9911796707
TMI Blog2020 (3) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... al of the language of Section 8, it is clear that an Operational Creditor on the occurrence of default has been provided with the option of delivering a demand notice of the unpaid operational debt or raising an invoice demanding payment of the amount involved. The two options available for initiation of Corporate Insolvency Process are provided to deal with all the eventualities that may occur. It is clear that the choice of issuance of demand notice u/s 8(1) of the Insolvency and Bankruptcy Code 2016, either in Form 3 or Form 4, under the Insolvency and Bankruptcy Code Application to Adjudicating Authority Rules 2016, depends on the nature of Operational Debt. Section 8(1) does not provide the Operational Creditor, with the discretion to send the demand notice either Form 3 or Form 4, as per its convenience. The applicability of Form 3 or Form 4 depends on whether the invoices were generated during the course of transaction or not. It is also made clear that the copy of the invoice is not mandatory if the demand notice is issued in Form 3 of the Insolvency and Bankruptcy Code Application to Adjudicating Authority Rules 2016 provided the documents to prove the existence of ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r; V. P. Singh, Member (T)] This Appeal emanates from the Order passed by the Adjudicating Authority/National Company Law Tribunal, Bengaluru Bench, Bengaluru in C.P. (IB) No.260/BB/2019, whereby the Adjudicating Authority has admitted the Application for initiation of Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor , filed under Section 9 of the Insolvency and Bankruptcy Code (in short I B Code ) on 24th October 2019, in the case of Neeraj Jain, Director of M/s Flipkart India Private Limited Vs. M/s. Cloudwalker Streaming Technologies Pvt. Ltd. The parties are referred to by their original status in the Company Petition for the sake of convenience. 2. Brief facts of the case are as follows: The Company Petition No. CP (IB) No. 260/BB/2019 is filed by M/s Cloudwalker Streaming Technologies Pvt. Ltd., under Section 9 of Insolvency Bankruptcy Code, 2016 against the Corporate Debtor M/s Flipkart India Private Limited on the ground that it has committed default for an amount of ₹ 26,95,00,000/- (Rupees twenty-six crore ninety-five lacs only). 3. The Operational Creditor M/s Cloudwalker Streaming Technologies Private Limited con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 70% of the stock as ordered by them till March 2018. 4. The Operational Creditor has issued a demand notice under Form 3 dated 08th June 2019, under Section 8 of the Insolvency and Bankruptcy Code, 2016 which was received by the Corporate Debtor on 13th June 2019. However, there has been no reply to the same. The Corporate Debtor has not raised any dispute about the amount outstanding to the Operational Creditor at any point of time. 5. The Corporate Debtor has filed its Response dated 25th September 2019 against the Company Petition contending as follows: (i) There is no admitted debt or liability, further stated that the Corporate Debtor had already paid an amount of ₹ 85,57,00,664/-, towards the invoices raised by the Petitioner/Operational Creditor. The Corporate Debtor is not liable to make any payment to the Operational Creditor. (ii) The Operational Creditor has approached the Corporate Debtor expressing its desire and interest in establishing business relation with the Respondent - Corporate Debtor , for sale of the Petitioner s product, through the resellers of the Respondent. Under due deliberations between the Petitioner and Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lacs ninety-six thousand six hundred and sixty-eight only) towards deficiency in services by the Petitioner. In Reply to the Response of the Corporate Debtor , the Operational Creditor has filed the Rejoinder reiterating the contents of the petition. In the Rejoinder by the operational creditor, it is specifically stated that as against the admitted amount of ₹ 103,62,00,000/- against invoices, the Corporate Debtor admitted having paid only ₹ 85,57,00,664/- (Rupees eighty-five crore fifty-seven lacs six hundred sixty-four only). Therefore, even as per admission Corporate Debtor ₹ 18,04,99,336/-is still outstanding from and out of the total invoice amount. Therefore, the Petition deserves to be admitted on the sole ground. (ix) The Corporate Debtor has contended that there is an existing dispute between the parties, which is to be adjudicated by the Civil Court, upon appreciating the evidence placed on record. It is further contended that on the instructions of the Corporate Debtor , the Operational Creditor imported the goods, which was duly communicated to the Corporate Debtor. But due to the shortage of warehouse facilities, the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up for the determination of this appeal are as under: 1. Whether it is the discretion of the Operational Creditor, or the nature of the Operational Debt, that determines the issuance of notice in Form 3 or Form 4 under Sec 8 (1) of the Insolvency and Bankruptcy Code 2016? 