M/s. Unique Roof Private Limited vs Kalimati Carbon Pvt. Ltd

Per: R. VARADHARAJAN, MEMBER (JUDICIAL)

 This is an Application filed by the Applicant viz., Muthuiah Thevar Rajapandian, Resolution Professional of M/s. Unique Roof Private Limited

under Sections 17, 18, 20, 25 (2) (b) read with Section 60 (5) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) seeking reliefs as follows:-

The Hon'ble Tribunal may be pleased to direct the respondent to pay the balance outstanding amount of Rs.39,08,034/- to the Corporate Debtor in pursuant to

the supplies made by the Corporate Debtor to the respondent company and pass any such other order, orders, direction and directions and thus render justice"".

 It is seen from the averments made in the Application that the Corporate Insolvency Resolution Process (CIRP) in relation to the Corporate

Debtor viz., M/s. Unique Roof Private Limited was initiated by this Tribunal vide order dated 04.10.2019 passed in IBA/316/2019 and the Applicant

herein was appointed as the Interim Resolution Professional (IRP).

 Thereafter, it is seen that the Applicant has caused a public announcement under Section 15 of the IBC, 2016 on 11.10.2019 calling for claims to

be submitted by the Creditors of the Corporate Debtor. Subsequent to the above a Director, whose powers stood suspended, of the Corporate Debtor

upon initiation of CIRP had filed an appeal before the Hon'ble NCLAT and it is seen that the said appeal is still pending adjudication as represented by

the IRP.

 Learned Resolution Professional has submitted that the Corporate Debtor is engaged in the activities of making steel building design as per the

purchase order and manufacturing of steel structure, sale of steel materials etc.

 It was submitted by the Learned Resolution Professional that upon perusal of the records of the Corporate Debtor, the Applicant found that there

are certain receivables which are yet to be received by the Corporate Debtor from the Respondent. In this regard, it was submitted that the Corporate

Debtor issued a quotation for supply of structural materials to the Respondent on 23.11.2018 for supply of structural materials at their work place. In

pursuance of the same, it is seen that the Respondent has issued a purchase order dated 23.11.2018 to the Corporate Debtor and based on the same,

the Corporate Debtor has supplied the materials to the Respondent and has raised invoices on various dates and delivered the materials to the

Respondent at their workplace. The details lists of invoices as provided in the Application are as follows:-

Sl.                   Invoice No. & Invoice             Amount

NO. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â

Date                                                   (Rs)

       U-1/854/27.12.2018                              1,51,795.00

       U-1/884/02.01.2019                              1,12,147.00

       U-1/015/06.04.2019                              13,00,891.00

4.        U-1/036/16.04.2019                            5,87,758.00

5.        U-1/049/24.04.2019                           4,78,431.00

       U-1/091/11.05.2019                            8,01,397.00

       U-1/113/21.05.2019                            13,55,914.00

       U-1/146/01.06.2019                            14,76,416.00

       U-1/155/04.06.2019                            1,03,132.00

     U-1/227/29.06.2019                            16,83,766.00

     U-1/256/06.07.2019                            6,76,329.00

     U-1/266/09.07.2019                            10,313.00

13.      U-1/292/16.07.2019                           15,198.00

14.      U-1/304/22.07.2019                           9,770.00

     U-1/365/08.08.2019                            4,777.00

     U-1/517/01.10.2019                            10,40,000.00

Total                                      98,08,034.00

It was submitted that the Respondent has issued the work completion report on 14.08.2019 as against the total invoices amount of Rs.98,08,034/-,

the Respondent has paid a sum of Rs.59,00,000/- as such a balance amount Rs.39,08,034/- is due from the Respondent to the Corporate Debtor as on

date and the same is being reflected in the Books of the Corporate Debtor as due and payable by the Respondent.

Under such circumstances the Applicant has filed the present Application seeking thereof to direct the Respondent to pay the balance amount

pending of Rs.39,08,034/- to the Corporate Debtor in pursuance to the supply being made by the Corporate Debtor to the Respondent.

The Respondent has filed the counter. Learned Counsel for Respondent submitted that the Respondent has paid a sum of Rs.59,00,000/- as on

22.01.2019 even without any work being started by the Corporate Debtor and whenever the Respondent enquired about the delay in work, the

Corporate Debtor used to give lame excuse for the same.

 Further it was submitted that as per original purchase order, Corporate Debtor is required to complete the work on or before 28.03.2019,

however, the Corporate Debtor has failed to complete the same, in pursuance of which the Respondent has sent various e-mails to the Corporate

Debtor for not even starting the work and after several reminders it was submitted that the Corporate Debtor has acknowledged the e-mail dated

26.03.2019 and has sought time to complete the work on or before 25.05.2019 based upon the meeting of the parties which was held on 08.04.2019.

