Ahluwalia Contracts (India) Ltd. Vs Logix Infratech Pvt. Ltd. (NCLAT Delhi)
Summary: NCLAT Delhi allowed the appeal filed by Ahluwalia Contracts (India) Ltd. and set aside the Adjudicating Authority’s order dated 03.06.2022 rejecting its application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Appellant had been awarded contracts by the Corporate Debtor, Logix Infratech Pvt. Ltd., for construction, civil and structural works relating to the “Logix Group Blossom Green” Project, including further balance work awarded on 11.07.2014.
After execution of the works, a final bill certificate was prepared and duly signed by both parties, under which Rs. 11 crores was payable to the Operational Creditor. Thereafter, the parties entered into a Memorandum of Understanding/settlement agreement dated 30.09.2019 prescribing the manner in which the Rs. 11 crores was to be paid. On failure to receive payment, the Operational Creditor filed a Section 9 application claiming Rs. 7,72,00,000/-. The Adjudicating Authority rejected the application on the reasoning that a Section 9 proceeding was not maintainable for breach of a settlement agreement because dues arising from such settlement might not constitute “operational debt.”
NCLAT held that this approach failed to consider the true nature of the underlying transaction. The dues had arisen from construction and structural work performed by the Appellant and therefore constituted operational debt. Crucially, the subsequent Memorandum of Understanding did not replace the underlying transaction or transform the nature of the debt; it merely provided the mode and manner for payment of an amount already crystallised under the final bill certificate.
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