2. Whether or not, copy of the invoice is a mandatory requirement for issuance of demand notice U/S 8(1) of the Insolvency and Bankruptcy Code 2016, in Form 3 of the Insolvency and Bankruptcy (Adjudicating to Authority) Rules 2016? 3. Whether or not for filing an application, U/S 9 of the Code in Form 5 under [sub-rule (1) of Rule 6] Insolvency and Bankruptcy (Adjudicating to Authority) Rules 2016, the submission of a copy of the invoice is a mandatory requirement, although the demand notice is served in Form 3? 10. Learned Counsel for the Appellant has raised the argument that the Operational Creditor Respondent No.1 has failed to produce invoices, purchase orders or any documents to prove its claim and has filed a defective Application under Section 9. 11. In reply to the above, the Appellants /Corporate Debtor contends that the Respondent No.1-Operational Creditor/ Cloudwalker Stre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ojections for the demands raised by the M/s Flipkart India Private Limited . The figures provided by the Flipkart are only projections or demand assumptions and does not constitute a binding purchase order under the Supply Agreement. The Appellant further contends that there can be no sale and supply of goods without a purchase order. The learned Senior Counsel for the Appellant has vehemently emphasised on the format of Section 9 Application, which is filed in the prescribed Form 5, under the Insolvency Bankruptcy Code (Application to Adjudicating Authority Rules, 2016) (from now on referred to as Rules ). The said Part V of Form 5 mandates that relevant document under which the debt has become due must be annexed . 15. To satisfy this requirement, the Operational Creditor has chosen only to produce the Supply Agreement and the projections emails, which by themselves can by no stretch of imagination constitute proof of debt. 16. It is further said that Part-V, Column 7 of Form 5 also mandates that a statement of the bank account where deposit or credit is normally received must be attached. The Operational Creditor has not attached even this bank statement. Though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed on to M/s Flipkart India Private Limited. Furthermore, the Respondent No.1 has even sold it to the third party, without any substantiation or even a mention of the amounts, received on such sale. 22. The Learned Senior Counsel has also argued that instead of producing relevant documents, the Respondent No.1 has based its claim on alleged unpaid amounts towards goods, custom charges and interest @ 12.65% without any substantiation. 23. It is further said that Clause 5(d) of the Supply Agreement provides, that no custom charges will be payable by the M/s Flipkart India Private Limited to the Respondent No.1. The Respondent No.1 had not filed any document or record relating to the purchase orders, invoices, to substantiate its claim. The Operational Creditor had charged interest, whereas, Clause 13 of the Agreement provides that no interest component is payable in any situation. 24. It is further contended that as per the terms of Supply Agreement, various purchase orders have been placed by the Flipkart, against which invoices have been issued. Post the issuance of debit notes, under Clause 4(b) of the Supply Agreement, a total reconciled amount of ₹ 85,99,97,33 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -two lacs ninety-six thousand six hundred and sixty-eight only) is due, reiterates its claim in the application. It is said that Corporate Debtor is attempting to create an impression that it has paid whatever was due. Nonetheless, even as per its showing, amount more than ₹ 1,00,000/- (Rupees one lacs only) payable by the Corporate Debtor to the Respondent No.1, which amount the Corporate Debtor has remitted to the Respondent No.1, without prior intimation, after the admission of the application by the Adjudicating Authority. 28. The Learned Counsel for the Operational Creditor has further contended that NCLT is not a forum for adjudication of the monetary claim as between the Respondent No.1 and the Corporate Debtor , so it was not necessary that the exact due from the Corporate Debtor should have been finalised. 