 It is alleged in the counter that the Corporate Debtor has indulged in fraudulent activity by inflating the bills for which the Respondent has

cautioned the Corporate Debtor for a number of times. Further it was submitted that even the Corporate Debtor was not able to complete the erection

part of the work before 25.05.2019 and that the Respondent had engaged their staff to follow with the Corporate Debtor and the factory premises for

completion of the work and it is also alleged that the Corporate Debtor had diverted all funds paid by the Respondent and demanded more money from

the Respondent.

 Thereafter, it was submitted that in spite of long delay and in order to complete the construction, the Respondent had agreed for extension of

time limit and thereby conveyed the same by sending an e-mail dated 07.06.2019 and that the work should be completed on or before 08.07.2019

thereby extending the time line for further period of two months.

 It was submitted that Respondent is purely relying upon the funds from the financiers to start the construction work and as such without even

the work being completed by the Corporate Debtor, it was difficult for the Respondent to disburse the amount to the Corporate Debtor and further the

financiers of the Respondent raised too many questions by stating that the loan schedule is not correlating with the construction schedule which has

put the Respondent in a precarious situation.

 Thus, it was submitted that the project which was stated to be completed within a period of 60 days from the date of placing of the purchase

order was not completed by the Corporate Debtor within the timeline, even after completion of 9 months period and being fed up with the delay and

the attitude demonstrated by the Corporate Debtor, the Respondent had decided to cancel the contract with the Corporate Debtor and informed the

same to the Corporate Debtor by way of an e-mail dated 24.08.2019.

 It was submitted that in spite of receipt of the e-mail, the Corporate Debtor had admitted to deliver the part of the goods without any discussion

which was refused by the Respondent. It was submitted by the Respondent that they are well within their rights to cancel the contract owing to

deliberate delay being caused by the Corporate Debtor and for not adhering to the several time lines given by the Corporate Debtor.

 Pursuant thereto it is seen that the Corporate Debtor has issued a notice dated 30.09.2019 to the Respondent claiming balance payment of

money under the purchase order and also demanded a compensation of Rs.30 lakh for a delay and damage caused to the Corporate Debtor to which

the Respondent through its counsel had replied by denying the allegations made therein.

 Learned Counsel for Respondent submitted that they had to complete the project by engaging some other persons and thereby the Respondent

had incurred loss of time, money and energy and further Corporate Debtor has caused damage to the Respondent by not properly fixing the purlins

and other works done by the Corporate Debtor also remain to be defective.

 It was also submitted that as on 24.08.2019, the Respondent has cancelled the contract and the work done at the site was estimated by a

Chartered Engineer and the same was assessed as for a value of Rs.57,48,702/- including GST and the same was less than the payment which has

been already received by the Corporate Debtor i.e., payment of a sum of Rs.59 lakh.

 Further it was also submitted that the Corporate Debtor has been creating documents to boost their credit value in order to save themselves

from the action of this Tribunal and in the said process they have inflated the bills unilaterally and has created sham documents dated 14.08.2019,

styled as a ""Work Completion Report"".

 It was submitted that a perusal of the said work completion report shows that there was certain items pending to be completed and under the

said circumstances it was submitted by Learned Counsel for Respondent that this Application is liable to be dismissed.

 The Applicant / Corporate Debtor has filed a rejoinder and the Applicant has sought to refute the contentions being made in the counter and has

also sought to deny the same as false. The Applicant has stated in the rejoinder that the delay on the part of the Corporate Debtor to supply the

materials was attributable only to the Respondent since they have not kept the site ready for delivery of materials and as such it is the Respondent

who was not cooperating with the Corporate Debtor and not vice versa.

 It was submitted that there is no defective work being done by the Corporate Debtor and as on date there is no correspondence and e-mail

communication from the Respondent regarding this issue.

 It was also submitted that the Respondent has issued the work completion Certificate dated 14.10.2018 and after issuance of work completion

certificate, the Respondent is not having any right to raise the objection. It is also submitted that termination of contract issued by the Respondent

unilaterally is not legal and the Respondent has cheated the Corporate Debtor and hence it was submitted by the Applicant that the present

Application may be allowed and that the Respondent may be directed to pay the balance amount which is due and payable by the Respondent to the

Corporate Debtor.

 Heard the submissions made by Learned Counsels for the parties and perused the records including the pleadings placed on file. The issue as to

whether the Respondent is liable to pay a sum of Rs.39,08,034/- to the Corporate Debtor is required to be decided in the present Application as per the

documents being placed by Learned Counsels for both the parties.

