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In the Matter of: M/s. Asian Wind Energy Private Limited v/s M/s. Santha Spinning Mills Private Limited

    CP. No. 1397/IB of 2018

    Decided On, 14 March 2019

    At, National Company Law Tribunal Chennai


    For the Operational Creditor: Shobhana Krishnan, Advocate. For the Corporate Debtor: T.K. Bhaskar, Adithya Reddy, Advocates.

Judgment Text

B.S.V. Prakash Kumar, Judicial Member.

1. It is a Company Petition filed u/s 9 of the Insolvency & Bankruptcy, 2016 (“the Code”), the story line in this case is the Petitioner has come before this Bench stating that since the Corporate Debtor (the debtor) has not utilized the power as stated in the letter dated 23.02.2015, the Corporate Insolvency Resolution Process shall be initiated against the debtor.

2. In the backdrop of the facts available on record, it is evident that this Petitioner and the Debtor entered into Power Purchase Agreement (PPA) dated 24.09.2012 for supply of 20,00;000 units of power per year by the Petitioner to the Corporate Debtor. In this PPA, it has also been mentioned that initial thermal Power Purchase Agreement was for a period of five years from the Commencement of Date (COD) of the project. This PPA commenced on 24.09.2012 meaning thereby it would come to end on 23.09.2017. In this PPA, it is very clear in Clause 6.1 that “the Power Producer (Petitioner) shall endeavour to supply the contracted quantity to the User Member (Corporate Debtor) as per Clause 4.2 and total generation of power is estimated approximately 20,00,000 units per year”.

3. The debtor has also taken us to Clause 6.5 stating that “the parties shall have the right to mutually agree on any additional supply of power to the User Member (Corporate Debtor) over and above the contracted quantity in accordance with Applicable Laws”.

4. Besides this, the Corporate Debtor has simultaneously taken us to another Clause 20.8 stating that “if at all any amendment is to be made to this PPA dated 24.09.2012; it has to be amended only with the written consent of both the parties”.

5. As to the payment of monthly bills, the Corporate Debtor has taken us to other Clauses 12.1.1 and 12.1.2 stating that “the Power Producer (Petitioner) shall raise bill on monthly basis for the quantity of energy found adjusted at User Member (Corporate Debtor) and current consumption charges bill for each month / billing period and the Power Producer (Petitioner) shall send this bill to the designated office of the User Member”.

6. Since this Petitioner has raised this claim basing on a letter sent by the Petitioner to the Debtor on 23.02.2015, we have ascertained that this Petitioner sent a letter dated 23.02.2015 informing the power purchase price changed to 26.54 per unit upto 20,00,000 units.

7. In addition to it, the Petitioner has mentioned the subscription of share value of Rs.40,000/- (4400 shares of Rs.10 each) with effect from 01.04.2015. As per the PPA, Clauses 4.2 and 4.3 and all other clauses have been changed. It has been further noted in this letter about generation/distribution of power, percentage will be increased from 4.81% to 15.38% and the supply of 20,00,000 units of the total capacity has been changed to 60,00,000 units with increase of 40,00.000 units.

8. If this letter is set against the PPA dated 24.09.2012, as per the written understanding between the parties, it shall be amended in writing with the consent of the parties for change of supply of power or any other information or material effected in respect to the transaction between the Petitioner and the Debtor. Here the point to be remembered is this Petitioner has claimed for units not consumed solely on the strength of the letter dated 23.02.2015 unilaterally written by the petitioner to the debtor communicating limit has been increased to 60,00,000 units.

9. As to when this Bench has asked this Petitioner as to whether any consent was given by the Debtor for increasing supply to 60,00,000 units, this Petitioner has failed to show any material disclosing the Debtor agreeing for supply over and above 20,00,000 units as envisaged in the letter dated 23.02.2015. When no such intimation of extending the supply limit to 60,00,000 has been accepted, or no agreement has been entered into between the parties, the letter dated 23.02.2015 cannot be assumed as an agreement between the parties entitling this Petitioner to make a demand for payment to the units that have not been utilized by the Corporate Debtor. The twist here is in case capacity limit is increased then if the consumer has failed to utilize it to its full capacity, then the consumer would be under obligation to pay even to unbanked units within the limit, therefore one sided letter cannot create an obligation, more so to the unbanked units.

10. To fortify the argument of the Debtor, the counsel has taken us to other material showing that since this Petitioner was not in a position to supply the energy as much as required by the Debtor, it has intimated to this Petitioner on 09.03.2017 stating that the Debtor intended to terminate the contract between the Petitioner and the Debtor on completion of the term of five years reflected in the PPA dated 24.09.2012. The Debtor Counsel has disclosed that as to the account in between the creditor and debtor, it is showing as NIL balance as on 10.10.2017. Of course, it is not even the case of the Petitioner that the Debtor has not paid towards the power already consumed by it.

11. Since there is no definite agreement or at least any indication reflecting the Debtor agreeing to avail 60,00,000 units per year, this Bench, merely by seeing a letter dated 23.02.2015 and the payment advice dated 19.10.2017 with payment back dated bill i.e., dated 04.09.2017,cannot assume that that this debtor is liable to pay to the power that has not been consumed by it.

12. In furtherance, the Debtor counsel has further adverted stating that since this PPA in fact came to end on 23.09.2017, the Petitioner being fully aware that the Debtor would not utilize the services of the Petitioner any more, this Petitioner has set up this case by sending this letter on 19.10.2017 by generating payment advice with ante dated bill i.e., 04.09.2017. By the time this letter sent by the petitioner, the term, of five years as stated in the PPA was already over.

13. The Corporate Debtor counsel has also stated that this Petitioner has failed to place any material showing that the Debtor was required to pay towards unutilized banked unit charges at any point of time before the letter dated 19.10.2017. Therefore merely by saying through a letter from the side of the petitioner, it cannot be subscribed that the debtor has agreed to the offer made by this Petitioner on 23.02.2015, therefore this payment advice sent to the Corporate Debtor on 19.10.2017 will not rise any obligation upon the debtor to honour the payment advice raised by the Petitioner.

14. While dictating this order in the open court, this Petitioner counsel has brought our attention to Clause 6.2 which is as below;

“6.2 The User Member shall plan its off take so as to ensure that it consumes power as per obligation, on cumulative basis, at the end of every year at least 80% of the Power contracted during that year, which works out to 16.00 Lacs units per year in case of full capacity genera

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tion of power producer”. 15. On looking at Clause 6.2, we are of the view that this Clause will kick into action only when there is an agreement between the parties for consumption of power. As long as agreement is not entered into between the parties for consuming 60,00,000 units, this clause will not have any relevance to adjudicate this case, thereby we hereby hold that this clause will not have any bearing on the claim raised by the Petitioner as there is no agreement between the parties obligating the Corporate Debtor to consume 60,00,000 units per year. 16. Henceforth, looking at the documents and contentions of either side, we have not found existence of debt as claimed by the petitioner, therefore this Company Petition is hereby dismissed as misconceived.