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TMI Blog2020 (12) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... and the factual matrix in proper prospective a flashback into the events relevant to the filing of application by Appellant under Section 9 for triggering of Corporate Insolvency Resolution Process and germane to its disposal is inevitable. Respondent- 'Guardian Homes Pvt. Ltd.' (Corporate Debtor) engaged in the construction business wanted to raise finance for its operations. The Appellant provided its services to the Corporate Debtor for raising finance as also advisory services for structuring and placement of debt instrument in private transactions. A letter dated 08.11.2017 incorporating the terms and conditions for providing services to the Corporate Debtor came to be issued by the Appellant which was accepted by the Corporate Debtor. Sanction letter dated 16.10.2018 placed before the Adjudicating Authority revealed that certain facilities to the extent of Rs. 280,00,00,000/- Crores were granted to the Corporate Debtor by one 'KKR India Asset Finance Pvt. Ltd.'. The Appellant raised proforma invoices on the Corporate Debtor dated 16.01.2019, 30.01.2019, 27.02.2019 and 20.04.2019 as noticed in the impugned order. In regard to proforma invoice dated 20.04.2019 for an amount of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of remaining fees which was due and payable to the Appellant. It is further submitted that even as per Corporate Debtor's own admitted case Appellant's fee settled at Rs. 1.5 Crores after which Rs. 75 Lakh was outstanding and same being due and payable to the Appellant and not having been paid in compliance to the demand notice, the Adjudicating Authority was bound to admit the application under Section 9. It is submitted that the mere assertion on the part of the Corporate Debtor that it is ready and willing to settle the balance of Rs. 75 Lakhs would not justify rejection of Appellant's application under Section 9. It is pointed out that Corporate Debtor's letter dated 02.05.2019 was an afterthought to evade its liability though part payment for services rendered by Appellant was made which clearly establishes that there was no pre-existing dispute between the parties. As regards plea of deficiency of services raised by the Corporate Debtor, it is submitted on the behalf of the Corporate Debtor that the Corporate Debtor, in terms of Clause 2.2 of the Engagement Letter was still liable to pay full fees to the Appellant. Learned counsel for the Appellant would further argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cember, 2018, as the Appellant's company failed to render its services within the fixed time, discussions were held and it was mutually agreed that the Corporate Debtor will pay amount of Rs. 1.5 Crores as professional fees towards the deficient services as provided by Appellant as full and final settlement. The Appellant, pursuant to the negotiations, raised the invoice dated 16.01.2019 for Rs. 1.5 crores towards the full and final settlement amount, the invoice being towards the 'fees' and not 'part fees''. Vide letter dated 19.02.2019, Respondent confirmed the payment of Rs. 75 lakhs clearly stipulating that the total professional fees agreed between the parties was Rs. 1.5 crores. When the Respondent received incorrect invoice dated 27.02.2019, it requested the Appellant to issue the corrected proforma invoice. It is pointed out that the Appellant did not object to the same nor disputed said emails. Even the demand notice dated 20.05.2019 issued by the Appellant stated that the quantum of debt were disputed by the parties. It is lastly submitted that the dispute admittedly existed prior to the issuance of the demand notice and failure to reply the same would not be entitled the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed while the amount due was Rs. 2,80,00,000/- in terms of the Sanction Letter for arranging funds to the tune of Rs. 280 Crores to the Corporate Debtor. A bare look at the letter reveals that the project "Cityscapes" was sanctioned on 16.10.2018 and first disbursement towards the funding was received on 25.10.2018. It is manifestly clear that the fixed period of six months for concluding the proposed transactions in the nature of providing financing facilities as contemplated in the engagement letter had elapsed on 07.05.2018 i.e. after the expiry of six months reckoned from 08.11.2017 when the engagement letter was issued. However, simple reading of Clause 1.3 of the engagement letter leaves no room for doubt that the contemplated period of six months was substitutable by a mutually agreed period and the agreed fee was liable to be paid in full provided the proposed transactions through the Appellant were concluded during the aforesaid term. Admittedly, no suit or arbitration proceedings were pending in regard to any alleged deficiency of service. The fact that another mandate letter dated 03.09.2018 forming Annexure 4 to the appeal paper book was issued in favour of Appellant wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raised in regard to deficiency in service in response to the demand notice, there appears to be considerable force in the contention of Appellant that withholding of admitted payable amount of Rs. 75 Lakhs by Corporate Debtor emanated out of its design to coerce the Appellant into accepting that the amount of fee payable had been settled at Rs. 1,50,00,000/- in terms of a mutual settlement which was not at all forthcoming. 8. In view of the foregoing discussion on merits of the case, we are of the considered opinion that the Adjudicating Authority has landed in error in holding that there was no 'debt' as claimed by the Appellant and there was 'deficiency in service' provided by the Appellant. The findings recorded by the Adjudicating Authority are grossly erroneous and same cannot be supported. Once the liability in respect of Rs. 75 lakh was admitted and the same was not discharged by the Corporate Debtor, dispute in regard to quantum of debt would be immaterial at the stage of admission of application under Section 7 unless the debt due and payable falls below the minimum threshold limit prescribed under law. The impugned order is liable to be set aside as the same is unsusta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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