Tamilnadu Water Investment Company Limited vs M/s. S. Periyapalayem Common Effluent Treatment Plant Private Limited

S.Ramathilagam, Member (Judicial)

Under  Consideration  is  an  application  filed  by  M/s.  Tamil Nadu Water Investment Company Limited (hereinafter referred  to  as  "Operational Creditor")  against  M/s.  S. Periyapalayem   Common   Efflueent Treatment   Plant  Private Limited (hereinafter  referred  to  s   "Corporate  Debtor")   under Section  9  of the  Insolvency  &  Bankruptcy  Code  2016  (in  short, 'IBC, 2016') r/w Rule 6 of the Insolvency & Bankruptcy (Application to   Adjudicating Authority) Rules,2016, to initiate   Corporate Insolvency Resolutibn Process(CIRP) against the Corporate Debtor.

A perusal of Part I of the Application shows that the Petitioner is a Public Limited Company. In relation to the Corporate Debtor,  the particulars  of the  Corporate  Debtor  are  given  in  Part  -  II  from which  it  is  seen  that the  date  of incorporation  of the  Corporate Debtor is given  as  20.05.2005  and the  Nominal  Share Capital  of the Company is Rs.3,00,00,000/- and  Paid-up Capital  is Rs.3,00,00,000/-. The Registered office of the Corporate Debtor as per   the   Application is   stated   to be   situated at   SF   No.224, Puzhakattu  Thottann,   A.   Periyapalayem,   Uthukuli   Road,  Tirupur, Tamil Nadu - 641 607.

In   relation   to   Part   III   of  the  Application   it  discloses  that  the Operational   Creditor  has   not  proposed   any  "Interim   Resolution Professional" (IRP)  and  left it to the discretion  of this Tribunal to appoint   the   IRP. Part   IV   details   the   transaction   between   the Operational Creditor and the Corporate Debtor leading to the debt and default and the amount which is being claimed is Rs.97,58,856/-,  which  includes a  sum  of Rs.82,63,491/-  towards principal and Rs.14,95,365/- towards interest at the rate of 16.2% p.a. The date of default is mentioned as 31.07.2018.

Part V in the prescribed Application discloses the documents based on which the claim is sought to be substantiated by the Operational Creditor  as   against  the  Corporate   Debtor  and   the   Operational Creditor has attached the following documents;

a.   Project   Management   Agendy   Services (PMA)   Agreement between   Operational   Creditor   and   the   'Corporate   Debtor dated 22.08.2012.

b.   Operation  and  Supervision,  Maintenance  and  Repair Agreement (Collectively referred as O&M Agreements) between   Operational   Creditor   and   the   Corporate   Debtor dated 23.08.2013.

c. OperationalCreditor'sinvoicesdated31.07.2018,31.08.2018,30.09.2018,31.10.2018,30.11.2018, 31.12.2018,31.01.2019,28.02.2019,31.03.2019, 30.04.2019,31.05.201 towards O&M  Services  and 07.12.2018 towards PMA services.

d.   Operational  Creditor's various  reminder  letters  sent to  the Corporate Debtor.

e.   Demand Notice issued by the Operational Creditor issued on 10.01.2020.

The  Learned  Counsel for the Operational  Creditor submitted  that the   Corporate   Debtor   approached   the   Operational   Creditor   to implement  a  technology  to  operate  and  to  achieve  Zero  Liquid Discharge (ZLD).

In pursuance of the same, both the parties entered into a  Project  Management Agency Agreement (hereinafter referred to as "PMA") dated 22.08.2012. The fee payable to the Operational Creditor was set  out  in   Clause 8.1   of  the   PMA  Agreement.   Thereafter,   the Corporate Debtor requested the Operational Creditor to take over Operation   and   Maintenance   of  its   Common   Effluent  Treatment Plant  (CETP)  and  had  pursuant thereto  both  the  parties  entered into an Operation and Supervision, Maintenance and Repair Agreement(Collectively referred as O&M Agreements)  on 23.08.2013.   As   per   Clause12   of   the   O&M   Agreements   it   is submitted that the Operational Creditor would  be  paid  a  monthly fee for the services rendered. The Operational Creditor has raised various invoices periodically and the Corporate Debtor was paying the   dues   on   adhoc   basis; but   with   inordinate   delay.   It   was submitted that as per the O&M Agreement, the Corporate Debtor is liable to settle the dues before the due date i.e. 20 days from the date of Invoice.