29. The Learned Sr. Counsel for the Respondent No.1/Operational Creditor further contended that the Operational Creditor has fulfilled the requirement of I B Code and had issued a demand notice, which was not even replied to by the Corporate Debtor . The Corporate Debtor having admitted its unconditional liability to the Respondent No.1 for an amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of Section 8, the operational creditor may file an application before the adjudicating authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor; and (d) such other information or as may be specified. (4) An operational creditor initiating a corporate insolvency resolution process under this section may propose a resolution professional to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... support of the claim before the constitution of the committee. (2) The existence of debt due to the operational creditor under this Regulation may be proved on the basis of- (a) the records available with an information utility, if any; or (b) other relevant documents, including- (i) a contract for the supply of goods and services with corporate debtor; (ii) an invoice demanding payment for the goods and services supplied to the corporate debtor; (iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; or (iv) financial account. FORM B PROOF OF CLAIM BY OPERATIONAL CREDITORS EXCEPT WORKMEN AND EMPLOYEES [Under Regulation 7 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016] 1. [Date] To, The Interim Resolution Professional/Resolution Professional [Name of the Insolvency Resolution Professional/Resolution Professional] [Address as set out in public announcement] From, [Name and address of the operational creditor] Subject.-Submission of proof of claim . Madam/Sir, [Name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment referred to in sub-section (2) of Section 8 of the Code, may be delivered to the corporate debtor, (a) at the registered office by hand, registered post or speed post with acknowledgment due; or (b) by electronic mail service to a whole time director or designated partner or key managerial personnel, if any, of the corporate debtor. (3) A copy of demand notice or invoice demanding payment served under this rule by an operational creditor shall also be filed with an information utility, if any. 6. Application by operational creditor.- (1) An operational creditor, shall make an application for initiating the corporate insolvency resolution process against a corporate debtor under Section 9 of the Code in Form 5, accompanied with documents and records required therein and as specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. (2) The applicant under sub-rule (1) shall dispatch forthwith, a copy of the application filed with the adjudicating authority, by registered post or speed post to the registered office of the corporate debtor. *** FORM 3 [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any record that [name of the operational creditor] has received the payment. 5. The undersigned, hereby, attaches a certificate from an information utility confirming that no record of a dispute raised in relation to the relevant operational debt has been filed by any person at any information utility (if applicable) 6. The undersigned request you to unconditionally repay the unpaid operational debt (in default) in full within ten days from the receipt of this letter failing which we shall initiate a corporate insolvency resolution process in respect of [name of corporate debtor]. Yours sincerely, Signature of person authorised to act on behalf of the operational creditor Name in block letters Position with or in relation to the operational creditor Address of person signing Instructions 1. Please serve a copy of this form on the corporate debtor, ten days in advance of filing an application under Section 9 of the Code. 2. Please append a copy of such served notice to the application made by the operational creditor to the adjudicating authority. FORM4 [clause (b) of sub-rule (1) of Rule 5] FORM OF NOTICE WITH WHICH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails of guarantee clause as per memorandum of association (as applicable) 5. Address of the registered office of the corporate debtor 6. Name, address and authority of person submitting application on behalf of operational creditor (enclose authorisation) 7. Name and address of person resident in India authorised to accept the service of process on its behalf (enclose authorisation) Part III PARTICULARS OF THE PROPOSED INTERIM RESOLUTION PROFESSIONAL [IF PROPOSED] 1. Name, address, email address and the registration number of the proposed insolvency professional Part IV PARTICULARS OF OPERATIONAL DEBT 1. Total amount of debt, details of transactions on account of which debt fell due, and the date from which such debt fell due 2. Amount claimed to be in default and the date on which the default occurred (attach the workings for computation of amount and dates of default in tabular form) Part V PARTICULARS OF OPERATIONAL DEBT [DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT] 1. Particulars of security held, if any, the date of its creation, its estimated value as per the creditor. Attach a copy of a certificate of registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of the application in accordance with the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Annex V Written communication by the proposed interim resolution professional as set out in Form 2 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. [WHERE APPLICABLE] Annex VI Proof that the specified application fee has been paid. Note.