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2026 Supreme(Online)(NCLT) 3060
NATIONAL COMPANY LAW TRIBUNAL
SS RAIL WORKS PRIVATE LIMITED – Appellant
Versus
VNR Infrastructures Limited – Respondent
IA(I.B.C) - 42/2022
For the Petitioner:M.ANIL KUMAR
For the Respondent:TSN RAJA
Disputed contractual claims against a liquidator require full adjudication in an appropriate forum and cannot be resolved via mandatory directions in an interlocutory application.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) - Sub-contract Agreement - Claim for release of payment for work executed - Sub-contractor seeking direction to Liquidator to accept measurements and final bills and submit them to principal employer for release of payment - Held, disputed questions relating to measurement, certification, entitlement, bills, stock reconciliation, materials, royalty, set-off, losses, termination of contracts and pending proceedings before appellate authority cannot be determined by merely issuing a direction to the Liquidator. (Para 62)
(B) Liquidation - Going concern sale - Effect on Liquidator's role - Sale of corporate debtor as a going concern does not ipso facto result in completion of liquidation - Liquidator continues to remain accountable for residual liquidation functions, including segregation of transferred and retained assets, reconciliation of estate accounts, lawful distribution and accurate reporting. (Paras 56-59)
(C) Liquidation - Claim adjudication - Sub-contractor's substantive claim for payment requires adjudication before appropriate forum and in presence of necessary parties, including corporate debtor under present management and, if necessary, the concerned principal employer - Directions to Liquidator to accept measurements, certify or process bills, or release amounts cannot be granted in such Interlocutory Application. (Paras 62, 64)
Facts of the case:
The applicant sub-contractor entered into a sub-contract agreement with the corporate debtor (now under liquidation) for execution of railway construction works. The applicant claimed it completed work and that the liquidator had received payments from the railway authorities but failed to release amounts due. The applicant sought a direction to the liquidator to accept measurements and final bills, submit them to the railway authorities for release of payment of a specific amount, and upon receipt, release the same to the applicant. The liquidator disputed the claim, contending the bill was not supported by proper measurement book extracts, and raised issues of stock reconciliation, equipment, royalty, termination of contracts, and pending appeals.
Findings of Court:
The court noted that the liquidator continues to have a role despite the going concern sale, but the substantive reliefs sought required adjudication of highly disputed questions. The court held that such reliefs could not be granted in the present proceedings. The applicant's substantive claim would need to be adjudicated before the appropriate forum, with necessary parties. The application was dismissed, but the court directed the liquidator to consider the subject matter while preparing status reports as earlier directed, and to hand over available records to the present management of the corporate debtor.
Issues: The main issues were whether the liquidator could be directed to accept the applicant's measurements and bills, process them, and release payment, and whether such relief could be granted given the disputed nature of the claims and pending proceedings.
Ratio Decidendi: Disputed questions of fact requiring adjudication of contractual claims, measurement and certification of work, and set-off cannot be decided in an interlocutory application seeking a mandatory direction against a liquidator; such claims must be adjudicated in an appropriate forum with necessary parties. A going concern sale does not automatically end the liquidation process or the liquidator's responsibilities.
Result: Application dismissed, subject to observations and limited directions regarding record-keeping and transmission.
1. The present Interlocutory Application has been filed by the SS Rail Works Pvt. Ltd (“ A pplicant ”) under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“ C ode ”) against M/s. VNR Infrastructures Ltd (“ C orporate Debtor ” ), represented by its Liquidator (“ R espondent ”), seeking a direction against the Respondent to accept the measurements and final bills submitted by the Applicant in respect of the subcontract works executed under the principal contract awarded by the North East Frontier Railway Authorities and thereafter submit the same before the N.F. Railway Authorities for the release of payment of Rs. 1,58,00,000/-, and upon receipt thereof, to release the said amount in favour of the Applicant.
Applicantion
2. The Applicant submits that the Corporate Debtor has obtained contracts from North East Frontier R ailway (“ N .F.Railways ” ), Maligaon, Guwahati, for the construction of the substructure of major bridges i n Tripura state. The Corporate Debtor had entered into a Sub-Contract Agreement 1, ANNEXURE A-1 dated 15.07.2015 with the Applicant on “end-to-end” basis for execution of works valued at Rs. 49,13,18,683/-. The Applicant asserts that, considering the financial distress o f the Corporate Debtor, the Applicant agreed to execute the said works for a consideration of Rs. 46,70,31,665/-.
3. It is submitted that pursuant to the said agreement, the Applicant completed more than 30% of the subcontract work and the Respondent released amounts under on-account bills aggregating to Rs. 4,65,48,456/- on different dates. It is further submitted that the final bill 2, ANNEXURE A-2 for an amount of Rs. 1,58,00,000/- was measured, finalised, and recorded by the Railway Department. And also mobilisation advance of Rs 80,00,000/- was also recovered from our running bills, for which responded is liable to release to the applicant because mobilization advance was drawn from t he NFR Authorities and utilised by responded company
4. The Applicant submits that the PVC (Price Variation Bills) bills were required to be submitted by the Applicant to the Respondent and thereafter by the Respondent to the NFR Authorities for verification and release of payment. It is stated that due to the cancellation of the Power of Attorney by t he Respondent, the Applicant could not submit the PVC bills to the NFR Authorities.
5. It is submitted that under Clause 3 of the Sub-Contract Agreement, the Applicant was required to submit monthly RA bills and the Respondent, upon receiving payment from the NFR Authorities for the work executed by the Applicant, was required to release the corresponding amount to the Applicant.
6. The Applicant submits that the expenditure incurred for execution of the subcontract work was met entirely from the Applicant’s own funds and borrowed funds obtained from financial institutions and not from the funds of the Respondent Company.
7. It is submitted that the Applicant executed the subcontract work and raised RA bills before the Respondent. It is further submitted that the NFR Authorities released amounts aggregating to Rs. 4.65 Crores to the Respondent towards the work executed by the Applicant. The Respondent thereafter released an amount of Rs4.65 Crores to the Applicant o n 03.04.2017, 05.10.2017, 27.02.2018 and 23.04.2018, leaving a balance amount of Rs. 4,40,000/- unpaid.
8. It is further submitted that during the CIRP period, certain amounts were released by the Resolution Professional to the Applicant. However, after commencement of liquidation proceedings, the Liquidator failed to release further amounts despite receipt of payments from the R ailway Authorities corresponding to the work executed by the Applicant. It is contended that despite receiving payments from the NFR Authorities, the Respondent failed to release the amounts payable to the Applicant in violation of the terms of the Sub-Contract Agreement dated 21.12.2026.
9. The Applicant submits that despite r epeated requests made to the Liqui
