Bombay High Court
Pingle Builders Pvt Ltd vs Union Of India Through The D. G on 6 February, 2025
Author: Bharati Dangre
Bench: Bharati Dangre
2025:BHC-AS:7065-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.1746 OF 2025
Pingle Builders Private Limited .. Petitioner
Versus
Union of India .. Respondents
...
Ms.Madhavi Nalluri i/b. Thodur Law Associates for Petitioner.
Mr.Y.S. Bhate a/w Ms. Smita Thakur for Respondent.
CORAM : ALOK ARADHE, CJ &
BHARATI DANGRE, J
DATED : 6th FEBRUARY, 2025
JUDGMENT:
- (PER BHARATI DANGRE J)
1. The Petitioner, primarily engaged in the business of
carrying out civil/ construction works, building and developing
residential and commercial complexes, has approached this Court,
being aggrieved by the action of the respondent, Union of India-
Directorate General Married Accommodation Project, New
Delhi, in cancelling the contract awarded to it on 9/06/2011, on
the ground of delay in its completion by order dated 1/02/2018,
and also being aggrieved by the issuance of fresh tender calling
bids from eligible persons for completion of the incomplete work.
Heard learned counsel Ms. Madhavi Nalluri for the
petitioner and Mr. Y.S. Bhate for the respondent.
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Rule. Rule made returnable forthwith.
2. The Directorate General Married Accommodation
Project, published a tender for construction of residential
accommodation for defence personnel at Mumbai (Navy and Air
Force) along with 'Instructions to Tenderer(s)' comprising of the
general instructions and highlighting the scope of the work with
an estimated cost of Rs.54.57 Crores. The documents
contemplated that the tender shall be based on drawing,
specifications, for which lumsum shall be quoted by the tenderer
in form of item rate.
The petitioner company engaged in construction
business, participated in the tender and was awarded the work for
contract amount of Rs. 44.37 Crores on 9/06/2011. According to
the petitioner, it proceeded with the work in terms of the work
order and was successful in finishing substantial portion of the
work within stipulated timelines in the contract, but faced
numerous difficulties which are entirely attributed by it to the
respondent, the significant factors being:
(i) Encumbrance free site was not made available by the
respondent during the initial stages;
(ii) Estimates prepared in respect of the subject contract were
entirely unrealistic;
(iii) Deviation orders for the subject contract not finalized;
(iv) The ban on sand mining created acute shortage of sand and
caused steep hike in its cost;
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(v) Imposition of additional restrictions on movement of men
and materials within the work site;
(vi) Significant number of drawings being introduced by the
respondent, during the currency of execution of the project;
(vii) Non-release of payments to the company despite completion
of substantial work in respect of the subject contract.
3. The petition has highlighted the percentage of work
carried out and proceed to state that the delay was entirely
attributable to the respondent but on 1/02/2018 the petitioner
received a communication informing that the contract awarded in
its favour has been cancelled, and issuing directions to make an
inventory of complete/incomplete items of works and materials,
and further directing that the property on which the construction
activity was being carried out shall be safeguarded until further
orders.
4. The petitioner raise a grievance that the termination
of contract by the impugned letter is a unilateral act and is based
on false, frivolous and unsubstantiated grounds, and is in
complete violation of the contract executed between the parties.
The communication addressed to the petitioner assigned a cause
for termination, by alleging that petitioner has failed to proceed
with the work with due diligence with a result that the project is
at stand still and is almost abandoned for a considerable period of
time and despite various review meetings and commitments being
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made to infuse materials and labour resources to expedite the
project ,there was no progress.
5. Since the termination notice indicated that as per the
contract condition no.1(c) of the General Conditions of
Contracts, the work shall be completed by any other agency, at
the risk and cost of the petitioner, who was allotted the contract
for construction of dwelling units, a fresh tender was invited by
the respondent for completion of balance work by publishing the
tender on the site www.defproc.gov.in, and the present petition
filed on 4/02/2025, raise a challenge to the termination of
contract vide letter dated 2/02/2018 as well as the tender notice
published by the respondent inviting fresh tenders for the
unfinished work.
