9911796707
TMI Blog2019 (11) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... um declared. - C.P. (IB) NO. 260/BB/2019 - - - Dated:- 24-10-2019 - RAJESWARA RAO VITTANALA, JUDICIAL MEMBER For the Petitioner : Ajit Anekar and Ms. Urvi Vaidya. For the Respondent : Dhyan Chinnappa, Sr. Counsel, Chinmay. J. Mirji and Ms. Charitha. V. ORDER Per: Rajeswara Rao Vittanala, Member (J) 1. The Company Petition bearing is filed by M/ s. CloudWalker Streaming Technologies Pvt. Ltd ('Petitioner/ Operational Creditor') U/ s 9 of the IBC, 2016 R/ w 6 of the (Application to Adjudicating Authority) Rules, 2016 by inter alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of M/S. Flipkart India Private Limited ('Respondent/ Corporate Debtor) on the ground that it has committed default for an amount of -(Rupees Twenty Six Crore and Ninety Five Lakhs Only). 2. Brief facts of the case, as mentioned in the instant Company Petition, which are relevant to the issue in question as follows: (1) M/S. CloudWalker Streaming Technologies Private Limited ('Petitioner/ Operational Creditor) is a Private Limited Company, incorporated under the Companies Act, 1956 and it is engaged in the business of import a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor. The Operational creditor facing huge losses and a liquidity crunch agreed to offer the said discount on the condition that the Corporate Debtor forthwith take delivery of the remaining LED TVs purchased by him and make payment for the same. The Operational Creditor has paid excess customs and duties beyond the NLC since the LED TVs were still in the customs warehouse, as the Corporate Debtor delayed in providing a delivery schedule and sent several emails, demand for payment for the aforesaid LED TVs procured and imported for the Corporate Debtor from 1 Ith October, 2017 to 1st December, 2017, were raised by the Operational Creditor pursuant to import of the LED TVs based on the Purchase Order Emails but to no avail. As of March, 2018, the Corporate Debtor had failed to collect more than 70% of the stock as ordered by them. Pursuant to the purchases as on 8th December, 2017, the Corporate Debtor was behind payments to the tune of₹ 55.06 Crores. (5) It is stated that the Operational Creditor facing heavy financial losses issued a notice and invoked the Arbitration Clause of the Supply Agreement. The Corporate Debtor on receipt of the Arbitration Notice threate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor Company is commercially insolvent and is unable to pay its debts. The Corporate Debtor Company is not economically viable and poses a threat to commercially morality. In such circumstances, it is prayed that the Adjudicating Authority may be pleased to permit the Operational Creditor to proceed against the Corporate Debtor Company in Insolvency Resolution proceedings. 3. The Respondent/ Corporate Debtor has opposed the instant Company Petition, by way of filing Statement of Objections dated 25.09.2019, by inter alia contending as follows: (1) The Company Petition is not maintainable either in law or on facts and it is liable to be rejected with exemplary costs. (2) It is submitted that the Respondent through its hard work and dedication, has established its goodwill in the Indian Market and has maintained such name by sheer dint of its business plans and professionalism, the Respondent maintains amiable relationship with its customers, vendors and service providers. The Respondent is a profit making Company with sufficient financial strength and is actively doing business in the wholesale B2B (Business to Business) sales. There is no admitted debt or liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is further submitted that, the Clause 2(g) of the Supply Agreement states as follows: 2. Ordering, Planning and Delivery Schedule (g) Unless othenvise agreed by the Flipkart in writing, deliveries to the place of destination until their formal acceptance by Flipkart shall be made at the risk and costs of the Supplier, including all expenses of packaging, storage and transportation of products i.e. deliveries shall be from ramp duty and tax paid. Further, supplier shall provide for sufficient shipment insurance at its costs untit due delivery. To the extent not otherwise agreed in writing, the Products shall be delivered at the unloading ramp of Flipkart. Flipkart shall have no obligation to pay for or return packing cases, skids, drums or other articles used for packing the Products whether or not reusable. If the Products are to be delivered in installments the Agreement shall be treated as a single contract and not severable . As detailed above Respondent is not obligated to indemnify the Petitioner against any risks or costs incurred by the Applicant. Further, it is agreed that the Petitioner shall bear all the expenses of packaging, storage and transportation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Civil Suit before the appropriate Court of law and that the IBC cannot be used as the tool to abuse and threaten bona fide Companies such as the Respondent. The very initiation of the present petition by the