Citation Codes

Equivalent Citations

citation codes

Case Number

(IB)2552(ND)2019

Disposition

allowed

Attorney(S)

Acts

COMPANIES ACT 2013
SECTION 9 INSOLVENCY AND BANKRUPTCY CODE 2016
Section 8 of the code
Section 14(2) to 14(4) of the Code
provision of Companies Act, 1956
Section 9(3)(b) of the I&B code
Authority) Rules, 2016 r/w Section 9 of the code
Rule 6 of the Insolvency and Bankruptcy Code, 2016

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Smart Summary

Case Summary: Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. (IB/2552/ND/2019)

Factual and Procedural Background

The applicant, Creative Infraheights Pvt. Ltd., a private limited company and contractor, entered into a work order dated 03.01.2019 (WO/GA/2019-20) with the corporate debtor, JBK Developers Pvt. Ltd., to execute civil works (including an underground tank, sewage & drainage civil work and sewage treatment plant) at Green Avenue Plot No.10, Surajpur Site-C, Greater Noida. The work order was for a total contract value of Rs.17,59,68,574/-. After performance (as alleged by the applicant), three running account bills dated 29.03.2019, 30.03.2019 and 25.04.2019 were raised and approved by the corporate debtor for Rs.34,081,24,52/- (per the record annexed).

The applicant issued a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 dated 11.09.2019 (served on 13.09.2019). When no payment followed, the applicant filed an application under Section 9 of the IBC on 09.10.2019 claiming an outstanding operational debt of Rs.36,35,021.52/- (which included contractual interest). The corporate debtor filed a reply raising objections to maintainability and asserting a pre-existing dispute; the applicant filed a rejoinder and sought initiation of the corporate insolvency resolution process.

Procedural outcome in this opinion: The Adjudicating Authority admitted the Section 9 application, appointed an Interim Resolution Professional, imposed moratorium under Section 14 and directed the applicant to deposit Rs.2,00,000/- with the IRP.

Legal Issues Presented

Whether the Section 9 application filed by the applicant is maintainable as an application for initiation of corporate insolvency resolution process (i.e., whether the debt is an "operational debt" under the Code and whether the work contract falls within the ambit of operational debt).
Whether there existed a pre‑existing dispute between the parties that would bar admission of the Section 9 application.
Whether the demand notice under Section 8 of the IBC was validly served (objection raised as to service/formal compliance).
Whether the affidavit filed in compliance with Section 9(3)(b) of the Code was defective (specifically whether the date of service of the notice was stated).
Whether the application was time‑barred (limitation) and whether the Tribunal had jurisdiction to entertain the application.

Arguments of the Parties

Corporate Debtor's (Respondent) Arguments

The work contract is neither the supply of "goods" nor of "services" as contemplated under Section 5(20) read with Section 5(21) of the IBC; therefore, the alleged debt is not an "operational debt" and the Section 9 application is not maintainable on that ground.
The applicant did not comply with mandatory requirements regarding serving the demand notice under Form‑3 at the registered office (objection to service/formal compliance), rendering the application not maintainable.
The affidavit required under Section 9(3)(b) is defective because it allegedly fails to state the date on which the notice was served upon the corporate debtor.
The corporate debtor contends that no operational debt is due because the applicant never performed the work as per the agreement; further, the corporate debtor claims it incurred a loss of Rs.10,00,000/- and seeks compensation.

Applicant's (Operational Creditor) Arguments

The applicant executed the work order and performed work; it placed on record running account bills, measurement sheets and ledger accounts to substantiate the claim and work performed.
The applicant relied on an email dated 22.04.2019 showing communications with the corporate debtor regarding bills and GSTIN, as evidence of performance and recognition of the bills by the corporate debtor.
The applicant contended that service of the Section 8 notice at the corporate office of the corporate debtor is valid and relied upon the Hon'ble NCLAT order in Alloysmin Industries Vs. Raman Casting Pvt. Ltd. (Appeal (AT) Insolvency No.684/2018) to support the validity of service.
The applicant maintained that it complied with statutory requirements and that the corporate debtor's contentions of a pre‑existing dispute are unsubstantiated and raised only after the Section 8 notice was issued.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Alloysmin Industries Vs. Raman Casting Pvt. Ltd., Appeal (AT) Insolvency No.684/2018 (NCLAT)	That service of a Section 8 notice at the corporate office of the corporate debtor can be treated as valid service.	The applicant relied on this authority to support the validity of service of the Section 8 notice. The Tribunal referred to NCLAT precedent to reject the corporate debtor's objection regarding service/formal compliance.
Mobilox Innovative Private Limited vs. Kirusa Software Private Limited (Hon'ble Supreme Court)	Adjudicating authority must reject a Section 9 application if there is a notice of dispute received by the operational creditor or a record of dispute in the information utility; the authority is to examine whether a plausible dispute exists that requires further investigation, not merely a feeble assertion unsupported by evidence.	The Tribunal applied the Mobilox test to assess the corporate debtor's objection. Finding no documentary evidence or plausible factual foundation for the alleged pre‑existing dispute, the court characterized the dispute as spurious/frivolous and not a bar to admission.

