Masstrans Technologiies Private Limited vs Gammon Engineers and Contractors Private Limited

H.V. Subba Rao, Member (J)

 This Company petition is filed by Mr. Vinay P Jain, Director of the Masstrans Technologiies Private Limited (hereinafter called “Operational

Creditorâ€) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against Gammon Engineers and Contractors Private Limited

(hereinafter called “Corporate Debtorâ€) alleging that the Corporate debtor committed default in making payment to the Operational Creditor for

the provided by the petitioner to the Corporate Debtor. This petition has been filed by invoking the provisions of Section 8 and 9 Insolvency and

bankruptcy code (hereinafter called “Codeâ€​) read with Rule 6 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

 The present petition is filed before this Adjudicating Authority on the ground that the Corporate Debtor failed to make payment of a sum of Rs.

94,23,410/-/- (Rupees Ninety-Four Lakhs Twenty-Three Thousand Four Hundred and Ten Only).

 The case of the Operational Creditor is as follows:-

a.  On 21.06.2016, Gammon Engineers and Contractors Pvt. Ltd. (the Corporate Debtor) issued a letter of Intent (‘the LOIâ€) upon Masstrans Technologies Pvt.

Ltd. (“the Operational Creditorâ€) for subcontract works for design, supply, installation, testing and commissioning of Highway Traffic Management System of

Gorakhpur Bypass Project on NH-28 in the State of Uttar Pradesh.

b. Â Pursuant to the LOI, on 27.06.2016, the Corporate Debtor had issued the Work Order bearing No. 8520/1383 upon the Operational Creditor which was valued at

Rs. 2,25,40,000/- (Rupees Two Crores Twenty-Five lakhs and Forty Thousand Only).

c. Â Between 7.09.2016 and 27.06.2017, the Operational Creditor had raised various invoices upon the Corporate Debtor for the goods provided and services rendered

by it, amounting to Rs. 2,25,40,000/- (Rupees Two Crores Twenty-Five Lakhs and Forty Thousand Only) (“the total amount of debtâ€). Out of the total amount of

Debt, the Corporate Debtor has advanced a payment of Rs. 1,31,16,590/- (Rupees One Crore Thirty-one Lakhs Sixteen Thousand Five Hundred and Ninety Only) to

the Operational Creditor leaving a balance amount of Rs. 94,23,410/- (Rupees Ninety-Four Lakhs Twenty-three Thousand Four Hundred and Ten Only) (“the

amount in default) which is due and payable to the Operational Creditor by the Corporate Debtor.

d. Â Between 05.02.2018 till 17.08.2018, the Operational Creditor had addressed various e-mails to the Corporate Debtor reminding it to repay the amount in default.

However, the Corporate Debtor has failed to do so.

e. Â Therefore, on 22.03.2019, the Operational Creditor had issued a Demand Notice upon the Corporate Debtor in accordance with the provisions of Section 8 of the

Code. The said demand notice has not been responded to by the Corporate Debtor till the date of filing of the present petition.

The Corporate Debtor has on the contrary, denied all the averments and allegations raised by the Operational Creditor. The contentions of the

Corporate Debtor are summed up as follows:

a. Â The Corporate Debtor stated that in the present case, though the letter of intent dated 21.06.2016 was issued and the work order dated 27.06.2016 was issued in

respect of job being design, supply of materials, installation, testing and commissioning of Highway Traffic Management System of Gorakhpur Bypass Project on

NH-28 in the State of Uttar Pradesh. This was issued by Gammon India Limited (“GILâ€) but in fact the actual work in respect of the said job was done by another

company named Gammon Infrastructure Projects Limited (GIPL).

b. Â The Corporate Debtor further stated that accordingly the actual work in respect of said job was done by Gammon Infrastructure Projects Limited (GIPL). Counsel

for the Corporate Debtor further mentioned that this was done without the Corporate Debtor being liable in any manner to pay any amounts for the work done for

GIPL by the Operational Creditor. The Corporate Debtor was nowhere in the picture for payment. Further, the correspondence emails annexed to the petitioner are

between GIPL and Operational Creditor, where Operational Creditor has admitted that the actual work was done under the directions/suggestions of GIPL as

communicated by GIPL to the Operational Creditor from time to time. The email dated 09.04.2018 from the Operational Creditor’s representative to one Mr. Kishor

Mohanty of GIPL, is self- explanatory in this regard. Further from the email dated 30.06.2018 addressed by the representative of the Operational Creditor to the

representative of GIPL, it is clear that the representatives of the Operational Creditor had one to one meetings with the representative of GIPL wherein discussion in

respect of payment of amounts by GIPL to the petitioner took place.

c. Â The Corporate Debtor stated that such communication in meeting between GIPL and Operational Creditor clears the fact that GIPL has admitted its liability to

make payment to the Operational Creditor in respect of the work done and here, nowhere the Corporate Debtor is in picture with respect to the work done and

respective payment and hence the question of respondent making any payment to the petitioner for the work done by GIPL never arose.