-Where workmen/employees are operational creditors, the application may be made either in an individual capacity or in a joint capacity by one of them who is duly authorised for the purpose. *** INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (INSOLVENCY RESOLUTION PROCESS FOR CORPORATE PERSONS) REGULATIONS, 20161 [AMENDED UPTO 25.07.2019] IBBI/2016-17/GN/REG004. - In exercise of the powers conferred under sections 5, 7, 9, 14, 15, 17, 18, 21, 24, 25, 29, 30, 196 and 208 read with section 240 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Insolvency and Bankruptcy Board of India hereby makes the following Regulations, namely- PROOF OF CLAIMS Regulation 7: Claims by operational creditors. (1) A person cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form 3 or send an invoice demanding payment of the amount due as per Form 4 of the Adjudicating Authority Rules, 2016. In case, the operational creditor prefers for the first option; then in that situation, it is not required to send a copy of the invoice along with the Demand Notice. 34. Ld. Counsel for the Operational Creditor further buttressed his argument, based on proforma of Form 4, as provided under the Adjudicating Authority Rules. The relevant portion of Form 4 is given as under: To, [Name and address of registered office of the corporate debtor] From, [Name and address of the operational creditor] Subject.-Notice attached to invoice demanding payment Madam/Sir, [Name of operational creditor], hereby provides notice for repayment of the unpaid amount of INR [insert amount] that is in default as reflected in the invoice attached to this notice . In the event you do not repay the debt due to us within ten days of receipt of this notice, we may file an application before the adjudicating authority for initiating a corporate insolvency resolution process under Section 9 of the Code. 35. In the above portion of Form 4, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which are to be submitted by the operational creditors before the Resolution Professional, for filing its claim. Regulation 7 is as under: PROOF OF CLAIMS 7. Claims by operational creditors. (1) A person claiming to be an operational creditor, other than workman or employee of the corporate debtor, shall 12[submit claim with proof] to the interim resolution professional in person, by post or by electronic means in Form B of the Schedule : Provided that such person may submit supplementary documents or clarifications in support of the claim before the constitution of the committee. (2) The existence of debt due to the operational creditor under this Regulation may be proved on the basis of- (a) the records available with an information utility, if any; or (b) other relevant documents, including - (i) a contract for the supply of goods and services with corporate debtor; (ii) an invoice demanding payment for the goods and services supplied to the corporate debtor; (iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; or (iv) financial accounts 39. On perusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation. 42. However, if the operational debt is of nature where the invoice is generated as part of the transaction, then in such cases the invoice becomes an essential document to prove the existence of the debt, and thus it has to be submitted. In case of operational debt where the transaction does not involve the generation of the invoice, then as per column 7 of Form 3, documents to prove the existence of operational debt and the amount in default are to be submitted along with the notice in Form 3. 43. However, it cannot be the discretion of the Operational Creditor to deliver the Demand Notice in Form 3 even if the operational debt involves transactions where corresponding invoices are generated but are not filed in court on the pretext that the Operational Creditor has chosen to send the Notice in Form 3. 44. The use of the phrase, deliver a demand notice of unpaid operational debt or copy of an invoice demanding payment of the amount involved in Section 8(1) does not provide the Operational Creditor, with the discretion to send the demand notice in Form 3 or Form 4 as per its convenience. Rather, it depends directly on the nature of the operational debt a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Form 4, as per its convenience. The applicability of Form 3 or Form 4 depends on whether the invoices were generated during the course of transaction or not. It is also made clear that the copy of the invoice is not mandatory if the demand notice is issued in Form 3 of the Insolvency and Bankruptcy Code Application to Adjudicating Authority Rules 2016 provided the documents to prove the existence of operational debt and the amount in default is attached with the application. 48. It is also made clear that for filing application u/s 9 of Insolvency and Bankruptcy Code 2016, in case the demand notice is delivered in Form 3 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, then the submission of a copy of the invoice along with the application in Form 5 is not a mandatory requirement, provided the documents to prove the existence of operational debt and the amount in default is attached with the application. 