6. From the date of termination of the contract on
2/02/2018, till filing of the petition several events have transpired
and the petition has highlighted the same in a sequential manner.
7. On account of the financial distress suffered by the
petitioner company, one Soorajmull Baijnath Pvt. Ltd, set in
motion the Corporate Insolvency Resolution Process (CIRP)
alleging that Pingle Builders Pvt Ltd, a corporate debtor has
committed default in making payment to the extent of
Rs.9,30,05,085/- invoking Section 9 of the Insolvency and
Bankruptcy Code, 2016. The National Company Law Tribunal,
Mumbai on 19/07/2018, admitted the petition and imposed a
moratorium under section 14, with effect from 19/07/2018, till
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completion of the corporate insolvency resolution process or until
approval of the resolution plan under sub-section (1) of Section
31 or passing of an order for liquidation of corporate debtor
under Section 33, as the case may be.
Mr. Shrikant Zawar, was appointed as an Interim
Resolution Professional (IRP) to carry out the functions as
mentioned under the IBC.
8. The Resolution Professional filed an Interim
Application No. 1506 of 2019 under Section 33 of the IBC,
before NCLT Mumbai, on the ground that no resolution plan has
been approved and the Committee of Creditors had unanimously
decided to initiate liquidation proceedings against the Corporate
Debtor.
The NCLT on 11/12/2020, allowed the application
appointing Ms. Vandana Garg, as liquidator under Section 34 (1)
of the Code, for conduct of the liquidation proceedings as
envisaged under Chapter-III of the Code. She was conferred with
the powers of the board of directors, key managerial personnel
and other partners of the Corporate Debtor and a direction was
issued by the tribunal to liquidate the Corporate Debtor and the
personnel of Corporate Debtor were directed to extend all co-
operation to the liquidator in conduct of the liquidation
proceedings.
9. On 9/11/2022, an application was moved by the
liquidator for taking the acquisition agreement dated 5/11/2021
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executed between the applicant and Mr. Swapnil Wagchoure on
record and in terms of the Acquisition Agreement, the entire
business, undertaking activities and operation of the Corporate
Debtor were transferred to Mr. Swapnil Wagchoure, proprietor of
M/s. Swapnil Electrical and Contractors, on the date on which the
agreement became effective.
10. The Acquisition Agreement is placed on record along
with the petition at Exhibit-E, and it record that Mr. Swapnil
Waghchoure carrying proprietary business of electric contract in
Nashik has agreed to take over the business of the Corporate
Debtor under liquidation as a going concern and it extended to
all assets of the debtor including but not limited to current assets,
deposits, loans and advances, secured to or available with the
Corporate Debtor as also all statutory and regulatory approvals,
license, agreements, permissions, clearances, registration, plant
and machinery, utilities, vehicles, furniture, accessories and
related infrastructure as well as all intellectual property and
goodwill.
The agreement clearly recorded that in consideration
of vesting of the Corporate Debtor in the Acquirer in terms of the
agreement, the acquirer shall pay a sum of Rs. 32,00,000/- to the
bank account specified by the liquidator and the existing directors
of the Corporate Debtor shall be replaced by the new directors
mentioned therein.
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The agreement also contain a clause as regards
Conduct Of Business Of The Corporate Debtor and it clearly
contemplated that all the assets, rights, title, interest or obligations
thereto shall continue to belong to and be vested in and managed
by the Acquirer.
11. In the interregnum, when the petitioner was
undergoing CIRP, the petitioner also approached the District
Court at Nashik, by filing Arbitration Application No.4 of 2019,
under Section 9 of the Arbitration and Conciliation Act, 1996,
seeking redressal against the action of the respondent in
cancelling the work contract vide order dated 31/01/2018, and
seeking a restrain order from appointing any new
agency/contractor to complete the balance work till the final
adjudication of the arbitration proceedings. The district court on
13/08/2019 allowed the Interim Application restraining the
respondent from not allotting the tender to any bidder, who has
submitted the bid for completion of the work of construction of
dwelling units at Colaba, Mankhurd, Kalina and Santacruz, in
pursuance of the e-tender published on 17/07/2019, however, by
judgment dated 10/02/2021, the District Judge Nashik, rejected
the arbitration application by recording that no prima facie case
or balance of convenience lies in favour of the applicant for any
interim relief, as he can always apply for damages, if the contract
was illegal contract, but on the other hand if the contract is stayed
the respondent would suffer irreparable loss and damage since
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construction of the dwelling units of Armed Forces would be
further delayed, as it was to be completed in the year 2013, as per
the work order dated 20/06/2011.
