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TMI Blog2020 (9) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... chnology Limited. Therefore, M/s. PP Telecell Marketing Pvt. Ltd. is clearly the Corporate Debtor and M/s. Park Network Pvt. Ltd. Is the Operational Creditor. Whether the debt in question is an operational debt? - HELD THAT:- The operational debt means claim in respect of provision of goods and services. In the present case, the goods and services are being provided by the distributor to the sub distributor as per clauses of the sub-distribution agreement. Insofar as the purchase of mobile handsets is concerned, clause 6(c) of the SDA mentions that the sub distributor shall place orders in writing for supply of products. Products bought against such orders will be delivered by the Distributor or lifted by the Sub Distributor within 24 hours of billing and will in no case be stored at distributor s premises beyond this deadline. Therefore, as per clause 4(a) and clause 6(c) of the Sub Distribution Agreement, the Distributor is the seller of mobile handsets and accessories and the Sub Distributor is the purchaser of the products from the Distributor. Clause 4(a) of the Sub Distribution Agreement also makes it clear that Distributor shall bear the cost of price drop for stocks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t) Acting Chairperson , (V.P. Singh) Member (Technical) And (Dr. Alok Srivastava) Member (Technical) For the Appellant : Mr. Praveen Kumar Aggarwal , Advocate For the Respondents : Mr. Ajay Goyal and Mr. Tushar Thareja , Advocates JUDGMENT { Per : Dr. Alok Srivastava, Member ( T ) } This appeal emanates from an order dated 27.5.2020 (hereinafter called Impugned Order) of the National Company Law Tribunal, Delhi, Bench V vide which Adjudicating Authority has admitted an application under Section 9 of Insolvency Bankruptcy Code, 2016 (hereinafter called IBC, 2016) filed by M/s. Park Network Pvt. Ltd. The appeal has been filed by Rajesh Mahajan, who is a suspended Director of the Corporate Debtor M/s. PP Telecell Marketing Pvt. Ltd. M/s. Park Network Pvt. Ltd. is Respondent No.1 in the appeal and M/s. PP Telecell Marketing Pvt. Ltd., the Corporate Debtor (which is now under CIRP) is Respondent No.2 through Mr. Ajay Goyal, Interim Resolution Professional. 2. The brief facts of the case are that M/s. PP Telecell Marketing Pvt. Ltd. having CIN No. U64202DL2002PTC117795 is in the business of trading and was the authorized distributor of M/s. Syntech (HK) Tec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributor by M/s. PP Telecell Marketing Pvt. Ltd. through the SDA dated 15.4.2015, wherein the Operational Creditor was given sub-distribution rights for sale of products indicated at Annexure A enclosed with the SDA. The price and payment terms were that Sub Distributor shall purchase product from the Distributor according to the price list applicable and terms of sale in effect for product made available to the Sub Distributor on the date of bill. Distributor may adjust the prices of the products from time to time upon reasonable prior written notice to Sub Distributor . 7. As Distributor s obligations, the following was included in the SDA:- 5(G) The Company/Distributor will introduce schemes from time to time to boost sales of the products. (H) Any liability arising out of non service ability, delayed or unsatisfactory serviceability or performance of the products will be borne by the Distributor. 8. The Operational Creditor was receiving all the benefits in relation to the products covered in the Sub Distribution Agreement from the Corporate Debtor M/s. PP Telecell Marketing Pvt. Ltd. These benefits were originally given by M/s. Syntech (HK) Technology ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also pointed out to certain defects and infirmities in application submitted by Operational Creditor under Section 9 of IBC 2016 stating that details of transactions, date of default and invoices to establish operational debt were not stated in the demand notice. The appellant has placed reliance of the decision of NCLAT in Neeraj Jain (Director of Flipkart India Pvt. Ltd.) vs. Cloudwalker Streaming Technologies Private Limited. He has also cited the case of Privy Council in Nazir Ahmed v. King Emperor {63 1A 372(1936)} and Ramco Systems vz. Spiceject Ltd. (2019 SCC Online 354 NCLAT), where the Hon ble Tribunal has held, ...in the absence of specific evidence relating to invoices forwarded by the Appellant and there being a doubt, we hold that the Adjudicating Authority has rightly refused to entertain application under Section 9 which requires strict proof of debt and default. He has argued that the admission of debt must be unequivocal, unconditional and clear, which is not so in the present case and the claim of operational debt on account of sales return is not tenable. The appellant has also referred to the judgment of Apex Court in Mobilox Innovations (P) Ltd. V. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for any claims whatsoever, whether as per the Company Policy or written commitment by a level not lower than a Branch Manager, if such claims are not lodged with the distributor with 15 days of the claim date. 15. Explaining the issue of sale return, the Learned Counsel for Respondent No.1 has stated that Respondent No.1 returned all the non activated handsets to Respondent No. 2, i.e. Corporate Debtor and the Corporate Debtor, after applying benefits under schemes and price reduction for the handsets sold to Respondent 1, credited the final amount to the account of the Respondent 1. He has claimed that handsets that were not activated were sale returns and the benefit of various schemes and price drops were related to the selling price of the handsets and thus the due amount was given to him by Respondent No. 2 in the form of credit notes which were verifiable through the ledger accounts. Therefore, the ledger accounts clearly show the amount owned by the Respondent 2 to respondent 1 was in regard to the services rendered as per the sub-distribution agreement and benefits etc. and are in the nature of operational debt. 16. We have perused the appeal memo, replies of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in this agreement there is a obligation placed of the mobile handset manufacturing company M/s. Syntech (HK) Technology Limited. Therefore, M/s. PP Telecell Marketing Pvt. Ltd. is clearly the Corporate Debtor and M/s. Park Network Pvt. Ltd. Is the Operational Creditor . 19. The next issue is whether the debt in question is an operational debt. Insofar as this isue is concerned, it would be useful to go through the definition of operational debt in Section 3(11) and Section 5 (21) of the IBC 2016 - 3(11) debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. 5(21) operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority. 20. It is evident from the definitions cited above that operational debt means claim in respect of provision of goods and services. In the present case, the goods and services are being provided by the distributor to the sub distributor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5.2019. The letter mentions that the demand raised by the Occupational Creditor is totally illegal as the amount demanded is not the liability of the company (M/s. PP Telecell Marketing Pvt. Ltd.), as there was no direct transaction between the parties and the amount claimed by the Operational Creditor. As has been discussed earlier in this judgment, the Sub Distribution Agreement is valid and creates a Corporate Debtor and Operational Creditor relationship between M/s. PP Telecell Marketing Pvt. Ltd. and M/s. Park Network Pvt. Ltd. Therefore, the dispute tried to be raised by M/s. PP Telecell Marketing Pvt. through his reply to the demand notice is imaginary and not as defined in Section 8(2)(a) of the IBC 2016. Thus, it is clear that the demand notice was sent on 2/5/2019 by the Operational Creditor to the Corporate Debtor and the dispute raised does not hold any ground. 22. The last point to be looked at is whether the application under Section 9 of IBC, 2016 was filed by the Operational Creditor within the time period of limitation. It is seen that the application dated 18.7.2019 was filed before the Hon ble NCLT (Adjudicating Authority) and as per para 4 of the application ..... X X X X Extracts X X X X X X X X Extracts X X X X
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