Petitioner is with the sole motive of making illegal gains by suppressing material facts and playing fraud upon this Tribunal. (6) It is submitted that the Respondent has without prejudice to its rights and contentions chosen to not initiate any legal action against the Petitioner due to the deficiency in service and has chosen to withhold payments that was not due as a result of such deficiency in services. (7) It is stated that, upon delivery of the Products, the Respondent reserves the right to verify and determine whether the products supplied by the Petitioner are in accordance with the PO and the Invoice raised by the Petitioner. In the event, the Respondent determines that the Products received are (i) in a damaged condition, (ii) not in accordance with the Supply Agreement, the Purchase order and/or in the Invoice raised by the Petitioner, and/or (iii) defective or deficient, it shall notify the same to the Petitioner. If there is a difference in the number of Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Creditor (2) The Balance sheet produced at Annexure XI clearly shows that the Corporate Debtor is incurring huge losses and thus statement that it is profit making Company is ex facie false to their own knowledge. Though the Petitioner is not denying that it has received some amounts from the Corporate Debtor for supply of LED TVs, the instant petition is filed for the defaults arise out of non-payment of balance dues, which the Corporate Debtor admitted to have withheld without any justifiable reason. (3) The Corporate Debtor at no point Of time denied about the quantities ordered by them or disputing the invoices raised by the Operational Creditor. As against the admitted amount of Rs. invoices, the Corporate Debtor admitted to have paid only 85,57,00,664. Therefore, even as per own admission of Corporate Debtor, 18,04,99,336 is still outstanding from and out of total invoice amount. Therefore, the Petition deserves to be admitted on this sole ground. (4) The Corporate Debtor though in receipt of reply failed reply to it and pay outstanding amount and did not raise any pre- existing dispute as prescribed under the Code in order to avoid initiation of CIRP. And mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rational debt and he has relied upon Section 5(21) and Section 3(11) of the Code in respect of the debt claim etc. He has also submitted that even though the basic document ie the Supply Agreement dated 29th December, 2016 is not in dispute, several terms of the Agreement are not complied with by the Operational Creditor in order to claim the amount. He has relied upon the following judgements rendered in the following cases: Greenhills Exports (Private) Limited, Mangalore and Ors Vs. Coffee Board, Bangalore, 2001(4) KarlJ 158 at Paras 14, 15 and 16 Ramgad Minerals and Mining Pvt. Ltd and Ors. , Vs. Vectra Advanced Engineering Pvt. Ltd., MANU/KA/6261/2018 at Paras 35, 36, 37 38 Parmod Yadav and Ors., Vs. Divine Infracon Pvt. Ltd., MANU/NL/0136/2018 atparas 10 and 11. In fact the instant case is filed to claim alleged damages rather than to initiate CIRP basing on invoices and purchase orders, the issue of damages/ disputes cannot be decided under the provisions of Code and Civil Court is competent to decide those issues and in support of his contentions, he has relied upon the judgments as cited supra. At the end of his argument, the Learned Senior Counsel expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emails , which are placed at Annexure IV to VII (page no.43 to 81) of the Petitioner, which inter-alia state that due to the shortage of slot, the Corporate Debtor could not lifting the stock. It is relevant to point out here that one email dated 16.10.2017, sent by Shri Jagdish Rajpurohit from M/S. CloudWalker Streaming Technologies Private Limited (Petitioner) to the Shri Santosh U Kamath (CCC-VS) and to Ms. Sakshi Khandelwal (Senior Manager - Business Development) of Flipkart India Pvt. Ltd. (Respondent), which reads as under: Dear Santosh, As discussed during our last meeting with Abhinav,. we are awaiting the PO's for 39 and 50 inch models which have arrived last week and are waiting in Customs. We won't be able to hold beyond 1 more day as it would then start attracting demurrage charges. Kindly send the PO's today and oblige. Regards, Jagdish Rajpurohit Cloud Walker . Thereafter, an email reply was also given by Ms. Sita Subramanian from M/S. Flipkart India Pvt. Ltd. (Respondent) dated 06.11.2017 @12.45 P.M, to the CloudWa1ker Logistics, which reads as under: Hi Sushma, As discussed With Ankur, please raise slot requests for the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been able to get slots as confirrned. This has been enabled with launch in mind. For the remaining stocks we will confirm exact scheduled for the same by tomorrow . 