Retention Money is an Operational Debt & period of limitation start on completion of the Defect Liability Period – Aashish Mohan Gupta vs Hind Inn and Hotels Ltd. – NCLAT
February 14, 2020
NCLAT held that the Operational Creditor had awarded the work and the retention money cannot be treated as separate money. The retention money is a part of main bill which was retained by the Corporate Debtor as per the terms of the Work Order and the same shall be released after completion of the work and issuance of the Completion Certificate. Further the Defect Liability Period completed on 01.04.2015 and thereafter the Operational Creditor had requested the Corporate Debtor to release money. We are of the view that it is not barred by limitation. Learned Adjudicating Authority rightly observed and held that the debt fell due from 27.07.2015 when the mail was sent by Ginjar Hotel of the Corporate Debtor stating that the Operational Creditor had attended to all the concerns and rectified the same. The other submission of the learned Counsel for the Appellant that debt does not fall within the definition of Section 5(21) of IBC is concerned, the Operational Creditor had rendered services and there is no dispute with regard to the said services and we cannot accept that the said claims will not fall under the definition of Operational Debt. For the Beneficial reference Section 5(21) of IBC is reproduced. We are of the view that the Corporate Debtor is due and payable retention money which is part of the main Bill thereby the Operational Creditor is well within the definition of Section 5(20) IBC.