# In the matter of Dharti Dredging and Infrastructure Ltd.

> NCLT judgment dated 2023-08-11. Citation: TCN-2023-NCLT-02060. The case involves a dispute over the termination of a works contract awarded to Dharti Dredging…

- **Court:** NCLT
- **Order date:** 11 Aug 2023
- **Citation:** TCN-2023-NCLT-02060
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/dharti-dredging-and-infrastructure-ltd-b7c82f2d

## Summary

### Background

The case involves a dispute over the termination of a works contract awarded to Dharti Dredging and Infrastructure Ltd (Corporate Debtor) by the Government of Kerala, Irrigation Department, for desilting of Mangalam Reservoir. The contract was subsequently sub-contracted to Mantovani Di Dharti Private Limited (MDPL). Delays occurred due to various reasons, including heavy rainfall, COVID-19 restrictions, and non-issuance of e-passes for the sale of dredged materials. The Corporate Debtor faced financial difficulties, leading to the initiation of Corporate Insolvency Resolution Process (CIRP). During the CIRP, the Respondents (Government of Kerala, Irrigation Department) decided to terminate the contract, citing delays and non-performance. The Resolution Professional

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## Facts

Dharti Dredging and Infrastructure Ltd (Corporate Debtor) was awarded a works contract by the Government of Kerala, Irrigation Department, for desilting of Mangalam Reservoir, agreement dated 09.10.2020. The contract was sub-contracted to Mantovani Di Dharti Private Limited (MDPL) on 01.11.2020. Delays in execution occurred due to heavy rainfall, COVID-19 restrictions, and non-issuance of e-passes for the sale of dredged materials. The Corporate Debtor faced financial difficulties, leading to the initiation of CIRP on 05.04.2022. The Respondents (Government of Kerala, Irrigation Department) decided to terminate the contract in a meeting held on 30.05.2022, communicated via letter dated 02.07.2022, citing delays and non-performance. The Resolution Professional (RP)

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## Issues and analysis

### Issue 1: Whether the decision of the Empowered Committee dated 30.05.2022 terminating the agreement bearing …

**Ratio:** The residuary jurisdiction of the NCLT cannot be invoked if the termination of a contract

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**Reasoning:** The NCLT reasoned that the communication from the Resolution Professional regarding the

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**Interpretation:** Section 14 of the IBC imposes a moratorium to ensure that the Corporate Debtor

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**Application:** In this case, the NCLT found that the termination was primarily based on the

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## Parties

- **Judges:** N. Venkata…; SH. CHARAN…
- **Appellants:** G. Madhusud…
- **Respondents:** Dharti Dredging…; Office of the…

## Timeline

- **2020-10-09 — Works Contract…**: Government of Kerala, Irrigation Department, awarded a works contract to Dharti Dredging…
- **2020-11-01 — Sub-Contract A…**: Dharti Dredging and Infrastructure Ltd sub-contracted the works contract to Mantovani Di…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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