NCLT Kolkata Dismisses Section 9 IBC Plea Against Bridge & Roof Co., Cites Pre-Existing Dispute Over Defective Work & Pending Final Bills

The Tribunal observed that disputes relating to defective and damaged paint work, non-completion of contractual obligations, and non-submission of final bills had arisen prior to the issuance of the demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 (IBC). It further noted that the Corporate Debtor had raised these disputes through communications, including an email dated March 11, 2024, directing the Operational Creditor to complete pending work and rectify defects, thereby evidencing a genuine dispute before initiation of proceedings.

The Operational Creditor had filed the application claiming an amount of ₹1,40,36,218.71 towards supply of welding electrodes and execution of fabrication and painting works. While reliance was placed on part payments and an alleged acknowledgment of dues, the Tribunal noted that such acknowledgment was limited and did not cover the entire claimed amount.

On the other hand, the Corporate Debtor contended that the contracts were not fully completed, final bills had not been submitted, and defects in execution remained unrectified. It was also argued that the completion certificate relied upon by the Operational Creditor was merely a provisional certificate issued for tender purposes and did not have contractual significance.

The Bench further took note of the contractual clause barring payment of interest on delayed payments and observed that the claim for interest itself was disputed. In this backdrop, the Tribunal held that disputes relating to quality of work, contractual compliance, and quantification of dues squarely fell within the ambit of “dispute” under Section 5(6) of the IBC.

Relying on the settled law laid down in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., the Tribunal reiterated that where a genuine dispute exists prior to the issuance of the demand notice, an application under Section 9 cannot be admitted. The Bench also referred to the NCLAT ruling in Anita Jindal v. Jindal Buildtech Pvt. Ltd., observing that the IBC is not intended to be used as a recovery mechanism, particularly against solvent companies.

In view of the above findings, the Tribunal concluded that the disputes raised were not spurious, hypothetical, or illusory, but real and substantial. Accordingly, the Section 9 application was dismissed as not maintainable

Counsels for Operational Creditor - Mr. Joy Saha Ld. Sr. Advocate, Mr. Ishaan Saha, Mr. Tanish Ganeriwala, Ms. Snehasish Chakraborty

Counsels for Corporate Debtor - Ms. Urmila Chakraborty, Ms. Paramita Banerjee, Mr. Rohan Raj, Ms. Shristi Sharma, Advocates (MCO Legals – Meharia & Company)

Case Title: Cross Marketing vs. Bridge & Roof Company (India) Ltd.

Case Number: C.P. (IB) No.320/KB/2024