12. The learned counsel for the petitioner would submit
that once the corporate debtor has been taken over by the
acquirer, who admittedly is not a petitioner before us, it shall
continue the action of raising a challenge to the cancellation
order, and also the invitation of fresh tenders by the respondent
for completing the unfinished work. The learned counsel would
submit that the petitioner is entitle to participate in the fresh
tender, in view of the fact that the petitioner company has been
acquired as a going concern in liquidation pursuant to the
execution of Acquisition Agreement, in accordance with relevant
provisions of IBC, 2016 and therefore, she claim that the
petitioner is entitled for the reliefs based upon the principle and
law laid down in Ghanshyam Mishra and Sons Pvt Ltd vs
Edelwiss Asset Reconstruction Company Ltd,(2021) 9 SCC 657.
13. In Ghanshyam Mishra (supra), the dominant object
of Insolvency and Bankruptcy Code, 2016 was discerned, to be
the revival of the Corporate Debtor, and make it a running
concern and this contemplated a preparation of resolution plan
based upon the out put of the Company of Creditors (COC).
While analyzing the scheme contained in the Code, finality is
attached to the resolution plan duly approved by the Adjudicating
Authority under sub-section (1) of Section 31, by specifying that
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the claims provided in the plan shall stand frozen and will bind
the Corporate Debtor and its employees, members, creditors
including the Central Government, any State Government or
local authority, guarantors and other stakeholders. A clear
position of law has emerged from the said decision to the effect
that on the date of the approval of the resolution plan by the
Adjudicating Authority, all such claims which are not part of the
plan shall stand extinguished and no person will be entitled to
initiate or continue any proceedings in respect to a claim which is
not part of the resolution plan.
The aforesaid decision revolves around the resolution
plan and the finality attached to it under the Code and do not
deal with the liquidation proceedings.
14. We really wonder as to how the principle in
Ghanshyam Mishra, would come to the rescue of the petitioner as
the petitioner has no legal existence as on date, as it has been
replaced by M/s Swapnil Electrical and Contractors, who has
entered into an agreement for sale of Corporate Debtor as a going
concern under liquidation and the agreement is signed between
the liquidator and Mr. Swapnil Wagchoure as a proprietor of M/s
Swapnil Electricals and Contractors.
The said agreement is accompanied with the
Schedules as regards the assets and liabilities of the Corporate
Debtor and it clearly record that all the contracts in favour of the
Corporate Debtor were terminated by the respective Government
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Department prior to initiation of CIRP, and when the liquidator
filed an appeal in the pending IBC proceedings, for revocation of
the termination of contract and permission to execute it in favour
of the Corporate Debtor, NCLT granted a stay on further action
by the respective Government Departments in any of the
concerned contract.
The Government Departments forwarded recovery
notices of more than INR 100 Crore against the terminated
contract, which was allowed to be dealt with subsequently. The
acquirer empathizing with the situation of the operational
creditor offered an amount of Rs. 25,00,000/- to the liquidator
and with respect to the materials at site, it was recorded that in
inspection, valuation, appraisal or any other process of
determining the value and /or usability of the material was not
undertaken by the liquidator/acquirer due to non-accessibility of
defence site. The tribunal directed that the liquidator with respect
to the recovery of material on site on the settlement appeal
various government departments have issued in favour of Pingle
Builders Pvt Ltd, a demand draft of Rs. 15,00,000/- .
15. In the wake of the aforesaid, we fail to appreciate the
grievance raised by the petitioner and the reliefs sought in the
petition in the wake of the aforesaid development as the
petitioner now stand acquired by the acquirer and we do not
intend to entertain the petition at its instance and grant any
relief.
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For the reasons recorded above, the petition is
dismissed.
(BHARATI DANGRE, J.) (CHIEF JUSTICE)
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