2020 (10) TMI 545 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - This Bench is of the view that 'referral fee' though not agreed to be paid under any agreement between the parties, was being considered to be paid and several disputes have been raised by the Corporate Debtor before the issuance of section 8 demand notice vide above said emails. It can be said that there is a pre-existing dispute regarding the quantum of 'referral fee' and a plausible dispute has been raised by the Corporate Debtor before the issuance of demand notice and therefore there is no crystallization of debt due and payable by the Corporate Debtor in the absence of any agreed terms - Petition dismissed.

Summary

Issues:
1. Petition seeking to initiate Corporate Insolvency Resolution Process against Corporate Debtor for default in payment.
2. Claim of consultancy services and project referral fees.
3. Dispute over payment and existence of prior disputes raised by Corporate Debtor.
4. Legal interpretation of 'referral fees' and contractual obligations.
5. Analysis of emails exchanged between parties and pre-existing disputes.
6. Application of Supreme Court judgment on the existence of a genuine dispute.

Analysis:
1. The petition was filed by the Petitioner seeking to trigger the Corporate Insolvency Resolution Process against the Corporate Debtor due to an alleged default in payment. The Petitioner claimed that the Corporate Debtor failed to make a payment of a specific amount along with interest, invoking relevant sections of the Insolvency and Bankruptcy Code.

2. The Petitioner asserted that they provided consultancy services and claimed project referral fees through various invoices totaling a specific amount. The Petitioner also highlighted the leads provided to the Corporate Debtor as part of their services, including details of the projects referred.

3. The Corporate Debtor disputed the claim, contending that the Petitioner's claim for 'referral fees' did not constitute an 'operational debt' as defined in the Code. The Corporate Debtor raised objections regarding the invoices submitted by the Petitioner and emphasized the absence of a contractual agreement for payment of such fees.

4. The legal interpretation of 'referral fees' and the contractual obligations between the parties were crucial in determining the validity of the claim. The Corporate Debtor made offers for partial payment, which the Petitioner refused, leading to a disagreement over the settlement terms.

5. The emails exchanged between the parties showcased a history of disputes and disagreements regarding the payment of 'referral fees.' The Corporate Debtor consistently raised objections and conditions regarding the payment, indicating a lack of mutual agreement on the terms of payment.

6. The Tribunal referred to a Supreme Court judgment emphasizing the need to distinguish genuine disputes from baseless claims. Considering the pre-existing disputes and the absence of a clear agreement on the payment terms, the Tribunal concluded that there was a plausible dispute raised by the Corporate Debtor before the demand notice was issued, leading to the dismissal of the petition.

In conclusion, the Tribunal dismissed the petition, highlighting the existence of a genuine dispute over the 'referral fees' claimed by the Petitioner and the lack of crystallization of the debt due to the absence of agreed terms between the parties.