. The Purchaser has to provide MNRE Certificate to the Contractor seller before dispatch goods from respective places, All other entry tax, Special Entry Tax and Octroi, if applicable will be settled and paid directly by the Purchaser. Any increase in the rates of taxes and duties, imposition of any new taxes, duties and levies or consequential increases thereto will be payable by the Purchaser to the seller extra at the actuals on the basis ofdocumentary proofs. we //
8 4" NCLT HVD asucu CF (IB! N0. IES/S/HDB/ZUIS It is averred that the above clause is evident that all the applicable taxes are to be borne by the Corporate Debtor.
v. lt is averred that the computation of the total amount viz. basic value and taxes are shown as follows: (in Rupees) Particulars Supply Erection Total Basic Value 3,44,00,000 31,00,000 3,75,00,000 Excise duty 25,71,775 25,71,775 Cess 77,154 77,154 CST 6,06,530 6,06,530 VAT 23,780 23,780 Service Tax 3,83,159 3,815,159 TOTAL 3,76,79,341 4,1 1,62,500 Amount paid by the (3,76,60,000] Corporate Debtor Balance Amount 35,02,500 payable by the Corporate Debtor It is averred that the above table shows that the Corporate Debtor is required to pay Rsr35,02,500/- and the contention of the Corporate Debtor that it has made the complete payments and cleared the dues is false, misleading and absolutely denied We have heard the learned counsel for the Operational Creditor and the learned counsel for the Corporate Debtor. The learned counsel for the Operational Creditor would contend that there is no dispute that the operational creditor entered into contract with the corporate debtor dated 18122010 for design, engineering, manufacturing, procuring, testing and supplying of l N0 Air Cooled Condenser. The learned counsel for the petitioner submits that a copy of the contract/ agreement dated 18.12.2010 is shown as Exhibit D at pages 19-43 of the Paper Booklet led. The learned counsel contended that the corporate debtor failed to pay the balance, There was lot of correspondence through e-mail with the corporate debtor. 111M // Z NCLT mu amen cp (IE) Na. 155/9/1-105/2019 However7 the corporate debtor failed to pay the amount due under the contract. The principal is Rs.35,02.500/e, and interest is Rs,53,34,037/a; totalling to Rs.88,36,537/'. Copies of unpaid invoices are shows at pages 67471 marked as Exhibit G of the Paper Booklet, Copies of delivery challans are shown at pages '72- 80, marked as Exhibit H of the Paper Booklet. Working for computation of defaulted amount including interest is shown at page 81. The learned counsel contended that in spite of oral demand as well as correspondence through e-mail, the corporate debtor failed to pay the unpaid invoices and thc Operational Creditor nally issued demand notice dated 29.03.2018 under section 8 of the Insolvency 85 Bankruptcy Code to the corporate debtor. The learned counsel contended that there is no dispute of service of demand notice on the corporate debtor. There is no reply by the corporate debtor. The learned counsel contended that there is no pre-existing dispute and that the claim is not barred by limitation as there is voluminous correspondence through e'mail with the Corporate Debtor. The learned counsel contended that if at all the amount due to the operational creditor is written off in the Books of Accounts of the Corporate Debtor, then the same should have been shown as income in the accounts of the Corporate Debtor and income tax ought to have been paid on it. There is no proof led to establish the same and as such the claim is still due to the Operational Creditor and the claim therefore, is not barred by limitation. The learned counsel contended that the Corporate Debtor is contending that the claim is barred by limitation and that it had paid over and above the contract price and as such n0 amount is due to the operational creditor. The learned counsel contended that the Corporate Debtor tried to project as if the Operational Creditor abandoned the remaining work and left the site. The learned counsel contended that there is no truth in the said MEL //
10 (a NCLT an BENCH [P "a; N0. 155/9/"05/2019 contention of the Corporate Debtor. On the other hand the Operational Creditor has completed the contract work and it is the Corporate Debtor, who had committed default in not paying the remaining balance amount. The learned counsel contended that the Operational Creditor is able to establish the debt due by the Corporate Debtor and default and as such the petition is liable to be admitted. On the other hand learned counsel for the Corporate Debtor would contend that the contract was given to the Operational Creditor for supply and erection of 1 N0. Air Cooled Condenser. Learned counsel contended that the Operational Creditor did not complete the contract work and the Operational Creditor is yet to complete the remaining work which was brought to the notice of the Operational Creditor by letter dated 03.06.2014. In the said letter it was made clear to the Operational Creditor that the remaining work to be completed and a request is made to the Operational Creditor to complete the same before making further payment. This was prior to the demand notice. This letter constitutes a dispute and as such the application cannot be admitted. Learned counsel contended that as per the contract the amount payable is Rs.3,75,00,000/-. Admittedly Corporate Debtor paid Rs.3,76,60,00/= Thus, the Corporate Debtor paid in excess of the contract price. Learned counsel contended that there was no amount due to the Operational Creditor. Next contention of learned counsel is that all the invoices were raised in 2012. The last invoice being dated 20.07.2012. The entire default was said to have occurred in 2012. Even according to the Operational Creditor the latest default was on 19.08.2012 and the last payment was made on 16.06.2012. Thus, the claim as well as the default alleged to have taken place in 2012. The entire e-mail correspondence is by the Operational Creditor only. There was no reply to the e-rnail communications sent by the Operational Creditor from time to timer Thus, there was no w //
