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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
V. SUJATHA, J.
M/s. GVR Infra Projects Ltd. - Petitioner
Versus
The State of Andhra Pradesh - Respondent
Writ Petition No. 6192 of 2021
Decided On : 13-06-2023
Writ Petition - Withholding of Payments - IBC Code, 2016, Sections 15, 13, 24, 31 - The court held that any debt in respect of payment of dues arising under any law for the time being in force, which does not form a part of the approved resolution plan, shall stand extinguished. Once a resolution plan is approved, the claims provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its stakeholders. The respondents were directed to clear the pending bills without deducting the vigilance claim.
Fact of the Case:
The petitioner company was awarded a construction work and faced delays due to various reasons. The respondents issued a fresh tender notification and terminated the petitioner's contract. The respondents also withheld payments citing substandard work and liquidated damages. The petitioner argued that the respondents cannot initiate coercive measures against them due to the approval of a resolution plan under the IBC Code, 2016.
Finding of the Court:
The court found that the respondents' actions of issuing a fresh tender notification, terminating the contract, and withholding payments were illegal. The court also held that the approval of a resolution plan under the IBC Code, 2016 extinguished any debt not part of the plan and bound the stakeholders to the plan.
Issues: The issues involved the legality of the respondents' actions in terminating the contract and withholding payments, and the applicability of the IBC Code, 2016 to the situation.
Ratio Decidendi: The court's decision was based on the interpretation of the IBC Code, 2016, specifically Sections 15, 13, 24, and 31, and the application of the principles established in the judgment of the Hon’ble Apex Court in Criminal Appeal No.8129 of 2019 and the High Court of Telangana in the case of The Sirpur Paper Mills Limited vs. Union of India.
Final Decision: The court directed the respondents to clear the pending bills without deducting the vigilance claim and disposed of the writ petition.
ORDER :
The present Writ Petition came to be filed under Article 226 of the Constitution of India seeking the following relief:-
The case of the petitioner in brief is as follows:
2. Brief facts of the case of the review, in pursuance of the tender notification issued by the 2nd respondent in relation to construction of ROB (Road Over Bridge) at Yelamanchili, Visakhapatnam. The petitioner company was awarded the said work vide agreement No.13/2013-14 dated 27.05.2013. The petitioner company has executed the said work within a period of twenty four (24) months i.e. 27.05.2013. The date on which the site was handed over to the petitioner. The total value of the work is about Rs.18,73,55,796/-. Apart from the said work, certain additional works were also indentified and accordingly supplementary agreements were executed to the tune of approximately about 4.58 crores. The petitioner has executed the works approximately worth of Rs.15.95 crores. But however, due to certain reasons i.e. Seemandhra Strike, Phailin Cyclone, and certain design changes in formation level and shortage of sand sue to the change of sand policy of the Government. There was some delay in execution of the said work, as such the petitioner made a representation explaining all his difficulties vide letter dated 23.12.2015. Considering the said representation the respondents are granted first extension up to 26.05.2017.
3. Meanwhile, the petitioner has brought to the notice of the respondent regarding the specification in relation to the construction of the RE walls are not suitable and suggested for construction of retaining walls with Reinforced Cement Concrete (RCC) vide letter dated 22.07.2015 and for completing the balance work, the respondents have to enter into fresh agreement because of the change of scope of the work. In view of the change circumstances, the petitioners have again sought for explanation of the work up to 26.12.2017. They have received a letter dated 11.08.2017, from the 4th respondent stating that the EOT proposals upto 26.12.2017 were forwarded to the 3rd respondent vide letter dated 25.05.2017 and the EOT is awaited. It was also stated that the designs and drawings for constructions of retaining walls (RCC) in place of RE walls in approach was approved by the competent authority on 10.08.2017 and also no hurdle to start the balance work.
4. A specific case of the petitioner is that, though the drawings were approved by the competent authority on 10.08.2017, no such drawings are communicated/ furnished to the petitioner.
5. While the matter being so, instead of either entering into a fresh supplementary agreement or extending further time as requested by the petitioner, the respondent issued a fresh tender notification in relation to the same subject work, showing the balance estimated work as Rs.8,71,24,980/- on 25.10.2017.
6. The grievance of the petitioner is that, even without terminating the petitioner’s agreement pursuant to the notice dated 06.10.2017, the respondents again issued a fresh tender notification in relation to the same subject. But, however an order dated 20.10.2017 has been issued to the petitioner on 06.11.2017, as per which the petitioner’s contract is determined since the petitioner failed to mobilize men and material to complete the balance work.
7. Aggrieved by the said order dated 2
The approval of a resolution plan under the IBC Code, 2016 extinguishes any debt not part of the plan and binds the stakeholders to the plan.
The approval of a resolution plan under the IBC extinguishes all claims not included in the plan, including tax liabilities.
The approval of a resolution plan under the IBC extinguishes all claims not included in the plan, including tax liabilities, ensuring a fresh start for the corporate debtor.
The main legal principle established in the judgment is the binding effect of the resolution plan approved by the NCLT on stakeholders, as well as the extinguishment of claims not part of the approve....
The approved Resolution Plan under the Insolvency and Bankruptcy Code binds all creditors, extinguishing claims not included, ensuring no surprise liabilities arise post-approval.
Once a resolution plan is approved under the IBC, the claims provided in the plan are binding and any claims not included in the plan are extinguished.
Approved resolution plans under the Insolvency and Bankruptcy Code extinguish all pre-CIRP claims not included, including statutory dues from tax authorities.
Once a resolution plan is approved under the IBC, all claims not part of the plan are extinguished, and the tribunal lacks jurisdiction to adjudicate on such claims.
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