49. Learned Sr. Counsel for the Appellant Corporate Debtor argued that the alleged debt does not qualify as an operational debt. It is stated by him that an operational debt can only arise against the provision of goods or services. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ious reasons of which our clients were not concerned, like, having any space due to Diwali rush etc., and only picked up the partial stock of 1,531 TVs leaving a balanced stock of 21,808 TVs with our client. 21. Needless to say, that on account of breaches on your part for not picking up the stock imported exclusively for you within the time stipulated and even violating the deal buy arrangement you made our client suffer, for no fault, on account of the following: (i) Forcing of reducing of fixed agreed NLCs ₹ 6,80,45,344.00 (ii) Increase in import duty cost due to delay ₹ 2,42,65,384.00 (iii) Interest cost till 14/3/18 on inventory ₹ 2,16,05,826.00 (iv) Value of the inventory failed to pick up ₹ 21,58,66,500.00 22. We state that you have failed to pick up the aforesaid balance quantity of the product specifically/exclusively imported for you, based on your others and assurances, thereby breached the terms of the agreement between the parties and further violated the arrangement agreed upon between the parties for delay buy and have caused losses to our clients. Thus, actions have not only caused losses to our aforesaid cli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the operational creditor would have proceeded for appointment of an Arbitrator. 54. On perusal of the above document, it is clear there was an existing dispute on 26th March 2018, i.e. before the initiation of CIRP. It is also apparent that the dispute between the parties was on account of not taking delivery of 21,808 TVs, which were imported by the Operational Creditor, based on the assurance by the Corporate Debtor. But the Corporate Debtor failed to pick up these goods. Therefore, the Operational Creditor sent the notice to the corporate debtor to make the payment within 30 days, failing which Operational Credit threatened to refer the dispute to Arbitral Tribunal. 55. Learned Counsel for the Operational Creditor submitted that by e-mail dated 21st May 2019, notice Dt.26th March 2018 was withdrawn, on the pretext that parties have decided to negotiate in good faith and arrive at an amicable solution to pending issues. 56. Learned Counsel for the Appellant contends that the entire claim of the Operational Creditor is based on the issue of not taking delivery of 21,808 TVs, which were exclusively imported, on the assurances of the Corporate Debtor. It is argued by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, the Operational Creditor was forced to unload the uncollected goods at heavily marked-down price just so that it could remain afloat. (Quoted verbatim) 58. Based on the above synopsis it appears that the alleged claim relates to the demand for payment for the LED TVs, procured and imported for the Corporate Debtor from 11th October 2017 to 1st December 2017. In the period above, till March 2018, the Corporate Debtor had failed to collect more than 70% of the stock of LED TVs, as ordered by them. The Corporate Debtor failed to collect the LED TVs; failed to pay the excess charges and costs as promised and failed to honour its commitment. Due to the failure of the Corporate Debtor in fulfilling its commitment , the Operational Creditor was forced to unload the uncollected goods at a heavily marked-down price so that it could remain afloat. 59. Thus by its admission, the title and possession of alleged uncollected goods, never been passed onto Flipkart and the operational creditor sold it to 3rd parties at a heavily marked-down price. The claim of the operational creditor is not crystallised. 60. It is pertinent to mention that the Demand Notice, which was iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 26,95,00,000/- (Rupees Twenty-six Crore and Ninety-Five Lakhs only). The Operational Creditor and Corporate debtor had entered into a Supply Agreement dt. 29th December 2016. Under this agreement, the Operational Creditor from time to time supplied LED TVs as per the requirement of the Corporate Debtor. The Operational Creditor had a running account with the Corporate Debtor. The Operational Creditor raised various demands and emails to the Corporate Debtor for the LED TVs procured, imported, delivered and left uncollected with the Operational Creditor. The various dates on which the debt fell due are as per the table/computation showing dates of default and amounts. 