 From the documents filed by the Respondent along with the counter, it is seen from the e-mail exchanged between the parties, the Respondent

from the inception has categorically stated that the Corporate Debtor is delaying the completion of the project. For instance e-mail dated 11.06.2019

which is being sent by the Respondent to the Corporate Debtor is extracted hereunder:-

16/10/2019 Kalimati Carbon (P) Ltd. Mail - Non Compliance of Terms of Contract / Project Delay / Kalimati Car (P) Ltd.

KALIMATI

The Carbon Company

Abhisek Jain, Kalimati Carbon Non Compliance of Terms of Contract / Project Delay / Kalimati Carbon (P) Ltd.

Abhisek Jain / Kalimati Carbon (P) Ltd.

Tue, Jun 11, 2019 at 9:25 PM

To: Enquiry

Cc: bala@uniqueroof.net, vikram dixit kannaiah , Suresh Carbon

Dear Sir,

You have completely failed to comply terms of contract as agreed and signed by both parties. Moreover, you have been doing over billing despite of our repeated

request.

The project has been suffered due to long standing delay in supplying roofing materials due to which we could not install activation machinery, This has caused

our bank to charge us penal interest and held up with regards to further release of funds.

We have highlighted these points in emails and requested you during several meetings in your Coimbatore works. We had to station our employee at your works

to monitor progress works as well in the past.

These clearly signifies non compliance and diversion / mismanagement of funds remitted to you,

Having said that, incurred bank interest, penalties by customers and suppliers due to delay in project will be billed back to you. We need to have your final

confirmation in next six working days if you would like to comply with terms of contract and interested to complete the project, failing which you will be liable

for legal implications as per the terms of contract.

Thank You.

With Regards,

Subsequently, again an e-mail was sent by the Respondent to the Corporate Debtor on 24.08.2019 by stating the reason as to the delay on the part

of the Corporate Debtor in completion of the project within the time stipulated thereunder which compelled the Respondent to cancel the contract. The

said e-mail is extracted hereunder:

From: Abhisek Jain / Kalimati Carbon (P) Ltd.

Sent: Saturday, 24 August 2019, 19:37 To: Enquiry

Cc: deva@uniqueroof.net; bala@uniqueroof.net; vikram dixit kannaiah;

Suresh Carbon

Subject: Re: Request for payment - reg Dear Sir,

Please refer to emails dated Aug 44th, Aug 22, Aug 21st, Aug 19th and several calls made to your number for status of dispatch as per commitment to deliver

roofing sheets by 20th August.

None of our emails and calls were answered. We have sent you DD scanned copy on July 26th as per our agreed terms.

Now you have completely failed to comply with terms and conditions of contract and emails sent by you. A very poor response from your team is furthermore

delayed our project by almost 4+ months now.

This has made us serious financial and reputation loss with our bank and equipment suppliers.

Kindly consider our contract to be cancelled with immediate effect.

An official letter with claims on part of bank interest & penalties levied by our suppliers onto us will be forwarded to you for settlement.

Thank you for your understanding and hope you do not make your other client's suffer like this.

Regards,

Perusal of the aforesaid two e-mail shows that there seems to be a blatant violation of the terms of the contract by the Corporate Debtor in

relation to the supply of the materials to the Respondent.

Further proceedings before this Tribunal being summary in nature, this Tribunal cannot indulge in the luxury of taking evidence from the parties unlike

a Civil Court and thereby coming to a conclusion as to any sum which is due and payable by both the parties.

 Further as per the valuation which is given by Chartered Accountant in so far as the goods being supplied by the Corporate Debtor to the

Respondent was being valued at a sum of Rs.57 lakhs and as per the demand made by the Applicant, the Respondent has paid a sum of Rs.59 lakhs.

 Thus, it is seen that there has been a gross violation in relation to adhering to the terms and conditions prima facie by the Corporate Debtor in

relation to the goods to be supplied by it and as such the Applicant, being a Resolution Professional of the Corporate Debtor and being appointed by

this Tribunal and having taken charge only from 10.10.2019 cannot be in a position to explain as to what transpired between the parties and also being

ignorant of the series of e-mails being exchanged between the parties and thus from the e-mail communications being exchanged between the parties,

it is seen that the Corporate Debtor has acted in violation of the terms and conditions of the purchase order and as such we are of the considered view

that the Corporate Debtor is not entitled for any further payment to be made by the Respondent in this regard as claimed in the Application.

In the said circumstances and in view of the reasons stated supra, the Application stands dismissed, however, without any cost.