Court's Reasoning and Analysis

The Tribunal examined the materials on record (work order, running account bills, measurement sheets, ledger accounts and correspondence) and the parties' submissions. It noted that the corporate debtor's principal contention was that no work had been performed and that therefore no operational debt was due. The Tribunal observed:

No documentary evidence or contemporaneous correspondence was produced by the corporate debtor to substantiate a pre‑existing dispute or the alleged failure of performance; the corporate debtor's contentions appeared to have been raised only after issuance of the Section 8 notice.
The applicant had placed on record measurement sheets, invoices and an email dated 22.04.2019 evidencing communication between the parties regarding bills and GSTIN, which supported the applicant's case that work was performed and bills were processed by the corporate debtor.
Applying the test in Mobilox, the Tribunal considered whether the corporate debtor had shown a plausible dispute that required further investigation. The Tribunal concluded the corporate debtor's objections were not supported by evidence and amounted to a spurious or frivolous dispute (referred to as "moonshine dispute" in the opinion).
On the specific objection to validity of service of the Section 8 notice and procedural compliance, the Tribunal referred to the NCLAT precedent (Alloysmin) relied upon by the applicant and held that the objection lacked merit.
The Tribunal found that the applicant had filed the affidavit required under Section 9(3)(b) and that the application was complete in the prescribed Performa under Rule 6 r/w Section 9 of the Code.
On limitation, the Tribunal identified the date of default as 11.09.2019 and noted that the Section 9 application was filed on 09.10.2019, concluding the application was within the period of limitation.
On jurisdiction, the Tribunal observed that the registered office of the corporate debtor is situated in Delhi, thereby vesting jurisdiction in the Tribunal to entertain the application.

Having applied these legal principles to the facts and documents, and finding no genuine pre‑existing dispute, the Tribunal concluded that the applicant had established default in payment of an operational debt and that the application was otherwise complete and maintainable.

Holding and Implications

Core Holding: The Section 9 application filed by Creative Infraheights Pvt. Ltd. is ADMITTED.

Direct consequences and directives issued by the Tribunal (as contained in the opinion):

Appointment of Interim Resolution Professional (IRP): Mr. Pankaj Kumar Singhal (email: aprlegalindia@gmail.com; mobile: 9871357353; registration no. IBBI/IPA-002/IP-N00532/2017-18/11561) was appointed as IRP, subject to there being no disciplinary proceedings pending against him. The IRP had filed consent and required disclosures under the applicable IBBI regulations.
Moratorium: On admission under Section 9(5) of the IBC, the moratorium under Section 14(1) of the Code shall apply in relation to the corporate debtor, with Sections 14(2) to 14(4) operating during the moratorium as applicable.
Security for IRP functions: The applicant was directed to deposit Rs.2,00,000/- with the IRP within one week from receipt of the order to cover IRP expenses and functions in accordance with Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The amount is subject to adjustment by the Committee of Creditors and shall be repaid to the applicant as accounted for by the IRP.

Broader implications: The opinion applies established precedents (including Mobilox and an NCLAT decision in Alloysmin) to evaluate pre‑existing disputes and service objections; the decision primarily addresses the parties' rights and obligations in this instance and does not purport to set new law. The direct effect is the initiation of the corporate insolvency resolution process against JBK Developers Pvt. Ltd., appointment of an IRP and imposition of the statutory moratorium.

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Creative Infraheights Pvt Ltd v. JBK Developers Pvt Ltd

CORAM: DR. DEEPTI MUKESH HONBLE MEMBER (JUDICIAL) 2 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. MEMO OF PARTIES CREATIVE INFRAHEIGHTS PVT. LTD. Registered office: Office No. 111, First Floor, Maharja Agrasen Shopping Complex, LSC-7, Sector-9, Rohini Delhi-110085 Applicant/Operational Creditor Versus JBK DEVELOPERS PVT. LTD. Registered office: 99, Patparganj, Delhi-110091 Site Address: Green Avenue Plot No.10, Surajpur Site C, Phase-2, Greater Noida (U.P.) Respondent/ Corporate Debtor FOR THE APPLICANT :Mr. Anshuj Dhingra, Adv. Ms. Shubhangda Singh, Adv. FOR THE RESPONDENT :Ms. Praveen Mahajan, Adv. Ms. Ruchi Mahajan, Adv. Mr. Siddharth Srivastava, Adv. 3 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. ORDER Per-Dr. Deepti Mukesh, Member (J)

1. The Present Application is filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity code) read with Rules 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority), 2016 (for brevity the Rules) by Creative Infraheights Pvt. Ltd. (for brevity Applicant) through Mr. Krishna Kumar Verma, being the Director of the applicant firm, duly authorized vide Board Resolution dated 01.07.2019, with a prayer to initiate the Corporate Insolvency process against JBK Developers Pvt. Ltd. (for brevity Corporate Debtor).

