NCLT rejects insolvency petition filed against Shapoorji Pallonji for a Rs 24 lakh default
An insolvency petition against Shapoorji Pallonji & Company Pvt Ltd has been rejected by the Mumbai bench of the National Company Law Tribunal (NCLT) on the basis of the fact that default has breached the limitation period of three years.
The insolvency petition against Shapoorji Pallonji & Company, which is a large infrastructure contractor company, was filed by Drilltech Engineers Private Limited, an operational creditor, for defaulting on payment of Rs 23.87 lakh.
Shapoorji Pallonji had engaged Drilltech Engineers for services of mobilization, drilling, cutting, binding, mock disposal and other related activities between March 2011 and May 2011.
In its petition the operational creditor states that there was a pre-condition of retention money to be released after one year from every invoice so raised. After completion of work, the Operational Creditor raised various invoices which were paid by the Corporate Debtor from time to time. However, the Corporate Debtor has not paid the balance invoice amount and retention money.
The tribunal rejected Drilltech Engineers’ petition on the basis that the last invoice raised by the Operational Creditor was dated 31 March 2013 and the date of default indicated by the Petitioner is 31 March 2013. “Therefore, the limitation period to file the Petition would end on 31 March 2016,” it said.
The tribunal also rejected the operational creditor’s argument that acknowledgement of the debt Shapoorji Pallonji through an email in September of 2017 does not stand the test of limitation period.
“The acknowledgement of debt, if any must be made by the debtor before the expiry of period of limitation,” observed the NCLT.
Retention Money
Retention money is the amount held by the company as a safeguard for any defective or non-conforming work by the contractor.
Drilltech Engineers submitted that the total debt amount was Rs.23,86,882, and this included amount due from invoice Rs 8,98,753 and amount due from retention Rs.14,88,128.
The Operational Creditor states that Shapoorji Pallonji during the retention period never intimated of any defect pursuant to which the retention money was to be retained by it. Drilltech further says that the Corporate Debtor placed yet another quotation for works. However, the Petitioner did not take further work till outstanding amount is repaid.
In its argument in the tribunal, the Shapoorji Pallonji & Company said that the petition was not maintainable as the invoices alleged to be unpaid by the petitioner were barred by limitation.
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