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TMI Blog2020 (5) TMI 195X X X X Extracts X X X X X X X X Extracts X X X X ..... and termination notice was issued on April 19, 2018 and termination would come into effect from May 19, 2018. Thus, one months' notice was issued prior to termination. The termination of service agreement was prior to demand notice dated June 17, 2018. In the termination notice, the corporate debtor specifically stated that the services rendered by the operational creditor are not satisfactory - The termination will be with effect from May 19, 2018. There is no dispute about issuing of termination notice. The termination notice goes to show that there was prior dispute in the sense corporate debtor was not satisfied with the customer care services extended to the customers of corporate debtor. The termination notice was prior to the issue of demand notice. Thus, the dispute was raised prior to demand notice. Further the corporate debtor also filed opinion expressed by the customers with regard to the customer care services as such when there is a pre-existing dispute the present petition cannot be admitted. Thus, corporate debtor established a pre-existing dispute - Petition dismissed. - C. P. (IB) No. 629 /9/HDB/2018 - - - Dated:- 5-11-2019 - Ratakonda Murali Judici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.) 1. VCM-UP/24547 23-12-2017 26,14,472 2. VCM-UP/24753 18-01-2018 22,88,878 3. VCM-UP/24887 15-02-2018 19,96,299 4. VCM-UP/25132 21-03-2018 19,53,347 5. VCM-UP/25355 31-03-2018 10,94,456 6. VCM-UP/00058 17-05-2018 10,69,173 7. VCM-UP/00239/18 13-06-2018 3,55,292 Total 1,13,71,917 (ii) It is averred that the total debt amount of ₹ 1,83,87,559 (rupees one crore eighty three lakhs eighty seven thousand five hundred and fifty nine only) along with interest at 18 per cent. per annum is due from the corporate debtor. Cheque bearing Nos. 184920 and 184918 dated May 10, 2018 and May 20, 2018 respectively issued by the Abhibus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 under section 8(2) of the I and B Code. The notice contains that the applicant had caused multiple instances of breach under the service agreement dated October 30, 2015 and communicated to the applicant from time to time. The debt dispute notice contains seven annexures, containing e-mail correspondence and various other documents, which are voluminous in size. (iv) It is averred that on July 28, 2018 the respondent sent the debt dispute notice by way of speed post to the applicant to the address specified in the demand notice, but the same was returned as incorrect address. On the very same date, i. e., on July 28, 2018 the respondent also sent the debt dispute notice to the registered office of the applicant by a separate courier, and it stood delivered to the applicant on July 31, 2018. Thus, the applicant has deliberately filed a false affidavit dated September 20, 2018 in the application stating that it did not receive any notice of dispute. (v) It is averred that the provisions of the I and B Code attach importance to the factum whether a notice of dispute was, in fact, sent by the alleged corporate debtor to the operational creditor. Thus, the I and B Code stipulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cally agreed on the applicant's liability to be levied with penalties and the penalties range up to ₹ 3,50,000 based on each such violation and the penalties are fixed separately for private buses and APSRTC buses. (xi) It is averred that the service agreement dated December 17, 2015 was amended four times till September 16, 2017 upon the mutual consent of the applicant and respondent and mutually agreed that the agreement will stand renewed for one year commencing on September 17, 2017 on the same terms and conditions. (xii) It is further averred that the applicant started causing multiple instances of breach of the provisions of the service agreement since 2016 and its services could only be considered as being deficient, sub-standard and of defective quality under the agreement. (xiii) It is averred that due to the repeated failure on part of the applicant in even hiring applicant personnel for itself to be deployed to service the respondent's customers, the respondent was forced to depute its own vice-president-HR to hire applicant personnel for the applicant. Each of such instances where the respondent's vice-president was virtually compelled to be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ser vice agreement, the respondent constrained to terminate the service agreement with effect from May 19, 2018 vide termination letter dated April 19, 2018. (xx) It is averred that the alleged operation debt claimed by the applicant of ₹ 1,83,87,559 stands disputed. (xxi) It is averred that the principal amount in the operational debt has been alleged as ₹ 1,13,71,917 having been raised vide seven purported invoices from December, 2017 to June, 2018. While raising and clearing invoices, the respondent levies the applicable penalties under annexure 1A of the agreement and approval will be given for clearance. (xxii) It is averred that the applicant has made false claims specifying wrong amounts. Upon raising the invoices along with the invoice documents, the respondent promptly assessed the penalties to be levied based on the invoice documents. However, instead of claiming the invoices as were approved by the respondent after deduction of penalties on account of the applicant's contractual breach, the applicant has sent the demand notice based on the preliminary invoices. As far as the Seventh invoice dated June 13, 2018 the applicant has failed to subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l amount showing it as due debt. As regards the remaining four invoices dated February 15, 2018, March 21, 2018, March 31, 2018 and May 17, 2018 the applicant deliberately made wrong claims of preliminary invoice amounts. As regards the Seventh invoice dated June 13, 2018 it was rejected as it was not accompanying with the supporting invoice documents. The above wrong claims under 7 invoices substantially alters the principal amount, which in turn alters interest, penalty, etc. (xxvii) It is also averred that neither of the parties agreed to any charging of interest and the applicant has made a wrong claim of ₹ 5,07,330 as interest on the invoices. (xxviii) It is averred that the entire principal amount of debt is disputed, there is no scope of any charge of interest on the other five invoices. Thus, the interest component is invalid, unjustified