The Operational Creditorwas awarded work on 19th November 2011 by the Corporate Debtor for civil work of construction. The Corporate Debtor, in terms of Work Order, five percent of the amount of every Running Bill was retained as Retention Money which was to be released after completion of Defects Liability Period of one year from the date of award of Completion Certificate and issue of Defect Liability Certificate to be issued by the Corporate Debtor to the Operational Creditor. The claim of the Operational Creditor herein is that the Corporate Debtor retained the Retention Money and had not paid the same even after the Defects Liability Period i.e., a one-year period commenced from 31st March 2014 till 1st April 2015. Failure to pay the said amount, Operational Creditor issued a Demand Notice dated 1st March 2018 to the Corporate Debtor demanding Rs. 24,75,085/- along with eighteen percent interest per annum. The stand of the Operational Creditor is that the Corporate Debtor has not raised any dispute in the reply.
The Corporate Debtor took a stand that the Demand Notice and bill is barred by principles of delay and latches and stated that the claim is stale beyond limitation as per the Limitation Act. Failure in paying the amounts, even after issuance of Demand Notice, the Operational Creditor filed Application before the Adjudicating Authority claiming a sum of Rs. 24,74,085/-. In Part-4, it is stated that the right to recover Retention Money first accrued to the Operational Creditor on 1st April.2015. The Adjudicating Authority has considered all aspects in the Application admitted the Application and initiated CORPORATE INSOLVENCY RESOLUTION PROCESS (CIRP) including the declaration of Moratorium.
The issues in the present case are the following as under :
National Company Law Appellate Tribunal (NCLAT) held The Operational Creditor had awarded the work and the retention money cannot be treated as separate money. The retention money is a part of the main bill which was retained by the Corporate Debtor in accordance with the terms of the Work Order and the same shall be released after completion of the work and issuance of the Completion Certificate. Further, the Defect Liability Period completed on 1st April 2015, and thereafter the Operational Creditor had requested the Corporate Debtor to release money. We are of the view that it is not barred by limitation. Learned Adjudicating Authority rightly observed and held that the debt fell due from 27th July 2015 when the mail was sent by Ginjar Hotel of the Corporate Debtor stating that the Operational Creditor had attended to all the concerns and rectified the same.
The other submission of the learned Counsel for the Appellant that debt does not fall within the definition of Section 5(21) of Insolvency and Bankruptcy Code, 2016 (IBC)IBC is concerned, the Operational Creditor had rendered services and there is no dispute regarding the said services and we cannot accept that the said claims will not fall under the definition of Operational Debt. For the Beneficial reference Section 5(21) of Insolvency and Bankruptcy Code, 2016 (IBC) is reproduced. We are of the view that the Corporate Debtor is due and payable retention money which is part of the main Bill thereby the Operational Creditor is well within the definition of Section 5(20) Insolvency and Bankruptcy Code, 2016 (IBC).