d. Â The respondent submits that it is understood that from the copies of alleged bank statement that the payment received from GIPL to petitioner on completion of

assigned work by petitioner.

e. Â Further, the invoices received from the petitioner have been duly handed over by Respondent to GIPL for payment. It is thus clear that the respondent does not

owe any amount and liability to the petitioner. It is respectfully submitted that the petitioner has not mentioned all these aspects in the petition and has suppressed

the material facts from this forum.

f. The respondent further states that as per Section 8(20) of the Code, Operational Creditor inter alia is a person to whom an operational debt is owed. In order to fall

under the category of operational creditor, firstly, the debt owed should be an operational debt and secondly, such operational debt should be owed to that person

i.e. the liability of the corporate debtor to pay should arise pursuant to the operational debt. Here in present case from the above it is cleared that petitioner has

rendered the services on instruction of GIPL and also requested GIPL to make the payment, and here has no where role of GIL as corporate debtor. A corporate

debtor defined under section 3(8) of Insolvency and Bankruptcy Code, 2016 is the Corporate person who owes a debt to any person. Here it seems and understood

from the documents annexed to the petition that respondent does not owe any amount and liability to the petitioner.

g. For the reason set out, the respondent submits that the present petition under section 9 of the Act shall be dismissed against respondent in interest of justice.

Findings

 Heard both sides and perused the record. As mentioned above, the main contention of the Corporate Debtor in this case is that the original work

order was issued by Gammon India Limited but the actual work was done by the Operational Creditor in respect of project site of Gammon

Infrastructure Projects Limited and some of the bills were also paid by the Gammon Infrastructure Projects Limited and therefore there is no privity of

contract between the Operational Creditor and the Corporate Debtor and thus the Corporate Debtor is not liable to pay the amounts claimed by the

Operational Creditor.

 In order to examine the above plea, it is important to look at the work order issued to the Operational Creditor. The Operational Creditor filed

copy of the work order dated 06.07.2016 issued in its favour by the Gammon India Limited at page no. 84 under Annexure ‘F’ attached to this

Company Petition. It is very clear from the said work order that the work order has been issued and duly signed by the Gammon India Limited. The

Operational Creditor also annexed copy of the order dated 22.03.2017 passed by this Tribunal in Company Scheme Petition No. 125/2017 jointly filed

by Gammon India Limited and Gammon Engineers and Contractors Private Limited (Corporate Debtor) whereunder the scheme of transfer of

Gammon India Limited as transferor company with Gammon Engineers and Contractors Private Limited as the transferee company was approved by

this Tribunal under which all the assets and liabilities of the transferor company were taken over by the transferee company i.e. Corporate Debtor.

Therefore, it is very clear from the above two documents that the Corporate Debtor being the transferee of Gammon India Limited cannot deny the

unpaid bills of the Operational Creditor. Mere forwarding of the bills submitted by the Operational Creditor to Gammon Infrastructure Projects Limited

by the Corporate Debtor does not absolve the Corporate Debtor from its liability. There was no dispute with regard to the debt and default in this

case. The respondent has not sent any reply to the demand notice issued by the petitioner.

 Thus, the above contention raised by the Corporate Debtor in the above petition is not legally sustainable and is liable to be rejected as it is an

afterthought to avoid the liability of Operational Creditor. As stated above, the debt and default are clearly established and the application is complete

in all respects and is well within limitation.

 Under these circumstances, this tribunal is of the considered opinion that the above company petition is liable to be admitted and accordingly the

same is admitted by passing the following:

ORDER

a. Â The above Company Petition No. (IB) -2066(MB)/2019 is hereby allowed and initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against

M/s Gammon Engineers and Contractors Private Limited.

b. Â Since the Operational Creditor has not suggested the name of any person to perform the duties of the Interim Resolution Professional (IRP) in the petition, this

Bench is appointing the IRP from the list furnished by the Insolvency and Bankruptcy Board of India (IBBI). This Bench hereby appoints Mr. Vasudev Ganesh Nayak

Udupi (uvnayak2004@yahoo.com), Insolvency Professional, Registration No: IBBI/IPA-001/IP- P00019/2016-17/10043 as the interim resolution professional to carry

out the functions as mentioned under the Insolvency & Bankruptcy Code, 2016.

c. Â The Operational Creditor shall deposit an amount of Rs.2 Lakh towards the initial CIRP cost by way of a Demand Draft drawn in favour of the Interim Resolution

Professional appointed herein, immediately upon communication of this Order.

d. Â That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any

judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate

debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or

enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession

of the Corporate Debtor.

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

period.

f. Â That 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.

g. Â That 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.

h. Â That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of the Code.

i. Â 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.

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

Accordingly, this Petition is allowed.

The Registry is hereby directed to communicate this order to both the parties and to IRP immediately.