ORDER

1. This Application is filed by M/s. Masprocon, (the Petitioner) seeking to initiate Corporate Insolvency Resolution Process (CIRP) against M/s. Prasad & Company (Project Works) Private Limited (the Respondent), for the alleged default in discharging the debt that is due to the Petitioner.

The facts of the case as per the Applicant

2. The Applicant performed engineering services encompassing design and the preparation of drawings for civil works to the Respondent in accordance with the Work Order No. P&C/JAGDALPUR/5 dated 10.10.2011., [Pg 27-30 of the Application] The initial amount agreed upon for the services was Rs.93,37,500/-. Subsequently, as the Respondent expanded the scope of work, the costs escalated to Rs. 2,94,41,268/-. The total Invoice value for the services amounted to Rs.3,87,78,768/-, out of which the Petitioner received Rs.1,01,65,957/-, inclusive of TDS. The current outstanding balance is Rs.2,86,12,811/-.

3. Furthermore, on August 12 2020, the Petitioner communicated to the Respondent, attaching an extra claim for design services related to the Project. The claim was necessitated by a significant increase in the size of buildings beyond the initially provided tender drawing size. The Respondent responded on September 11 2020, stating that efforts were being made to pursue the claims, and the matter was pending approval with their employer BHEL and the outcome would be communicated in due course.

4. It is emphasized that the Petitioner provided design engineering services as per the specifications and expansions outlined by the Respondent. The approval or disapproval of the works by the Respondent’s principal is deemed irrelevant to the services allocated by the Respondent to the Petitioner. The Petitioner executed additional works as specified by the Respondent, and there is prima facie Agreement from the Respondent, explicitly stated in the email.

5. As of the date of Demand Notice, the Respondent is liable for an amount of Rs.2,86,12,811/-, excluding an interest component of Rs.1,53,38,034/-. The total outstanding sum, inclusive of interest amounts to Rs.4,39,50,845/-.

6. The Petitioner has persistently reminded the Respondent to settle the outstanding dues. However, the Respondent repeatedly deferred the payment. The Petitioner along with its key managerial personnel, issued a Demand Notice in Form 3 & Form 4 as per the Insolvency and Bankruptcy Code (IBC), 2016, on January 29, 2021., [Pg 15-25 of the Application] The stated amount in the Demand Notice is Rs.4,26,30,594/-, inclusive of interest at 18% p.a. i.e. Rs.1,49,48,390/-. The claim has been adjusted to account for taxes, resulting in a total claim amount of Rs.4,39,50,845/-.

7. However, the Petitioner had not received the outstanding dues from the Respondent in response to the Notice issued under Section 8(1) through Form 3 of the Insolvency and Bankruptcy Code (IBC), 2016. Section 9(1) of the IBC, 2016 clearly stipulates that "After the expiry of the period of 10 days from the date of delivery of notice or Invoice demanding payment under Section 8(1), if the operational creditor does not receive payment from the corporate debtor or notice of dispute under Section 8(2), the operational creditor may file an application before the Adjudicating Authority for initiating the Corporate Insolvency Resolution Process."

8. The Respondent, in failing to respond to the Demand Notice, took deliberate action by filing a civil case before Hon’ble IX Additional Senior Civil Judge, Ranga Reddy District, L.B. Nagar, under case number O.S. 181/2020 dated 5th February 2021., [Pg 84 of the Application] In this civil case, the Respondent falsely claimed an amount of Rs.33,81,700/- from the Petitioner without providing a proper reply to the earlier Demand Notice. Hence, this application.

The Counter

9. In response to the Application, the Respondent filed a Counter. The Respondent argued that the present Application is not maintainable due to a pre-existing dispute. It was as