11. On 01.12.2017, Shri Jagdish Rajpurohit from M/S. CloudWaIker (Petitioner) sent an email to Ms. Sita Subramanian (BGM-VS) from M/S. Flipkart India Pvt. Ltd., (Respondent), which reads as under: Hi Sita, With reference to the pickup view for the inventory in hand for Nov- Feb we have now executed the shipments for November as per orders received. Please see attached excel sheet for status of the pickup plan given by FK to us at the start of the month. However there is a shortfaZZ of approx. ₹ 50 Lacs in the November Pick up. As you know the new NLC around is linked to FK pickup plan and was agreed not to be below these numbers. I know this is the first month of the plan but I am just raising a flag here since we are now entering December and there is a pickup plan of₹ 47,416,OOO from FK which we are planning to execute and I requests you to please support in this by including the shortfall also in December so we come on track. We are now facing a an acute situation of full inventory an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. Moreover, the defence now raised, as stated supra, on behalf of Corporate Debtor, as rightly pointed out by the Learned Counsel for the Petitioner, is an afterthought and those defenses are baseless and not tenable, and thus they are liable to be rejected. 13. In support of the petition, Mr. Jagdish Rajpurohit, Director and Authorized signatory of the Operational Creditor Company, has filed an Affidavit dated 28th June, 2019, by inter alia stating that the Operational Creditor has issued a Demand Notice in Form -2, dated 08.06.2019, under Section 8 of the Code to the Respondent, and the same was received by the Respondent on 13.06.2019. However, the Respondent did not choose to respond the said demand notice. Therefore, the Respondent has failed to bring the notice of the Petitioner/Operational Creditor an existence of a dispute or a pendency of suit or arbitration proceedings filed before the service of the Demand Notice. There is no substantive proceeding initiated by the Corporate Debtor either before or after receipt of demand notice. Furthermore, the Respondent/ Corporate Debtor has failed to repay the unpaid operational debt as specified in the Demand Notice sent by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has filed an Appeal before the Hon 'ble NCLAT, New Delhi, in Company Appeal (AT) (Insolvency) No.98 of 2019, and the Hon'ble NCLAT, New Delhi, vide its order dated 01.08.2019, by setting aside the order of this Adjudicating Authority, has remitted the case to the Adjudicating Authority by interalia observing as follows: The Appellant - M/S. Next Education India Pvt. Ltd. (Operational Creditor) filed an application under Section 9 of the 'Insolvency and Bankruptcy Code, 2016' against M/S. K12 Techno Services Private Limited (Corporate Debtor), the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench by impugned order dated 20th December, 2018 rejected the Application on the ground of 'existence of dispute'. The Appellant brought on record (Forn 5) of 'debt' and 'default'. It is also brought on record the Demand Notice U/ s. 8(1) of the 'J B Code' was issued on 8th August, 2017. The Adjudicating Authority on the ground that the Respondent has filed reply on 8th September 2017 to the Demand Notice noticed that several disputes had been raised. They have also annexed several correspondences about the defective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2019 and the Hon'ble NCLAT, New Delhi, vide its order dated 25.07.2019, has set aside the order of this Adjudicating Authority, and thus remitted the case to the Adjudicating Authority by inter-alia observing as follows: M/S Gupshup Technology India Pvt. Ltd. (Operational Creditor) filed application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'J B Code') against 'M/S Interpid Online Retail Pvt. Ltd. ' ('Corporate Debtor') which having rejected by Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench, by order dated 8th November, 2018, the present appeal has been preferred by the Appellant. 2. According to the Appellant, it entered into Agreement with Respondent - M/S. Interpid Online Retail Pvt. Ltd., on 8th October, 2014. The Agreement was for a period of one year and as per Clause 3.2 of the Agreement, it would get auto renewed for further period of one year each unless terminated by either party. As per Clause 4.2 of the Agreement, the Appellant would send monthly invoices to the Respondent for the fees accrued in the previous month in accordance with the terms set out in Schedul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r got issued a legal notice dated Il. 10.2017 by claiming for consisting of five invoices starting from 31.05.2015 to 31.07.2015 claiming for total amount of Rs. Out of which respondent paid Rs. and the remaining outstanding balance was 57,86, 148/-. The Respondent vide its email dated 5th September, 2017, requested the petitioner to furnish supporting documents in support of its claim, followed by specific reply dated 24th October, 2017 to the above legal notice, by inter alia, raising dispute of claim. Therefore, it is clear that when the Respondent has disputed the amount, as the amount is more than ₹ 1 lakh, the application under Section 9 cannot be rejected. From the aforesaid provision of the Limitation Act, it is clear that the application is maintainable within three years from the