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TMI Blog2019 (12) TMI 1355X X X X Extracts X X X X X X X X Extracts X X X X ..... vices LLP (herein after referred to as Petitioner/Operational Creditor) is a Limited Liability Partnership, registered with the Registrar of Companies, Delhi. Its main object of the Company is engaged in the affiliate digital marketing business, wherein it procures campaigns from advertisers or from large affiliates and sublets the campaigns to publishers for execution. The Petitioners is working with more than 20 advertisers or big affiliates and has about 15 publishers to execute the campaigns. (2) M/s. InMobi Technology Services Pvt. Ltd. (herein after referred to as Respondent/Corporate Debtor) is a Private Limited Company was incorporated on 02.09.2011 under the Companies Act, 1956, bearing CIN: U72900KA2011PT C060216. Its Authorised Share Capital of Rs. 5,00,000/-(Rupees Five Lakhs only) and Paid-up Capital of Rs. 5,00,000/- (Rupees Five Lakhs only). Its main object of the Company is engaged in providing mobile platforms for enterprise marketers. (3) On or about May 2016, the Corporate Debtor approached the Operational Creditor to run a VAS subscription campaign. Accordingly, in due compliance with the scope of work, the Operational Creditor ran several campaigns and deli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of 10 days as per Section 8 of the IBC, 2016. After more than a month from the date of receipt of the Demand Notice, the Corporate Debtor received a reply dated 15th November 2018 to the said Demand Notice. (6) As per the financial statement filed by the Corporate Debtor for the Financial Year 2016-2017 and 2017-2018, the total revenue from sale of services reported by the Corporate Debtor for Financial Year 2016-2017 is INR 2,87,02,04,669/-and for the Financial Year 2017-2018 is INR 3,17,81,65,183/-. The Corporate Debtor has reported a profit before tax of INR 5,38,74,337/- and a loss before tax of INR 29,02,25,810/- for the Financial Year 2017-2018. 3. The instant Company Petition is opposed by the Respondent/ Corporate Debtor by way of filing Statement of Objections dated 13.11.2019, by inter alia contending, as follows: (1) The Petitioner has filed the present Petition with a view to recover disputed debts, which is contrary to the objectives of the Code. In fact, given the suppression of material facts by the Petitioner, and the fact that it has invoked the jurisdiction of this Tribunal for a purpose other than resolution of insolvency, penalties under Section 65 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies in 2016, and is widely recognized as India's first 'unicorn', i.e., a Company with a valuation of over USD 1 Billion. It has also won several awards, including the prestigious 'NASSCOM Randstad Award for Best Practices in Talent Management'. It is claimed that the Respondent is one of India's truly innovative and successful technology" businesses. (4) It is stated for the services rendered, a commission was to be paid to the Petitioner for each click on the link hosted on its websites. However, commission would only become due and payable if the same amounted to a 'Qualified Action' as defined under Section 2(b) of the Agreement. The relevant portion of Section 2(b) of the Agreement has been reproduced herewith: "We will pay Affiliate for each Qualified Action (the "Commission"). A "Qualified Action" means an individual person who (i) accesses the Program Web Site via the Link, where the Link is the last link to the Program Web Site, (ii) is not a computer generated user, such as a robot, spider, computer script or other automated, artificial or fraudulent method to appear like an individual, real live person, (Hi) is not using pre-popula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be without regard as to whether or not such Commissions were earned as a result of such breach. In the event of a material breach of this Agreement, Wadogo reserves the right to disclose your identity and contact information to appropriate law enforcement or regulatory authorities or any third party that has been directly damaged by your actions." 4. Heard Ms. Bhavya Mohan, learned Counsel for Petitioner and Shri C. K. Nandakumar, and learned Counsel for the Respondent. We have carefully perused the pleadings of both the parties, and extant provisions of the Code and rules made there under. 5. Ms. Bhavya Mohan, learned Counsel for the Petitioner, while reiterating various averments made in the Company Petition and also in synopsis, as briefly stated supra, has further submitted that the debt and default in question is admitted and the same is not in dispute, and the Demand Notice dated 08.10.2018 issued by the Petitioner to the Respondent was not responded within the stipulated period. Therefore, she has also relied upon various documents filed in support of the case and also placed a Memo dated 13.12.2019, which reads as under: "The Operational Creditor prays that this memo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed the Petitioner. Further, the Respondent also filed a Petition under Section 482 of the Code of Criminal Procedure, 1973 in Crl. P. No. 9867 of 2017 before the Hon'ble High Court of Karnataka, wherein the Hon'ble Court was pleased to dispose of the Petition with a direction to the police to complete the investigation within two months. Therefore, the Petitioner has suppressed various material facts with the intention of wrongly invoking the present proceedings against the Respondent Company. And the Respondent Company is a financially healthy Company with over 1,500 employees on its roster and not 'insolvent'. Therefore, the Petitioner failed to make out a case for initiation of CIRP and thus urged the Adjudicating Authority to dismiss the Company Petition. He has also relied upon the following judgments in support of his case: Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018) 1 SCC 353. Macnally Sayaji Engineering Limited Vs. Kee Projects Limited - C.P.