8. List of other documents attached to this application in order to prove the existence of operational debt and the amount in default. A. Resolution for Authorisation. B. Table/computation showing dates of default and amounts. C. Purchase Order Emails. D. Replies of the Operational Creditor confirming the Purchase Order Emails. E. Emails by the Corporate debtor delaying the collection of goods due to unavailabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Code. 68. Learned Sr. Counsel of the Corporate Debtor has placed reliance on a judgment of the Hon ble Supreme Court in the case of Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353: 2017 SCC OnLine SC 1154 : (2018) 1 SCC (Civ) 311 at page 394 Hon ble Supreme Court has held that: 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding ₹ 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? and (iii) Whether there is 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 in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional Creditor issued notice as per Clause 18 of the Supply Agreement for making the payment within 30 days, failing which he threatened to refer the matter to the Arbitral Tribunal. The Operational Creditor has admitted this fact in its e-mail that the Corporate Debtor has failed to take delivery of about 21,808 LED TVs by which the Operational Creditor was forced to unload the uncollected goods at heavily marked down price. 72. The Computation Chart, as is mentioned on page 182 of the Paper Book, shows that the Operational Creditor has filed its claim for the following amount: Heading Order Value (in Crores) The amount received (in cores) Unpaid amount (in crores) Dates of default. Value of goods 72.45 58.50 13.95 31.03.2019 Customs charges 5.25 31.03.2019 Interest @ 12.65% on delayed payment till 31 st March, 2019 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of stock of uncollected LED TVs at heavily marked down prices. The loss to the Operational Creditor is not crystallized. The Adjudicating Authority exercising summary jurisdiction cannot determine the claim amount and initiate the corporate insolvency resolution process, as per law laid down by the Hon ble Supreme Court in the case of Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., (2018) 1 SCC 353: 2017 SCC OnLine SC 1154: (2018) 1 SCC (Civ) 311 . In the above case, the Hon ble Supreme Court has held that: 37. It is now important to construe Section 8 of the Code. The operational creditors are those creditors to whom an operational debt is owed, and an operational debt, in turn, means a claim in respect of the provision of goods or services, including employment, or a debt in respect of repayment of dues arising under any law for the time being in force and payable to the Government or to a local authority. This has to be contrasted with financial debts that may be owed to financial creditors, which was the subject-matter of the judgment delivered by this Court on 31.08.2017 in Innoventive Industries Ltd. vs. ICICI Bank [Innoventive Industries Ltd. vs. ICI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the internal review by terms of the Supply Agreement and released the payment of ₹ 42,96,688/- (Forty-two lacs ninety-six thousand and six hundred eighty- eight only) which was found to be due and payable. Though the Respondent No.1 / operational creditor does not admit that only an amount of ₹ 42,96,668/- (Rupees forty-two lacs ninety-six thousand six hundred and sixty-eight only) is due, reiterates its claim in the application. It is said that Corporate Debtor is attempting to create an impression that it has paid whatever was due. Nonetheless, even as per its showing, amount more than ₹ 1,00,000/- (Rupees one lacs only) payable by the Corporate Debtor to the Respondent No.1, which amount the Corporate Debtor has remitted to the Respondent No.1, without prior intimation, after the admission of the application by the Adjudicating Authority. 77. In reply to the above, Learned Senior Counsel for the Corporate Debtor contend that as per the terms of Supply Agreement, various purchase orders have been placed by the Flipkart, against which invoices have been issued. Post the issuance of debit notes, a total reconciled amount of ₹ 85,99,97,332/- has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , failing which the dispute was said to be referred to the Arbitrator. This notice was withdrawn before issuance of demand notice under Section 8(1) of the Code. But by withdrawing the said notice, the dispute does not cease to exist. The entire claim of the Corporate Debtor is an uncrystallised claim which cannot be adjudicated by the Adjudicating Authority under summary jurisdiction. In the circumstances, it appears that the Appeal deserves to be allowed and impugned order passed by the Adjudicating Authority admitting the petition, deserves to be set aside. 80. We set aside the impugned order dated 24th October 2019 passed by the Adjudicating Authority and the application filed under Section 9 by the Operational Creditor Cloudwalker Streaming Technologies Pvt Ltd., company petition CP (IB)260/BB/2019 is Rejected. The Flipkart India Pvt Ltd ( Corporate Debtor ) is released from the Corporate Insolvency Resolution Process . Interim Resolution Professional will handover the records and assets of the Corporate Debtor to the Promoter immediately, who will manage the Corporate Debtor . The Appeal is allowed with the aforesaid observations and directions. The Adjudicating Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