2. The Applicant is a private limited company incorporated on 13.07.2011 under the provision of Companies Act, 1956 bearing CIN No. U45400DL2011PTC222229 having its registered office at 111, First Floor, Maharaja Agrasen, Shopping Complex, LSC-7, Sector-9, Rohini, Delhi- 110085.The authorized share capital of the company is Rs. 1,00,000/- and the paid up capital of the company is Rs.1,00,000/-. The applicant is a contractor to carry out works in the nature of under Ground Tank, Sewer Treatment Plant, Sewage & Drainage Civil Work at Green Avenue Plot No.10, Surajur Site- C, Greater Noida, (U.P.).

3. The Corporate Debtor is a private limited Company incorporated on 23.07.2003 under Companies Act, 2013 having its registered office at -99, Patparganj, Delhi-110091 and site address on which the work was done under the guidelines given by the Corporate Debtor was at Green Avenue Plot No. 10 ,Surajpur Site C, Phase 2. The authorized share capital of the company is Rs. 14,00,00,000/- and paid up capital of Rs. 3,76,38,000/-The corporate debtor is engaged in real estate business and has obtained approval from the concerned authority. 4 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd.

4. The applicant submits that on03.01.2019 the applicant and corporate debtor entered into an agreement bearing no. WO/GA/2019-20, which was in the form of a work order for execution of certain work at the site of the corporate debtor. In terms of the said work order, the applicant was mandated to carry out work in the nature of under Ground Tank, Sewer Treatment Plant, Sewage & Drainage Civil Work at the corporate office of the corporate debtor. The work order was fixed for a total amount of Rs.17,59,68,574/-(Rupees Seventeen Crores Fifty Nine Lakh Sixty Eight).The copy of agreement dated 03.01.2019 has been annexed herein.

5. The applicant submitted that after execution of work order as per the agreement, three running account bills dated 29.03.2019, 30.03.2019 and 25.04.2019 (hereinafter referred to as RA Bills) were raised to the corporate debtor for payment. The bills were duly verified by the project manager as per the measurement sheets of the applicants and after finalization of the amounts claimed there under, the said RA bills were duly received by the Authorized Signatory of the corporate debtor and approved for an amount of Rs.34,081,24,52/-. The said approved and signed bills along with measurement sheets have been annexed herein. Consequently, the applicant made several reminders through various mode of communication, for payment of the aforementioned amount payable.

6. The applicant issued a demand notice dated 11.09.2019 under Section 8 of the code calling upon the corporate debtor to pay the total outstanding amount of Rs.36,35,021.52/- The said notice was served upon the corporate office of the corporate debtor on 13.09.2019, the tracking report has been annexed herein. As per applicant no reply was received with respect to rising ofdispute. 5 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd.

7. The Applicant filed the present Application under section 9 of IBC, 2016 and served the copy of this application which was duly delivered to the Corporate Debtor as per service affidavit. As per Form V, the total debt outstanding is 36,35,021.52/- the said amount includes contractual interest @ 18% per annum calculated for the date the bill becomes due till 11.09.2019.

8. The corporate debtor filed reply and raised the following objections:

a) The main objection raised by the corporate debtor is that with regards the maintainability of the present application as the work contract is neither the goods nor services as contemplated under Section 5(20) read with Section 5(21) of IBC nor the alleged debt isan operational debt.

b) Further, the corporate debtor has raised an objectionthat the applicant has not complied with mandatory requirement of serving the demand notice under Form-3 at the registered office of the applicant. Hence application is not maintainable

c) That the affidavit filed under Section 9(3)(b) of the I&B code is defective as the applicant has failed to state the date on which notice was served upon the corporate debtor.

d) The corporate debtor submits that no operational debt is due and outstanding as the applicant had never undertook any work on the site as per the agreed terms vide agreement dated 03.01.2019. Further, due to which the corporate debtor has incurred loss amounting to Rs 10,00,00/-. Hence, the corporate debtor has claimed the said amount as compensation.

