NCLT Dismisses SS Rail Works' VNR Infrastructure Liquidation Claim

Case Name: M/s.SS Rail Works Pvt. Ltd. vs M/s.VNR Infrastructure Limited (under liquidation)

Court/Authority: National Company Law Tribunal, Hyderabad Bench-II

Case Number: I.A. No.43 of 2022 in C.P.(IB).No.12/10/HDB/2017

Date of Order: 20.05.2026

Period of Dispute: Sub-contract agreement dated 20.02.2015, payments from 2017-2018

Petitioner/Applicant: M/s.SS Rail Works Pvt. Ltd., represented by its Chief Executive Officer Mr. A. Srinivasulu Reddy

Respondent: M/s.VNR Infrastructure Limited (under liquidation), represented by its Liquidator Mr. T.S.N. Raja

Regulatory Body: North East Frontier Railway Authorities (N.F. Railway)

Tribunal Members: Shri Rajeev Bhardwaj (Member Judicial), Shri Sanjay Puri (Member Technical)

The Applicant alleged that:

They executed subcontract works valued at Rs. 15,36,71,645/- for VNR Infrastructure under a principal contract with N.F. Railway
They completed more than 20% of the work and received Rs. 1,21,89,206/- in on-account bills and Rs. 25,91,710/- in PVC bills
The Respondent/Liquidator received approximately Rs. 1.45 Crores from NFR Authorities for work executed by Applicant but released only Rs. 1.21 Crores, withholding Rs. 24 lakhs
The Liquidator violated Clause 3 of the Sub-Contract Agreement by not releasing payments received from NFR Authorities
The Liquidator released payments to other subcontractors (Prakash Enterprises: Rs. 57,78,040; Datta Supply Agency: Rs. 1,60,00,000) without objection but raised issues only with Applicant
NFR Authorities were willing to release Rs. 25,91,710/- if final bills and measurements were submitted by Respondent

The Respondent contended:

The Sub-Contract Agreement was executed with S&S Enterprises (proprietary concern), not with SS Rail Works Pvt. Ltd.
The Applicant had no locus standi to prosecute the claim
Bills were not supported by proper Measurement Book extracts or Railway Authority countersignatures
Issues existed regarding PVC bills, stock reconciliation, materials, equipment, royalty, termination of contracts, and bank guarantee invocation
Connected disputes were pending before NCLAT

The Tribunal found:

VNR Infrastructure was sold as a going concern for Rs. 12,48,70,000/- through e-auction on 09.03.2020, approved by NCLT on 07.07.2021
The sale included project credentials, arbitration receivables and 89 ongoing works in progress
The Liquidator was not functus officio and continued to have residual liquidation functions including reconciliation under Section 53 IBC
The application sought mandatory directions that would require adjudication of disputed contractual terms (measurements, certification, entitlement, stock reconciliation, royalty, set-off, losses)
There was ambiguity regarding assets and contracts transferred under the going concern sale
The relief sought went beyond simple liquidation process directions and required substantive contractual adjudication

The Tribunal:

Dismissed the substantive relief seeking direction to Liquidator to accept measurements, process bills, and release payment
Directed the Liquidator to account for this claim while preparing project-wise and litigation-wise status report as per IA No.742 of 2021 directions
Directed that if any records relating to Applicant's subcontract works are available with Liquidator, they should be handed over to the present management of VNR Infrastructure
Clarified that these directions were for accounting and record transmission purposes only, not admission of claim
Left all rights and contentions of parties open

Liquidator must include this claim in residual liquidation accounting and reconciliation exercise
Liquidator must prepare comprehensive project-wise and litigation-wise status report
Liquidator must complete audited/unaudited financial statements, transaction-wise computation of liquidation costs
Liquidator must reconcile realizations and distribution, and complete statutory filings

The application was dismissed with the observation that the Applicant may pursue remedies against:

The Corporate Debtor under its present management/successful going-concern purchaser
Appropriate contractual, statutory or other competent forum including Railway Authorities
The dismissal was without prejudice to the merits of the Applicant's substantive claim