2020 (3) TMI 1216 - AT - Insolvency and Bankruptcy

Condonation of delay in filing appeal - the appeal has been filed with a delay of 15 days beyond the period as enunciated under section 61(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is to be borne in mind that section 5(20) of the I and B Code defined operational creditor means a person to whom the operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Section 5(21) of the I and B Code speaks of operational debt , meaning a claim in respect of the provision or goods or service including employment or debt in respect of payment or dues assigning in law for the time being in force and payable to the Central Government, in State Government or in Local Authority. Sections 5, 6 of the I and B Code defines that dispute which includes a suit or arbitration proceedings relating to (a) the existence of amount of debt (b) the quality of goods or services or (c) the breach of a representation or warranty. In the present case, the respondent through e-mail dated March 23, 2018 had intimated the appellant/ operational creditor that the payments were not received and that the same could not be received from SRS in as much as the customer was not reachable and in bad shape and that they had not received any payment from the customer till date. When the respondent had disputed the debt and the same being not payable by it, because of the reason that the purchase order and commercial proposal was executed between the operational creditor being a reseller of Microsoft programme and SRS group of companies and further as a collecting agent, the respondent in the considered opinion of this Tribunal cannot be held liable for the outstanding amount. In the present case, the claim of the appellant as an operational creditor does not fit within the purview of the definition of the term of operational debt under section 5(21) of the I and B Code on account of the fact that it was neither against any goods purchased by the respondent nor against any services availed by it. In the absence of any material to fasten the liability on the respondent by virtue of the terms of the purchase order, which was not addressed to the respondent the appellant/applicant cannot be characterised as an operational creditor as per definition of section 5(20) of the I and B Code. Taking into account the vital fact that the respondent in its reply notice dated May 17, 2018 had disputed the claim of the appellant and its liability to pay, etc., by raising serious bona fide factual pre-existing disputes, which requires an in depth examination/investigation and the said disputes which cannot be gone into any summary proceedings under the I and B Code, it is held by this Tribunal that the application filed by the appellant as an applicant before the learned Adjudicating Authority is not maintainable in the eye of law - appeal dismissed.

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Establishment of operational debt.
3. Principal-agent relationship and liability.
4. Admissibility of the application under Section 9 of the Insolvency and Bankruptcy Code (IBC).

Detailed Analysis:

1. Delay in Filing the Appeal:
The appellant filed the Company Appeal (AT) Insolvency No. 780 of 2019 with a delay of 15 days beyond the period specified under Section 61(2) of the Insolvency and Bankruptcy Code, 2016. The delay was attributed to the late collection of the impugned order due to summer vacation and bereavement in the family of the appellant's counsel. The Tribunal, taking a lenient and liberal view, allowed the interlocutory application for condonation of delay, emphasizing substantial justice.

2. Establishment of Operational Debt:
The appellant, an authorized reseller of Microsoft, claimed that the respondent had accepted liability for payments by receiving invoices and making partial payments. The invoices for the years 2016-2018 were raised on the respondent based on an agreement and understanding among the parties. However, the Adjudicating Authority observed that there was no supportive evidence reflecting the liability of the corporate debtor as per the terms of the alleged purchase order. The Tribunal concluded that there was no establishment of "operational debt" against the corporate debtor, which falls within the definition of "dispute" under Section 5(6) of the IBC.

3. Principal-Agent Relationship and Liability:
The respondent argued that it acted as a "disclosed agent" for the SRS group of companies, with no direct agreement or liability towards the appellant. The respondent contended that the arrangement was for one year and any subsequent invoices were not its responsibility. The Tribunal noted that the appellant did not show SRS as a necessary party to prove the nexus of debt payable. The Tribunal found that the respondent, as a collecting agent, could not be held liable for the outstanding amount.

4. Admissibility of the Application under Section 9 of the IBC:
The Tribunal referred to the Supreme Court's decision in Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd., which outlined the conditions for admitting an application under Section 9 of the IBC. The Tribunal emphasized that the claim did not fit within the definition of "operational debt" under Section 5(21) of the IBC, as it was neither against any goods purchased nor any services availed by the respondent. The Tribunal held that the application was not maintainable, as the proceedings under the IBC are not adversarial litigation and cannot be used as a substitute for debt enforcement procedures.

Conclusion:
The Tribunal dismissed the appeal, stating that the appellant's claim did not fall within the purview of "operational debt" under the IBC. The Tribunal also noted that the respondent had raised serious bona fide factual disputes that required in-depth examination, which could not be addressed in summary proceedings under the IBC. The dismissal of the application does not preclude the appellant from seeking appropriate remedies before a competent forum.