The  Learned  Counsel  for the  Operatibnal  Creditor Submitted  that though the O&M Agreement was entered in the year 2013, owing to delays in completion of the project, the consent to operate the CETP was granted by Tamil Nadu  Pollution Control Board (TNPCB) only for  15%  of the CETP's designed  capacity and  as a  result of which  the  Corporate  Debtor was  unable to  meet the  O&M  costs. Further in the year 2016, TNPCB ordered for closure of 2 out of the 5 members of the Corporate Debtor CETP. As a consequent to this the Corporate  Debtor Suspended the operations at the CETP and sent a letter on 26.08.2016 requesting the Operational Creditor not to charge any O&M fees for the period when the operations at CETP was  suspended  and  also  requested  for  a 25%  discount  on   the invoices   raised   by  the   Operational   Creditor  for  the   months  of January 2016 to March 2016.

It is averred in the application that after considering the Corporate Debtor's financial status the Operational Creditor agreed to extend 25% discount on O&M charges from August 2016 till May 2019. In addition to the above, again on 30.06.2017 the Corporate Debtor had   sent  a   letter  to  Operational   Creditor  to   provide  a  further discount of 50% which was rejected by the Operational Creditor.

It is submitted that the Operational Creditor had sent a  letter on 17.11.2017 requesting the Corporate Debtor to clear the outstanding dues.  in response to the said  letter on 29.11.2017 it was  confirmed  that  a  sum  of Rs.9,82,130  towards  PMA  charges was remitted and agreed to clear the balance outstanding by way of monthly instalments of Rs.5,00,000.

Further  it  was  submitted   by  the  Ld.   Counsel   of  the  Operational Creditor  that  the  Corporate  Debtor  on 06.06.2019   informed   the  Operational  Creditor about closure  of Corporate  Debtor's  member units by TNPCB and requested to temporarily demobilise operations. Thereupon, the Operational Creditor through its letter dated 24.06.2019 conveyed  its decision to demobilise and  requested the Corporate   Debtor   to   clear   the   outstanding   dues.   To   this,   the Corporate  Debtor  agreed  to  pay  through  monthly  instalments  of Rs.5,00,000  which  was  rejected  by  the  Operational  Creditor.  The Corporate  Debtor had thereafter;  vide  its letter dated  09.08.2019, raised  wholly  untenable  reasons  inter-alia,  pertaining  to  delay  in procurement of MVRE bags, non-functioning of member units which were rejected by the Operational Creditor.

11.After numerous communications, a Demand Notice under Section 8 of the  Insolvency  and  Bankru tcy  Code,  2016  was  issued  by  the Operational Creditor to the Cor orate Debtor on 10.01.2020 and the same  was  delivered  to  the  Corporate   Debtor  on 30.01.2020,  to which the Corporate Debtor   has not   responded. It   was also submitted  that the Corporate  Debtor has not paid the outstanding amount  as  per the  invoices  and  no  reply  to  these  invoices  were made   by  the   Corporate   Debtor.   Under  these  circumstances,   the Operational Creditor   submitted   that   the   Corporate Debtor   has committed  a  default  in  the  payment of the  debt amount which  is due and  payable to the Operational  Creditor and  hence prayed for initiation of the Corporate InsOlvency Resolution Process against the Corporate Debtor.

12.The Respondent has filed the counte . The Learned Counsel for the Respondent at the outset submits that the present Application is not maintainable in view of the fact that there is a dispute between the parties.

13.The Learned Counsel appearing for the Corporate Debtor submitted that, the Corporate Debtor raised various pre-existing disputes with the Operational Creditor even before the receipt of demand notice. The   Operational   Creditor  had   arbitrarily  without  considering   the reduced  inflow  of effluents  has  raised  invoices  and  therefore  the Corporate Debtor   vide its letter dated 09.08.2019 had duly intimated  the  Operational  Creditor  about  various  discrepancies  in monthly invoices raised by   the 9perational Creditor   and had requested the Operational Creditor to reconcile the same.