date when the right to apply accrues. Since, the Insolvency and Bankruptcy Code, 2016 has come into effect since 1st December, 2016, we hold that the application is not barred by limitation. The Adjudicating Authority while passing the order, failed to appreciate the facts and erroneously held that there is a pre-existing dispute and the claim is barred by limitation. For the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d questions, in a case filed under the IBC, 2016, which is summary in nature, and the issues to be primarily decided basing on the principles of natural justice. As stated supra, there are several clauses in the agreement in question, and the respondent, on the contrary made claim against the petitioner. Ultimately, the parties in the first instance have to reconcile their own statement of accounts before approaching the Tribunal to invoke provisions of IBC, 2016. The Petitioner, instead of finalising the disputed amounts, has filed the instant Company Petition on untenable grounds. The question of excess payment, and set-off as claimed by the respondent has to be examined in an appropriate proceeding in a case filed in accordance with the law, and the issue cannot be adjudicated in the instant Company Petition. Therefore, we are of considered opinion that there is a dispute with regard to debt in question, and thus it is not a fit case to admit. 2. The Respondent- 'M/S. Nitesh Estates Limited'- ('Corporate Debtor') has taken plea that it has informed the Appellant by e-mail dated 27th February, 2017 that there are serious issues with respect to the engagement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)). is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing - i.e. it must exist before the receipt of the demand notice or invoice, as the case may be. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or 8 send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor (Section 8(2)(b)). It is only if, after the expiry of the period of the said j o days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor has not delivered the invoice or notice for payment to the corporate debtor (Section 9(5)(ii)(c)). It may also reject the application if the notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility (Section 9(5)(ii)(d)). Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected (Section 9(5)(ii)(e)) . From the aforesaid decision, it is clear that the existence of dispute must be pre-existing i.e. it must exist prior to issuance of the demand notice or invoice. If it comes to the notice of the Adjudicating Authority that the 'operational debt' is exceeding Rs. I lakh and the application shows that the aforesaid debt is due and payable and has not been paid, in such case, in absence of existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid 'operational debt', the application under Section 9 canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate debtor in Part 11, particulars of the proposed interim resolution professional in part 111, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7 (5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the debt , which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. For the reasons aforesaid, we set aside the impugned order dated 5th October, 2018 and remit the case to the Adjudicating Authority to admit the application under Section 9 after notice to the Respondent, so that the Respondent may get an opportunity to settle the matter prior to the admission of the application. The appeal is allowed with aforesaid observations and directions. No costs. 17. So as far the willingness of the Respondent to settle the issue in question is concerned, both the parties have not come with any concrete settlement of the issue. Moreover, it is open to the parties to settle the issue, even after admission of the case, by filing an Application UIs. 12 A of Code. However, the instant Petition cannot be kept it pending for settlement of the issue, as the case was filed as early as on 22nd July, 2019, and the Adjudicating Authority has granted several opportunities to the parties to settle the issue especially the Corporate Debtor claimed it is solvent Company and initiating CIRP against it, would have serious devastating effect on its operations. The Code, under provisions of section 9, inter-alia prescribes time lines for either for admission or rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing moratorium is declared prohibiting all of the following, namely: a. the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b. transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; c. any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; d. the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. e. The supply of essential goods or services to the corporate debtor as may be specified shall not terminated or suspended or interrupted during moratorium period. f. The provisions of sub-section (I) shall not apply to such transaction as may be notified by the Central Government in consultation with any financial regulator. g. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