11 a NCLT uvn BENCH CP (IE) No. lss/s/HDB/ZLIH acknowledgement of the alleged operational debt. Said email correspondence was one-sided. Email communications were made from 2011 to February 2015. Period of three years will expire by February 2018, even if it is assumed that the correspondence with the Corporate Debtor constitutes acknowledgement. However, the present petition is led on 16.11.2018, which is beyond three years. Learned counsel contended that on either of the grounds the claim is barred by limitation. Article 137 of the Limitation Act would apply to the applications filed under 185B Code. Thus, the claim is barred by limitation and as such the petition cannot be admitted. It is true that there is no dispute with regard to entering into contract by the Operational Creditor with the Corporate Debtor for supply of l No. Air Cooled Condenser in respect of l x 7.5 MW Power Project for the Corporate Debtor. lt was dated 18.12.2010 Invoices raised in 2012. The question is whether the alleged operational debt is barred by limitation. Limitation starts from the date of last invoice. Application ought to have been filed within thrce years from the date of last invoice or within three years from the date of acknowledgement, if any. In the present case thc claim, if any, is barred by limitan'on. The invoices were raised in 2012. Applicah'on ought to have been led Within three years from the date of last Invoice, which was dated 20.07.2012. Even otherwise, application ought to have been led within three years from the date of last payment which was stated to be made on 16.06.2012. Even according to the Operational Creditor, the default had occurred on 19.082012. Thus, the application is filed three years beyond the date of last Invoice as well as from the date of last payment. There was lot of E-rnail correspondence with the Corporate Debtor. Of course, the Operational Creditor filed E-mail correspondence done by it with the Corporate Debtor at pages 46-66 of the Paper Booklet. Such E-mail correspondence is one-sided, viz. it emanates from the Operational Creditor without any acknowledgment in the form of reply from the Corporate Debtor. To constitute an (f NELT an BENCH CF (IBI Nu. IES/S/NDE/ZGIE acknowledgement, there must be E-mail reply from the Corporate Debtor to the Operational Creditor. Surprisingly, there is no reply by the Corporate Debtor through E-mail acknowledging the balance payable, to E-mail correspondence. Even otherwise, E- mail correspondence ended in February 2015. However, the application is filed on 16.11.2018. Thus, the application is beyond three years from the date of last E-mail correspondence with the Corporate Debtor. Thus, thc application is barred by limitation. The Operational Creditor has relied on letter dated 03.06.2014. This letter is shovm as Exhibit F, at page 46 of the Paper Booklet filed on behalf of the Operational Creditor. The case of the Corporate Debtor is that the Operational Creditor was yet t0 complete the remaining part of the contract work. This was brought to the notice of the Operational Creditor by the Corporate Debtor through letter dated 03.06.2014- and payment will be released after completion of the remaining work. On the other hand it is the contention of the learned counsel for the Operational Creditor that in the same letter the Corporate Debtor had clearly admitted that the project could not be commissioned due to its own difficulties and gave assurance to release the payment after overcoming the nancial difficulties faced by it. It is true that in the letter the Corporate Debtor has categorically admitted that the project is not yet commissioned due to power evacuation problem and shortage of funds. In the same letter the Corporate Debtor appreciated the work of the Operational Creditor either in the matter of supply of material and erection. However, in the same letter it was also brought to the notice of the Operational Creditor to complete the pending works, balance amount will be credited to the account of the Operational Creditor after commissioning of the plant. Thereafter, there was no reply to this letter by the Operational Creditor denying that there was any pending work. WJ/ / / 13 12. NCLT HYD BENCH EP (IE) Nu. 165/9/HDB/14719 Even if the said letter is taken into account as an acknowledgement of liability, yet the applican'on is filed beyond three years. This letter is dated 03.06.2014, whereas the application is filed on 16.11.2018, which is beyond three years. As such this letter also does not save the limitation. The other contention raised by the learned counsel for the Operational Creditor is that the amount due to the Operational Creditor should have been reected in the Books of Accounts of the company. In any event, it is written off, then the Corporate Debtor ought to have shown it as income in the relevant year in which this debt was written off and should have paid income tax. There is no material placed by the Corporate Debtor that the amount was written off. Therefore, it can be presumed that the debt stands appearing in the account of the Corporate Debtor and as such it saves limitation. There is no material placed by the Operational Creditor that the Corporate Debtor was showing any amount due to the Corporate Debtor. One of the contentions raised by the Corporate Debtor is that it had paid in excess of the contract price. On the other hand thc contention of the learned counsel for the Operational Creditor is that the Corporate Debtor is yet to pay taxes as per the contract, which is not paid. No balance sheet of the Corporate Debtor is filed by the Operational Creditor. Burden lies on the Operational Creditor to prove the debt alleged is appearing in the Books of Accounts of the Corporate Debtori No such material is placcd for the Tribunal to come to conclusion that the alleged debt is appearing in the Books of Accounts of the Corporate Debtor. In absence of any such evidence, conclusion cannot be arrived at basing on the material available before the Tribunal. It is very clcar that the application is barred by limitation under Article 137 of the Limitation Act. / W / 14 NCLT an BENCH cp "a; Nu. lGS/E/HDB/ZUID
13. Even otherwise, there was no reply to the Demand Notice by the Corporate Debtor Had it been true that pending works were yet to be attended to by the Operational Creditor, then the Corporate Debtor would have given appropriate reply to the Demand Notice issued under section 8 of the 1&B Code. Surprisingly, there was no reply alleging that pending work is yet to be completed, Therefore, it cannot be said that there was any pre-existing dispute and work was incomplete, Even though there was no prior dispute, yet the application is patently barred by limitation and as such the application cannot be admitted and is liable to be rejected. In the result, the application is rejected 54,2 (3* NARENDER KU'M BHOLA RATAKONDA M MEMBER (TECHNICAL) MEMBER [JUDICIAL] Syamala l Karim 15