9. The applicant has filed rejoinder wherein it is contended that the corporate debtor has raised misleading contentions. It is further submitted that the applicant has filed the ledger accounts in support of its claims. The 6 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. applicant opposing the contention of corporate debtor that no work was done pursuant to the execution of work order and hasplaced on record the copy of measurement bill maintaining the account of work performed by the applicant. The applicant submits that an email dated 22.04.2019 has been placed on record, which shows the communication between the official of corporate debtor and the applicant, wherein discussion regarding the format of the bill and correct GSTIN no. is being made, which clearly shows that work had been performed by the applicant. The applicant has relied upon the order passed by the Honble NCLAT, in the matter of Alloysmin Industries Vs. Raman Casting Pvt. Ltd Appeal (AT) Insolvency No.684/2018 in support of the contention that service of Section 8 notice at the corporate office of the corporate debtor shall be treated as valid service.

10. Considering the documents on records and submissions of counsels, it manifests that the corporate debtor has tried to create and establish a pre- existing dispute by asserting that the services had never been performed. Further, the corporate debtor has also raised contentions with regards to maintainability of the present application and sufficient proof to substantiate the contentions have not been provided. No documentary evidence or correspondence is placed on record by the corporate debtor to support the contentions, that there is a pre-existing dispute and the said dispute was raised for the first time only after notice under Section 8 of IBC was issued. In reply the various objections raised are mere statements made by Corporate Debtor which has not been substantiated with any proof.

11. The corporate debtor has not placed on record any document which exhibits the plausible dispute between the parties.The objection raised with respect to maintainability of the application, there is no merit as on the issue of service on Section 8 notice is overruled by Honble NCLAT. The corporate debtor claims to have asked for compensation from applicant but no 7 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. document has been annexed, on the contrary the applicant has placed on record the document with respect to execution of work, and invoices received by the corporate debtor but not objected the so-called dispute raised by the corporate debtor, as mere reply filed by the corporate debtor to the present application, is unable to establish any pre-existing dispute of genuine nature. This leaves no doubt that the default has occurred for the payment of the operational debt for which the invoices were raised by the applicant and the so called dispute raised by the corporate debtor is merely a moonshine dispute as laid down In Mobilox Innovative Private Limited vs. Kirusa Software Private Limited, the Honble Supreme Court observed that It is clear , therefore that once the Operational creditor has filed an application, which is otherwise complete , the adjudicating authority must reject the application under Section 9(5)(2(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility . It is clear that such notice must bring to the notice of operational creditor the existence of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which required further investigation and that the dispute is not a patently feeble legal argument or an assertion of fact unsupported by evidence .It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. In view of the above observation it can be concluded that the dispute raised by the corporate debtor, is spurious, plainly frivolous and unable to categorize as genuine dispute as reproduced above. Hence, contention of the corporate debtor, of a pre existing dispute without any evidence and merit is a clear after thought to defeat the claim of the applicant. 8 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd.

12. The date of default is 11.09.2019 and the present application is filed on 09.10.2019. Hence the application is not time barred and filed within the period of limitation.

13. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.

14. The Applicant has filed an affidavit in compliance of section 9(3)(b) which is placed on record.

15. The present application is filed on the Performa prescribed under Rule 6 of the Insolvency and Bankruptcy Code, 2016 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 r/w Section

9 of the code and is complete. The applicant is entitled to claim its dues, establishing the default in payment of the operational debt. Hence, the application is admitted.

16. As a consequence of application being admitted and IRP name suggested by the applicant, this Bench appoints Mr. Pankaj Kumar Singhal , having email id: aprlegalindia@gmail.com, mobile no.9871357353 and registration no. IBBI/IPA-002/IP-N00532/2017-18/11561as the Interim Resolution Professional, subject to the condition that no disciplinary proceedings are pending against him. The IRP has filed consent Form-2 of the Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority) Rule 2016 and made disclosures as required under IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016.

17. As a consequence of the application being admitted in terms of Section 9(5) of IBC, 2016, moratorium as envisaged under the provisions of Section 14(1), shall follow in relation to the corporate debtor, prohibiting as per 9 IB/2552/ND/2019 Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. proviso (a) to (d) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(4) of the Code shall come in force.

18. We direct the applicant to deposit a sum of Rs. 2 lacs with the Interim Resolution Professional, namely Mr. Pankaj Kumar Singhal, to meet out the expenses and perform the functions assigned to him in accordance with regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within one week from the date of receipt of this order by the Operational Creditor. The amount however be subject to adjustment by the Committee of Creditors, as accounted for by Interim Resolution Professional, and shall be paid back to the applicant.

Creative Infraheights Pvt Ltd v. JBK Developers Pvt Ltd

Case Summary: Creative Infraheights Pvt. Ltd. Vs. JBK Developers Pvt. Ltd. (IB/2552/ND/2019)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Corporate Debtor's (Respondent) Arguments

Applicant's (Operational Creditor) Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Creative Infraheights Pvt Ltd v. JBK Developers Pvt Ltd

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