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TMI Blog2019 (7) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... mand notice and, it is filed for with sole intension to recover it. Therefore, it is not fit case to admit to initiate CIRP etc. and thus it is liable to be dismissed. Appeal dismissed. - MR RAJESHWARA RAO VITTANALA, MEMBER (JUDICIAL) AND MR ASHOK KUMAR MISHRA, MEMBER (TECHNICAL) For The Petitioner : Ms. Maria Joseph For The Respondent : Shri Abheek Saha ORDER Per : Rajeswara Rao Vittanala, Member (J) 1. C.P.(IB)No.l43/BB/2017 is filed by Ms. Rohita (Petitioner/Operational Creditor) u/s 9 of IBC, 2016, U/R 6 of I B (AAA) Rules, 2016, by inter alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of M/s. All That Hype Media Private Limited (Respondent/Corporate Debtor), on the ground that the Corporate Debtor committed a default of amount of ₹ 7,95,403/- (Rupees Seven Lakh Ninety Five Thousand Four Hundred and Three Only). 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows: 1) Ms. Rohita (hereinafter referred as Petitioner/Operational Creditor), has been in the digital marketing industry for 7 years and has won awards for work done by her. She has worked with a number of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor received mails from the Directors of the Company showing that the process to appoint her as a Director of the Company had begun and the paperwork for the same was being undertaken. Trusting the Corporate Debtor, the Operational Creditor did not press for completion of the formalities. 6) In or around in the month of June 2016, Ms. RuhiFazila Shaik, the Director of the Corporate Debtor, citing personal reasons, informed the Operational Creditor that she intended to shut down the Company and wanted to focus on her blog. The Operational Creditor reluctantly agreed to the same as the Operational Creditor was left with no other alternative. The Operational Creditor was also promised severance pay of three months salary apart from the share of profits due as settlement of all accounts. 7) The Corporate Debtor unilaterally decided July 31st, 2016 would be the Operational Creditor s last day at the Company. The Operational Creditor was compelled to accept the same as the Operational Creditor was left with no alternative. The Operational Creditor requested that all accounts be drawn up in order to ascertain the exact position of the Company and for calculation of all amounts that we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services. They have denied each and every statement or contention which is inconsistent with or contradictory to whatsoever is stated in this written statement, and no statement, or contention, not specifically denied by the Corporate Debtor, shall be deemed to have been admitted, merely for want of a specific traverse. 2) The Legal Notice received from the Operational Creditor, which though not a notice under Section 8 of the I B Code, 2016, it was immediately replied on 24th March, 2017 by disputing her contentions and claims. 3) The Corporate Debtor was incorporated with the aim of formalizing and expanding the activities previously undertaken solely by Mrs. Ruhi under the online platform Republic of Chic , which included content creation and content distribution services. While Republic of Chic already provided content services for clients like Tanishq, Central etc. The Company was also set up to provide content services for brands beyond those serviced by Republic of Chic . Thus the aim of setting up the Company was to separate content distribution platform and also to formalize content services under the Company, which Republic of Chic was already providing. 4) The Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law for illegal gains and to harass the Corporate Debtor and their Directors. 8) The Operational Creditor invested her time in the Company at her own will and her engagement or the terms thereof (including grant of 20% ownership of a fixed salary) as alleged by the Operational Creditor was never formalized under any agreement between the Operational Creditor and the Corporate Debtor. It is alleged that the Corporate Debtor also suffered multiple losses and damages due to actions of the Operational Creditor. Apart from failing to set up a successful Influencer marketing wing for the Company as was promised by her, she also started soliciting clients and adding them under her own name or redirecting business to other entities creating further losses and acting against the interest of the Corporate debtor herein. The Corporate Debtor holds substantial proof that the Operational Creditor during her employment with Corporate Debtor and thereafter worked for clients of Corporate Debtor and thus creating losses for the Corporate Debtor Company. 9) Since Operational Creditor being personally known to Mrs. Ruhi, she did not take any actions against her or claimed damages and allowed he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submitted that the Petitioner has generated tremendous revenue and became and profit-making enterprises basing on the assurance has been given. The E-mail sent by the Respondent shows that the Company was processing to appoint her as a Director. The services of Petitioner was terminated on 31st July, 2016. Therefore, as per oral agreement, the Respondent/Corporate Debtor is liable to pay the Operational Creditor a sum ₹ 7,95,403/- (Rupees Seven Lakh Ninety Five Thousand Four Hundred and Three Only), being 50% of the profits of the Company of total profits of the Company were ascertained at ₹ 15,90,806/-(Rupees Fifteen Lakh Ninety Thousand Eight Hundred and Six Only). The Respondent also agreed that the certain amount was due and payable to the Petitioner. Since the application is filed in accordance with law and debt and default is not seriously in dispute, the Learned Counsel urged the Tribunal to admit the case by initiating CIRP with consequential orders. 6. Shri Abheek Saha, learned Counsel for Respondent, while reiterating various averments made in the Company Petition, has further submitted that the Respondent has raised substantial dispute even before issui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of facts and rival claims cannot be adjudicated in a summary proceedings like proceedings under the Code. 8. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. (2018) 1 SCC 353 has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. In another latest judgment rendered in Transmission Corpn. of A.P. Ltd. v. Equipment Conductors and Cables Ltd. [C.A. No. 9597 of 2018, dated 23-10-2018] Supreme Court of India, it is, inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of judgment, it is stated that Adjudicating Authority, while examining an application filed under Section 9 of Code, will have to determine: i. Whether there is an operational debt as defined exceeding ₹ 1 Lakh? ii. Whether documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? iii. Whether there is existence of dispute b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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