and cannot be considered as operational debt. (xxix) It is denied that the service agreement was terminated without giving the stipulated notice period. The respondent rightfully terminated the agreement by giving 30 days notice as per clause 10.1 of the service agreement as the respondent sent the termination notice on A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) It is averred that the corporate debtor is fully conversant with the contents of demand notice as it gave a reply dated July 27, 2018 which is evident that the respondent has received the demand notice and the respondent with a mala fide intention is trying to portray before this Tribunal that there are some technical errors on the part of the operational creditor. The respondent is very well aware of the fact that it does not have any proper reason for not paying the claim amount mentioned in the petition and is trying to create technical issues to overcome the liability. (ii) It is averred that clauses 11 to 15 of SLA, the parties have specifically agreed on the applicant's liability to be levied with penalties in cases, including answered calls, failure of applicant's employees in delivering services for the required number of days among various other factors. The penalty is ₹ 3,50,000 for each violation. (iii) It is averred that the contention of the respondent/corporate debtor that there was multiple instance of breach of provisions of the ser vice agreement since 2016 is absolutely false and vehemently denied by the petitioner herein. (iv) It is av ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce agreement, clause 6.4 reads that the penalties shall be deducted from the payments being made to the petitioner/operational creditor. It is averred that when penalties are being levied for the alleged non-performance of the petitioner's employees, the question of debit note is of little relevance as the same is relevant in the exchange of goods and not services. (xi) It is averred that the allegations of there being multiple number of breaches is absolutely false and incorrect as the petitioner was at all time diligent in performing its duties in accordance with the service agreement and the issue of penalties are raised only with an intention of absolving its liability which it ought to discharge towards the petitioner-company. (xii) It is averred that the amount claimed is not fair and just and there were penalties which needs to be deducted, the same should have been intimated to the petitioner or deducted and processed by the respondent. However, delaying the same at every instance and over and above that not releasing the payments shows the mala fide intention of the respondent to avoid the payments on one ground or the other. (xiii) It is averred that the corp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the utmost satisfaction of corporate debtor. Counsel contended the corporate debtor however committed default in respect of the invoices raised for the services rendered. Counsel contended the service agreement is shown as annexure-I. Counsel contended there was no dispute raised at any time prior to issuing demand notice in respect of services rendered by the operational creditor. Counsel contended operational creditor rendered services from 2015 to 2017 and raised invoices for an amount of ₹ 1,13,71,917 which is payable within 30 days. The cheques issued by corporate debtor were not honoured and returned with endorsement payment stopped by drawer . 8. Counsel contended the fact corporate debtor issued cheques by itself would establish that corporate debtor is liable to pay the amount covered by the invoices. It cannot be said that there was any dispute. Counsel contended that infact corporate debtor agreed to send money covered by the cheques through RTGS. Thus, there is no prior dispute. Counsel contended the alleged notice of dispute is not at all issued to the operational creditor. No proof is filed for alleged service of notice of dispute said to have been issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er IT infrastructure to handle the customers' concerns, calls and queries ; (e) Vertex abruptly closed its Benguluru (Karnataka) operations centre ; (f) Due to Vertex's deficient services, the TSRTC and APSRTC levied hefty penalties on Abhibus, resulting in direct business and reputation loss. Counsel has relied on the opinion given by the customers about the services rendered. They are shown at page Nos. 75 to 82 of the counter booklet. 10. Thus, learned counsel contended the customers expressed total dissatisfaction with regard to the customer services of the operational creditor. Even though service agreement was amended several times yet there was no improvement in the customer services. Therefore, termination notice was issued on April 19, 2018 by virtue of clause 10 of service agreement. Thereafter demand notice was issued for which corporate debtor issued notice of dispute. Learned counsel has relied on paragraph 29 of the judgment of the hon'ble apex court in Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd. [2017] 205 Comp Cas 324 (SC) ; AIR 2017 SC 4532, wherein the hon'ble Supreme Court held as under (page 366 of 205 Comp Cas) : If re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by the operational creditor. 12. The corporate debtor has relied on the reviews of the customers which are shown at page Nos. 75 to 82 of the counter. It is true, information from the customers found in these mails shows that they are totally dissatisfied with the services of the operational creditor. It is undisputed fact that service agreement dated October 30, 2015 was cancelled and termination notice was issued on April 19, 2018 and termination would come into effect from May 19, 2018. Thus, one months' notice was issued prior to termination. The termination of service agreement was prior to demand notice dated June 17, 2018. In the termination notice, the corporate debtor specifically stated that the services rendered by the operational creditor are not satisfactory. The corporate debtor relied on the copy of the termination notice at page Nos. 35 to 36 of the counter marked as annexure-II. It is clear from the termination notice that the reason for cancellation of contract is project deliverables like supply of manpower as required, etc. , are not being made due to various reasons. The termination will be with effect from May 19, 2018. There is no dispute about ..... X X X X Extracts X X X X X X X X Extracts X X X X
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