A three-member bench has upheld the order of the Mumbai-based bench of the National Company Law Tribunal (NCLT) after observing that there are pre-existing disputes over the operational debts of Rs 788.45 crore, claimed by the civic body
The National Company Law Appellate Tribunal (NCLAT) has set aside the plea of South Delhi Municipal Corporation (now Municipal Corporation of Delhi) to initiate insolvency proceedings against infrastructure operator and toll management company MEP Infrastructure Developers.
A three-member bench has upheld the order of the Mumbai-based bench of the National Company Law Tribunal (NCLT) after observing that there are pre-existing disputes over the operational debts of Rs 788.45 crore, claimed by the civic body.
The NCLAT bench headed by Chairperson Justice Ashok Bhushan said over the operational debt claimed by SDMC, litigations/dispute resolution mechanisms have been pursued by both the parties in the High Court and the internal forum of the civic body.
"In such a situation, the section 9 application, which is clearly impacted by such 'pre-existing dispute', has correctly been disallowed by the Adjudicating Authority (NCLT). Finding no error in the Impugned Order, we refuse to interfere with it. The appeal is, therefore, rejected and is disposed of accordingly," said the NCLAT.
The NCLT on October 8, 2021, rejected the civic body's plea to initiate insolvency proceedings against MEP Infrastructure Developers and this was challenged before the appellate tribunal NCLAT.
SDMC entered into an agreement called the 'Toll Tax and ECC Collection Agreement' on September 28, 2017, for the collection of Toll Tax and Environment Compensation Charge at border points from specified vehicles entering Delhi.
The civic body had submitted that as per clauses of the said Toll Tax Agreement, the MEP Infrastructure was required to remit an amount of Rs 23.12 crore on weekly basis to the SDMC.
This was the proportionate weekly remittance amount out of the total payment of Rs 1,206 crore per annum, payable for five years by MEP Infrastructure in accordance with the Toll Tax Agreement.
However, SDMC said that the contractor failed to make regular payments and deposit penalty amounts, and multiple demand notices and intimations for the outstanding pending payments and penalty amounts were issued by the corporation.
While MEP Infrastructure made certain claims upon SDMC due to reduced toll tax and ECC collection leading to loss of revenue, and these claims were referred to a High-Level Committee for examination. After examination, certain recommendations were made to the Standing Committee of SDMC for consideration.
However, SDMC contended that the loss in toll tax collection was due to mismanagement by MEP Infrastructure.
Later, MEP Infrastructure approached the High Court of Delhi after its claims were not considered, which directed to give an opportunity of hearing to it by the civic body.
After that SDMC issued a termination notice on March 16, 2020, and Notice Inviting Tender (NIT) was issued for the appointment of a new contractor. This was again challenged before High Court by MEP Infrastructure.
The civic body claimed that despite certain interim orders passed by the High Court for payment of amounts on weekly basis, MEP Infrastructure has failed to comply.
Upon failure of MEP Infrastructure to make overdue payments, the SDMC sent a demand notice on January 12, 2021, asking for a payment of Rs 788.45 crore as operational debt for Toll Tax, ECC collection amount and penal interest and moved the NCLT.
However, the NCLT declined to admit the insolvency plea filed by the civic body.