(IB) No. 569/ND/2017. A.D.Electro Steel Co. Pvt. Ltd. and Anr. V. Anil Steels -Company Appeal (AT) (Insolvency) No. 194 of 2017. Sudarshan Cargo Pvt. Ltd. Vs. M/s. Techvac E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 by inter-alia stating as under: "...3 Our Client states that, as you are aware, there is dispute in existence between you and our client on the payment of the services provided by you. Most claims raised in the Demand Notice under reply have been disputed by our client on multiple occasions, previously in writing, prior to the issuance of the Demand Notice. We draw your attention to the email dated 03.02.2017, addressed to and subsequently acknowledged by Mr. Himanshu Mendiratta and Mr. Arjun Basu wherein our client specifically denied all the false and vexatious claims made by you. Our client also informed you of third party report confirming the fake and fraudulent clicks generated by you through your traffic in the course of your services. 4. Our client states that as per the terms of the Agreement, you were required to provide the services of publishing advertisements on our client's program website and payment for the services was based upon the number of clicks/downloads as reflected on the online payment tracker and by the traffic quality report. As per the terms and conditions of the Agreement, our client was to pay only for 'Qualified Actions' wherein a l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iming payment towards the disputed invoices. 7. Our client states that there has been no acknowledgement of debt and the email dated 17.08.2016 annexed to the demand notice was sent after a discussion with your client that only if the traffic report is found non-fraudulent and that the advertisers do not complain about the campaigns, will the payments be made. The email exchange occurred when our client was still ascertaining the reports of fraudulent conversions by you. Subsequently, our client intimated you of quality issues which resulted in withholding of payments. It is reiterated that as per the Agreement our clients is entitled to withhold payments as the clicks generated have been fraudulent." 10. The Respondent has filed several communications exchanged between the parties along with the reply raising defective services provided by the Petitioner. The Respondent, has also filed a Complaint dated 08.02.2017 to the Police Inspector, HAL Police Station, HAL, Bengaluru, making serious allegations against Mr. Himanshu Mendiratta, Mr. Arjun Basu and Mr. David Kahana for Harassment, Assault and Criminal intimidation. Wherein it is inter-alia stated as follows: "....7. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Karnataka, Bengaluru, by inter-alia seeking to quash the entire proceedings against the Petitioner and other accused in complaint dated 13.10.2017 and NCR No. 636/2017 registered against the Petitioner offences P/U/S 406 of IPC, U/s 482 of the Cr. P.C., and the same was disposed of by an order dated 22.06.2018 by directing to dispose of NCR, as expeditiously as possible, in accordance with law within two months from the date of receipt of copy of this order. 12. The above facts and circumstance of the case, clearly disclose that there are several pre-existing disputes between the parties with regard to the alleged claims.. Therefore, the contention of the learned Counsel for the Petitioner that the debt and default is not in dispute is not at all tenable and it is liable to be rejected. Moreover, the Petitioner has filed instant Company Petition with an intention to recover the alleged outstanding amount, which is seriously in dispute even prior to the issue of statutory Demand Notice. It is also not possible to examine various allegations made by the parties with regards to defective services and outstanding amounts in question, under the provisions of Code, which is summary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited, (2018) 1SCC 353 has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. In another latest judgment rendered in Transmission Corporation of A.P. Ltd. Vs. Equipment Conductors and Cables Ltd., (CA No. 9597 of 2018) dated 23rd October, 2018, 2018, (2018) 147 CLA 112 (SC) Supreme Court of India, it is inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of judgment, it is stated that Adjudicating Authority, while examining an application filed under Section 9 of the Code, will have to determine: a) Whether there is an 'operational debt' as defined exceeding Rs. 1 Lakh? b) Whether documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? c) Whether there is existence of dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of demand notice of the unpaid operational debt in relation to such dispute? If any one of aforesaid conditions is lacking, the application would have to be rejected. 15. For the aforesaid reasons and circumstances and the law on the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X
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