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Shruti Singh   20 April 2020

PARTY NOT AVAILABLE - NEW CONTRACT TO BE ENTERED BETWEEN OTHER PARTY NOT AVAILABLE - NEW CONTRACT TO BE ENTERED BETWEEN OTHER TWO PARTIES

A sub-contractor entered into contract with a contractor for project of Main party (company). There have been 2 contracts between the parties - contractor & sub- contractor and contractor & main party, though it was mentioned in contract that the work order is for said main party.If the contractor becomes bankrupt and unavailable and the Main party wants to continue the project with sub-contractor, if they want to enter into a new contract between them, How can it be done so that in future contractor cannot put legal obligations on the parties? What legal provisions will be applicable?


 8 Replies

Dr J C Vashista (Lawyer)     21 April 2020

You have stated 2 different scenario (s) wherein (1) Contract between company and contractor and (2) contractor and sub-contractor. In the case the contactor is stated to have been declared as bankrupt and not available both the contracts comes to an end.

Subsequently you have stated that the (earlier) sub-contractor makes an agreement with company to continue with the project, it would be fresh contract..

Hemant Agarwal (ha21@rediffmail.com Mumbai : 9820174108)     21 April 2020

Originally posted by : Shruti Singh
A sub-contractor entered into contract with a contractor for project of Main party (company). There have been 2 contracts between the parties - contractor & sub- contractor and contractor & main party, though it was mentioned in contract that the work order is for said main party.If the contractor becomes bankrupt and unavailable and the Main party wants to continue the project with sub-contractor, if they want to enter into a new contract between them, How can it be done so that in future contractor cannot put legal obligations on the parties? What legal provisions will be applicable?

 

1. IF contractor is declared "Bankrupt", THEN contractor derives no legal right to contest defaults or continuity of contract between any of the related parties.  Herein, the Company, becomes free of all liabilities towards the bankrupt contractor and may deal "afresh" in all further manners, with anybody Co. wishes to, without any further legal references to the bankrupt contractor. 

Keep Smiling .... Hemant Agarwal
VISIT: www.chshelpforum.com

Shruti Singh   21 April 2020

Thank you so much for your response.
Just to be precise, not sure about being "declared" bankrupt as the contractor is able to be tracked or contact. So in that scenario what should be done?

P. Venu (Advocate)     21 April 2020

Is this a query or a riddle?

Hemant Agarwal (ha21@rediffmail.com Mumbai : 9820174108)     21 April 2020

Originally posted by : Shruti Singh
Thank you so much for your response.Just to be precise, not sure about being "declared" bankrupt as the contractor is able to be tracked or contact. So in that scenario what should be done?

1. A person cannot declare him to be "bankrupt". He has to file Court proceedings and be declared as "bankrupt", to absolve himself off most legal disputes.

Keep Smiling .... Hemant Agarwal
VISIT: www.chshelpforum.com

 

 

SACHIN AGARWAL (ADVOCATE)     21 April 2020

Since after declaration of Bankrupt, the main contractor is left with legal rights at all. The Sub-Contractor may enter into a fresh contract with the Company.

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     21 April 2020

The contractor cannot absolve from his liabilities even after bankruptsy, however, the repayment of his debts shall be as per Court order in share. Once this process completes, the main company has every right to enter into contract with any person or party which it has done with the sub-contractor as on day but the same shall come into force in case the eventuality of the bankruptsy occurs.

Dr J C Vashista (Lawyer)     22 April 2020

The contractor or any other individual has to move to competent court to declare himself as "Bankrupt" explaining full details of assets and liabilities.

During the bankrupcy proceeding the Court shall disburse all assets of the petitioner among debtors (including claim of the company involved in the instant case) for secured or unsecured liability, preferential claim on pro-rata basis as per law. Thereafter the petitioner shall be left with "NO" assets.


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