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TMI Blog2020 (5) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... before the issuance of the Demand Notice by the Operational Creditor. The factum of filing of a C.P. No. 4 of 2016 by the Managing Partner of the Operational Creditor in his personal capacity against the Corporate Debtor and others also dealing with the transactions would show that there exist dispute between the parties. The Hon'ble Supreme Court in Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT ] held that the 'existence of 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 maybe. Petition dismissed. - CP (IB) NO./1269/IB/2018 - - - Dated:- 20-1-2020 - R. Varadharajan, Judicial Member And Anil Kumar B., Technical Member For the Appellant : H. Karthik Seshadri, C. Suraj, and P. Rajaji, Advs. For the Respondent : E. Om Prakash, Sr. Adv. and P. Elaya Rajkumar ORDER R. VARADHARAJAN, JUDICIAL MEMBER Under Adjudication is an Application that has been filed by M/s. Sagaya Annai Associates (hereinafter referred to as 'Operational Creditor') under section 9 of the Insolvency Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the notice, to which the Corporate Debtor has sent a reply on 17.09.2018. 6. The Learned Counsel for the Operational Creditor submitted that the Corporate Debtor is involved in the business of Warehousing and Logistics service provider in procurement, warehousing, transportation, distribution, process outsourcing and process consultancy. It was submitted that the Corporate Debtor in the month of September 2014 approached the Operational Creditor to provide its various clients with Manpower service and in accordance with the same, the Operational Creditor thereby duly provided Manpower Supply and other services to the Corporate Debtor's client on behalf of the Corporate Debtor. The invoices were raised by the Operational Creditor from time to time to the Corporate Debtor for the services rendered and the payment were also made by the Corporate Debtor. 7. The Learned Counsel for the Operational Creditor submitted that for the services rendered in relation to twelve invoices from 01.06.2016 to 04.09.2016 which were raised by the Operational Creditor, the payments against these invoices were due and payable by the Corporate Debtor within 30 days from the date of issue of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me and style of M/s. Store N Move Pvt. Ltd. on 17.09.2014. 11. It was submitted by the Learned Senior Counsel appearing on behalf of the Corporate Debtor that at the time of Incorporation, the promoters/Directors of the Corporate Debtor are Mr. YSP Balraj, Mr. Devaraj Vasanth Immanuel and one Mr. Pannerselvam Jayendran (who joined lately) and later Mr. Devaraj Vasanth Immanuel and Mr. Jayendran resigned from the Directorship of the Corporate Debtor Company in the year 2016 and as on today Mr. YSP Balraj is holding 36.84% of stake in the Corporate Debtor who has filed a Company Petition before this Tribunal, alleging oppression and mismanagement against the Respondent/Corporate Debtor and others under sections 241 and 242 of the Companies Act, 2013 and has also sought various relief and the said Company petition is pending on the file of this Tribunal vide CP. No. 4 of 2016. It was also submitted that Mr. YSP Balraj who is the shareholder in the Corporate Debtor has filed the present petition in the capacity of the Managing Partner of the Operational Creditor. 12. The Learned Senior Counsel for the Corporate Debtor submitted that the present petition filed under section 9 of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is a debt and default on the part of the Corporate Debtor and whether there exist any dispute between the parties before the issuance of the Demand Notice. 16. It is evident from the record that there exist no Agreement as between the Operational Creditor and the Corporate Debtor for supply of services as contemplated between the parties. The Operational Creditor has placed on record only the Invoices as raised by them against the Corporate Debtor. 17. The Operational Creditor has filed an additional typed set of papers on 14.11.2019 wherein the Financial Statements for the year ending 2019 is being filed and a perusal of the same postulates the fact that there exists a dispute between the parties. The relevant extract from the Financial Statements is reproduced hereunder; Mr. Y.S.P. Balraj (removed Director) has filed a CP No. 4 of 2016 against all the Directors (including Previous Director) for oppression and mismanagement for reasons as disclosed by the directors in the Board Report. The outcome of the case is yet to be decided and may or may not be in favour of the Company and its Directors. ...It is communicated to us that the financial statements are been prepa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciate company; and (g) underwriting the subscription of any securities or derivatives thereof, of the company: Provided that no contract or arrangement, in the case of a company having a paid-up share capital of not less than such amount, or transactions exceeding such sums, as may be prescribed, shall be entered into except with the prior approval of the company by a resolution: Provided further that no member of the company shall vote on such resolution, to approve any contract or arrangement which may be entered into by the company, if such member is a related party: Provided also that nothing in this sub-section shall apply to any transactions entered into by the company in its ordinary course of business other than transactions which are not on an arm's length basis: Provided also that the requirement of passing the resolution under first proviso shall not be applicable for transactions entered into between a holding company and its wholly owned subsidiary whose accounts are consolidated with such holding company and placed before the shareholders at the general meeting for approval.] Explanation.- In this sub-section,- (a) the expression -office or pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees, or with both; and (ii) in case of any other company, be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to five lakh rupees. 20. Per Contra it was contended by the learned Counsel for the Operational Creditor that they are exempted under third provision to sub-section (1) of section 188 of the Companies Act, 2013 wherein all the transactions were made during the ordinary course of business and as such they cannot be brought under the realm of Related party. However, we are unable to accede to the submissions made by the Learned Counsel for the Operational Creditor, in view of the fact that in the Financial Statement and Auditor's Report of the Corporate Debtor, the transactions in relation to the Operational Creditor is being shown as Related Party Transactions and it is a fact which is borne on record which cannot be brushed aside and as such the contention raised by the Learned Counsel for the Operational Creditor that these transactions were made during ordinary course of business is not sustainable. 21. From the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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