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TMI Blog2021 (5) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... subject to the rigours of CIRP, profit making viable going concerns engaged in tasks of national importance and push them into liquidation. It is therefore clear that the Petitioner seeks to use this Tribunal as a mere recovery forum, which is not acceptable, being against the spirit of the Code. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but they can be invoked to initiate CIRP for justified reasons as per the Code. It is clear that a debt which has been denied, is not backed by any evidence, and the Petition is filed for the purpose of recovery against a solvent going concern contributing immensely to the country's economy the Petition deserves to be dismissed. It is certainly not a case where the Corporate Debtor is unable to repay its debts on account of its inability to pay that requires a resolution - Petition dismissed. - C. P. (IB) No. 17/BB/2021 - - - Dated:- 26-4-2021 - Rajeswara Rao Vittanala , Member ( J ) And Ashutosh Chandra , Member ( T ) For the Appellant : Misbahul Haque For the Respondents : Theerthesh B. S. ORDER Ashutosh Chandra , Member ( T ) 1. C.P. (IB) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Indigenized Defense Projects wherein the Operational Creditor provided the expertise consultancy support and services to the Corporate Debtor. During the period of contractual association, expertise consultancy services were provided regularly by the Operational Creditor to the Corporate Debtor according to the terms and conditions of the aforesaid consultancy agreement and accordingly monthly consultancy fee were charged along with GST amounting to ₹ 2,36,000/- per month to the Corporate Debtor. The Operational Creditor only received the monthly consultancy fees till the month of August 2018. However, the monthly consultancy fees from September 2018 to February 2019 (6 months) was unpaid to the Operational Creditor. The said due is also acknowledged by the Corporate Debtor on its email dated 03.02.2019 and the non-payment of due is also evident form Statement of Bank Account of the Operational Creditor. (5) On 28th of February 2019 the Consultancy Agreement was terminated according to Article 2(b) of the Consultancy Agreement, a prior notice sent on 1st of February 2019 through email to Corporate Debtor by the Operational Creditor and the farewell meeting on 05.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot tenable in law. In compliance of Section 9 (3) (b) and Section 9 (3) (c), the 'bank statement' and 'affidavit of no dispute' has also been annexed herewith this Petition. 3. The Company Petition is opposed by the Respondent by filing Statement of Objections dated 03.04.2021, by inter alia contending as follows: (1) It is stated that the Ministry of Corporate Affairs vide Notification No. S.O.1205 (E) dated 24.03.2020 amended Section 4 of IBC, 2016 and specified one crore as minimum amount of default for initiating CIRP. The extract of Notification is as hereunder: S.O.1205(E)- In exercise of the powers conferred by the proviso to Section 4 of the IBC, 2016 (31 of 2016), the Central Government hereby specifies one crore rupees as the minimum amount of default for the purposes of the said Section. Since the alleged default is ₹ 14,16,000/- the Petitioner herein loses its locus standi to make this instant Petition. The Petitioner is trying to take shelter under explanation provided to Section 10A of the I B Code, 2016 which states that: 10A. Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he I B (AAA) Rules, 2016 the Application filed in Form 5 should be accompanied with the documents and records required therein and as specified in the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Regulation 7 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 states that to prove the existence of debt, the Operational Creditor shall file either the records available with the information utility or a contract for the supply of goods and services with Corporate Debtor, an invoice demanding payment for the goods and services supplied to the Corporate Debtor, an order of court upon non-payment of a debtor or financial statement. In view of the fact that the alleged consultancy agreement is non-est in the eyes of law and in view of the fact that no invoices or records from the information utility is filed along with the Application, in view of the fact the alleged email does not per se prove the existence of debt, the Application is defective, not maintainable and liable for dismissal. (6) The relevant extract of Rule 6 of I B (AAA) Rules, 2016 and Regulation 7 of the IBBI (Insolvency Resolution Process for Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable. From the date of agreement i.e. on 01.07.2016 till August 2018 consultancy services have been provided by the Operational Creditor to the Corporate Debtor according to the terms and conditions of the consultancy agreement, the consultancy fee has been received by the Operational Creditor. From September 2018 to February 2019 the Operational Creditor regularly reminded the Corporate Debtor via emails and follow-ups for the consultancy fee of 6 months period which has not been paid. (2) It is also stated that it is not mandatory for the Operational Creditor to raise an Invoice. Hence, the objection cannot be raised on the invoice. U/s 9(3)(a) of the IBC, 2016, which states that: (3)(a) A copy of the invoice demanding payment of the demand notice delivered by the operational creditor to the corporate debtor: It is presumed by the abovementioned clause that it is not mandatory to produce or raise and invoice demanding payment, the Demand Notice under Form 3 Clause (a) of sub-rule (1) of Rule 5 of the IBC, 2016 delivered by the Operational Creditor to the Corporate Debtor shall be sufficient enough to justify the claim. As the Operational Creditor has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unstamped Consultancy Agreement dated 01.07.2016. The Petitioner abruptly stopped his services without any rhyme or reason. The Respondent had to incur heavy expenditure to undertake the services from different vendors. Since the Petitioner was known to the Respondent and on account of humanitarian ground, the Respondent did not impose any cost obligation on the Petitioner for breach of contract. However, the Petitioner with an ulterior motive and mala fide intention is threatening the Respondent with insolvency proceedings. 6. Heard Mr. Misbahul Haque, learned Counsel for the Petitioner and Mr. Theerthesh B.S., learned Counsel for the Respondent. We have carefully perused the pleadings of the Parties and the extant provisions of the Code and the law. 7. As far as the two technical objections raised by the Corporate Debtor are concerned, we are not in agreement. Firstly the amendment to section 4 of the Code vide Notification dated 03.04.2021 raising the minimum amount of default for initiating CIRP to ₹ 1 crore applies to defaults committed after this amendment whereas the alleged default in the instant case is prior to this date, and hence is inapplicable to the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that evidence of services rendered itself is absent. A right or a claim essential to the existence of an operational debt requires such evidence. Informal e mail correspondences cannot be a substitute for such evidence as could lead us to conclude that services were rendered and payments remained due for such services, especially when in its reply notice dated 14.02.2020 to the legal Demand Notice dated 01.02.2020 served u/r 5 of the Rules of 2016 upon the Corporate Debtor, the debt was denied. 10. Though the dispute may not be pre-existing, in this case the liability is denied as no services are established to have been provided by the Petitioner for the period September 2018 to February 2019 for which the payments are demanded. 11. From the submissions made by the Corporate Debtor, it is seen that it is a critical supplier to the Defence sector and Indian Space Programme, and is involved with several projects of strategic importance, and is the only private company in India having a licence from the Government of India for undertaking Missile Refurbishment and upgradation. It also exports sophisticated micro-electronic products to various countries. It has a Paid up Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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