Penny Wise – Pound Foolish : Seems Way Ahead For Indraprastha Gas Limited

Strange are the ways of functioning of the Indraprastha Gas Limited (IGL). The top management of the semi-government company seems hardly caring about public money and is splurging it on hiring a battery of the most expensive lawyers of the country in a bid to save a paltry amount due to a contractor with whom the company is drawn into a long legal battle.

The case goes back to the year 2012 when Indraprastha Gas Limited has given an Annual Maintenence Contract of PNG services at 15 control rooms vide order number – IGL/ND/C&P/P 12037 to M/s Shanivi Construction Private Limited. The rate contract was valid from 1/11/2012 to 31/12/2013 and the contract value was Rs. 25 crore. Things went hunky dory between IGL and the contractor and with the passage of time IGL paid Rs. 22 Crore 40 Lakh to the contractor in this period.

Things suddenly turned ugly when the top brass of Indraprastha Gas Limited stopped the last tranche of payment of Rs. 2.40 crores, citing different reasons for non-payment. Numerous communications, meetings and request fell on deaf ears. The contractor approached, from time to time, the then Managing Director Narendra Kumar, his successor E. Ranganathan and the present MD A.K. Jana, but his pleas fell on deaf years.

Finally the contractor – M/s Shanivi Construction Private Limited, which falls under the category of MSME, filed a complaint in MSEFC which in turn referred the case for arbitration to DIAC. However, the IGL through its councils, got a stay from the Honb’le High court on the ground that the company is not an MSME and hence, it cannot approach the MSEFC.

M/s Shanivi Construction Private Limited then approached the Hon’ble NCLT where its petition was admitted and the Hon’ble NCLT, after hearing the matter, ordered Corporate Insolvency Resolution Process (CIRP) against IGL and the IGL, in a bid to save face, rushed to Hon’ble NCLAT and got a stay on CIRP Proceedings. While the stay continues, the next date of hearing is November 26, 2021.

Advocate Ajay Paul, counsel for M/s Shanivi Construction Private Limited told www.bharatvigilante.com “The case by Shanivi Construction Pvt Ltd falls in the category of cases covered by section 8 of the Insolvency and Bankrupcy Code as it is an Operational Creditor. The National Company Law Tribunal admitted the application of Shanivi only when it found that the Shanivi fullfilled all the requirements under section 8 of the Act. The first requirement is that there should be an existing debt which is more than ten days old. Either, there should be delivery of the Invoice upon the Corporate Debtor or there is a service of a Demand Notice to show that there is a debt upon the Corporate Debtor. Second point which requires consideration of NCLT is that whether any dispute has been raised by corporate Debtor within 10 days from the date of receipt of Invoice or demand notice. In the case against Corporate Debtor IGL, the invoices stood raised way back in years 2013-2014 and the IGL had not raised any dispute within 10 days from the receipt of the invoices. The adjudicating authority has to see that whether the default has occurred after receipt of Invoice by Corporate Debtor or after receipt of a Demand Notice. The point of trigger for filing application is a default of 10 days either upon receipt of. Invoice or upon delivery of Demand Notice whichever is earlier. In case against IGL the Delivery of Invoice is to be taken into consideration as it happened in year 2013-14. After receiving Invoices, IGL raised no dispute within 10 days of receipt of such invoices. Hence application of Shanivi has been rightly accepted by the NCLT. The Demand Notice does not require consideration in the present case against IGL as the said Notice was issued in 2019 by Shanivi even though there was no need of issuing demand Notice as the cause of action for filing an application under the act had already accrued upon default of 10 days from the date of receipt of Invoice by IGL”.

Industry sources say that a caucus is working within the Indraprastha Gas Limited for a long time now and from the previous to the present Managing Director, does not have the guts to go against and defy this group of officers. They say it is highly likely that when it came to the final payment of M/s Shanivi Construction Private Limited, the latter was asked by the same caucus to shell out a heavy amount to get the payment released and when he refused to do so, the payment was blocked on some flimsy pretext or the other.

Here, there are some pertinent questions which the top management of Indraprastha Gas Limited needs to answer –

a) The performance of the contractor was all good for 18 months of the contract after which IGL made 90 percent of his payment without any objection or delay but what went wrong in the last few months?

b) If the contractor was really at fault, why did the IGL release his Bank Guarantee (BG) rather than holding and encashing the same?

c) If the contractor was at fault, why was he not blacklisted and surprisingly, when the next work order came, his company was put on “Holiday” mode?

With this “strange act” of the IGL, the payment of about Rs 2.40 crores has now swelled to Rs. 12 crores based on the MSME ACT which allows interest 3 times the bank rate compounded monthly.

Veterans of the industry laugh at this situation of the IGL. They say that a company of this size and repute should have long back cleared the matter with the contractor amicably rather than making an ego issue out of it and getting embarassed in NCLT, NCLAT and SEBI, as the IGL had to inform the SEBI that the Hon’ble NCLT had ordered CIRP against it and that the IGL has obtained a stay on this matter from the Hon’ble NCLAT. They also point out that against a small pending payment of Rs. 2.40 crore, the IGL would have for sure spent over ten times of this amount in paying off the fees of the battery of top lawyers they hired for this case.

On one hand, the Modi Government is trying to promote MSME to the fullest, with active participation from the Ministry of Finance, MSME Ministry etc, but this is a typical flip side story of what the government is promoting. MSMEs are being harassed to an extent of finishing off their businesses and forcing them to run from pillar to post, to this court to another, that too for their own hard earned money which has been blocked for reasons still unknown to them.

To Be Continued….