It is further stated that the Corporate Debtor has sent a letter dated 28.08.2019 to the Additional  Director,  Department of Handloom  & Textiles under ,Ministry of Textiles about the deficiency of services rendered by the Operational Creditor.

15.It  is further submitted  that the Operational  Creditor through their legal  counsel,  vide  letter  dated 02.03.2022  had  called   upon  the Corporate   Debtor  for  negotiation   by   invoking   Clause 33   of  the Operation   and Service   Agreement   &   Maintenance   and Repairs Agreement  as  well   as  Clause 19  of  the   Projection   Management Agreement and further indicated that in case of   failure of negotiation the Operational Creditor would initiate Arbitration proceedings against the Corporate Debtor.

Heard the submissions made by the Learned Counsel for the parties. From   the   facts   of   the   case,   it   is   narrated   above   it   becomes imperative for this Adjudicating Authority to adjudicate on Ithe issue to whether there exists a 'dispute' between the parties in relation to the amount which is being claimed by the Operational Creaitor for a sum of Rs. 97,58,856/-.

17.We   perused   the   documents   including   the   pleadings   placed   on record. The contention of the Learned Counsel for the Operational Creditor is that the Corporate Debtor has committed default in the payment of the  sum  which  is due  and  payable  by the  Corporate Debtor to the  Operational  Creditor.  This Adjudicating  Authority  in order to  come  to  the  conclusion  that  the  Corporate  Debtor  has committed default in  paying the debt amount which  is due to the Operational  Creditor,  as  to  the  facts  of the  present  case  has  to examine  in  detail  the  clauses  contained  in  the  0 M  Agreements dated 23.08.2013 entered into between the parties.

It is seen  that the Corporate  Debtor has enclosed  all communications which were exchanged between the parties. On the perusal of the said documents, it is sufficiently mad clear that the Corporate  Debtor has raised a 'dispute' in  relation to the delay  in procurement of MVRE bags, delay in completion of the work on the basis  on  which  the  work  has  been  progressed  in  relation  to  the Operational Creditor.

Further,  it is noted from the application that the Corporate Debtor has   not   replied   to   the   demand   notice   sent   by   the   Operational Creditor.  However,  it is seen that the Corporate  Debtor has raised various  disputes  and  deficiencies  in  the  work  carried  out  by  the Operational Creditor   and   that   the   series   of   letters   exchanged between   the   parties   show  that  there   is  a   dispute   between   the parties in relation to work done by the Operational Creditor.

20.It is required to be noted that the Hon'ble Supreme Court of India in the  matter of M/s.  `Mobilox Innovations  Pvt.  Ltd.' Vs.  IKirusa Software Pvt.  Ltd.' (2018)  1  SCC 353  has clearly laid down that 'the test for determination for the Adjudicating Authority is to see at the stage of Admitting/rejecting the Application is whether there is a plausible  contention  which  requires  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'.  Thus,  it is  not required for this Adjudicating Authority to enter  into  the  gravity  of  the  dispute  which   exists   between  the parties  and   is  only  required  to  see  that  whether  the  dispute  as raised by the Respondent requires further investigation and that the dispute is not patently feeble legal argument or an assertion of fact unsupported by evidence.

Further this Tribunal being an Adjudicating Authority under the IBC, 2016  and  the  proceedings  before this Tribunal  being  summary  in nature, this Tribunal unlike a Civil Court cannot indulge in the luxury of taking evidence and that the debt and default on the part of the Corporate   Debtor   is   required   to   be   proved   by   the   Operational Creditor beyond reasonable doubt.

22.Thus,  from  the  discussions  made  supra  we  are  of the  view  that there  exists  a  dispute  between  the  parties  and  the  said  dispute required further investigation and hence the Application filed by the Applicant / Operational  Creditor under Section  9 of the IBC,  2016 stands dismissed. No costs.