Case Note & Summary
The appeal arises from the dismissal of a Section 9 application under the Insolvency and Bankruptcy Code, 2016 (IBC) by the National Company Law Tribunal (NCLT), Chennai, on 20.03.2024. The Appellant, M/s. Shrushti Contech Private Limited, an Operational Creditor, was awarded a work contract by the Respondent, M/s. V A Tech Wabag Limited (Corporate Debtor), for civil works for a plant water system for APGENCO-KTPP project under Order No. MBG-PO-15481/10P5M dated 06.06.2014, later amended by Order No. MBG-PO-17110/10P80 dated 12.02.2015. The Appellant completed the work, and a Completion Certificate was issued by APGENCO on 23.04.2016. The Appellant claimed that certain amounts remained unpaid, and after issuing a demand notice under Section 8 of IBC, filed a Section 9 application before the NCLT. The NCLT dismissed the application on the ground of pre-existing dispute and limitation. The Appellant appealed to the National Company Law Appellate Tribunal (NCLAT), Chennai. The NCLAT upheld the NCLT's decision, finding that the Corporate Debtor had raised disputes regarding the quality of work and deductions prior to the demand notice, constituting a pre-existing dispute. Additionally, the application was filed beyond three years from the completion certificate dated 23.04.2016, making it barred by limitation under Article 137 of the Limitation Act, 1963. The appeal was dismissed.
Headnote
A) Insolvency and Bankruptcy Code - Section 9 Application - Pre-existing Dispute - The existence of a dispute between the parties prior to the issuance of demand notice under Section 8 of IBC, 2016, bars the admission of a Section 9 application. The court held that the Corporate Debtor had raised disputes regarding the quality of work and deductions, which were communicated before the demand notice, thus constituting a pre-existing dispute. (Paras 1-10) B) Limitation - Operational Debt - Completion Certificate - The limitation period for filing a Section 9 application runs from the date of completion of work or last payment, not from the date of completion certificate. The court held that the application filed beyond three years from the completion certificate dated 23.04.2016 was barred by limitation under Article 137 of the Limitation Act, 1963. (Paras 2-12)
Issue of Consideration
Whether the NCLT was correct in dismissing the Section 9 application on grounds of pre-existing dispute and limitation.
Final Decision
The appeal is dismissed. The order of NCLT dated 20.03.2024 rejecting the Section 9 application is upheld.
Law Points
- Pre-existing dispute
- limitation
- operational debt
- Section 9 IBC
- completion certificate
- work contract
