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TMI Blog2022 (1) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... debt and operational debt. The word Operational Creditor defined under sub Section 20 of Section 5 of I B Code, 2016, Operational Creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. In the instant case, the covenants as mentioned in the Memorandum of Understanding dated 08.06.2015 clearly mentions and admits that the payment of ₹ 6 Crores is a liability on the part of the Corporate Debtor for the services rendered. Therefore, the definition of Operational Debt clearly attracts in the instant case, since the Respondent had provided services and in consideration thereof the Corporate Debtor admit its liabilities for the said services. Further, the Respondent also clearly fall under the category of Operational Creditor since an operational debt is owed to the Operational Creditor. This Tribunal comes to a resultant conclusion that the Respondent s claim is an Operational Debt and the Respondent falls under the category of Operational Creditor and there is no pre-existence of dispute. Further, it is not time barred as seen from the Demand Notice issued by the Respondent and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to return the said cheques and in response thereof they have claimed to have lost the said cheques. However, the Appellants accepted the said statement in good faith. 7) In view of breach of the solemn covenants under the Sale Deed, the Corporate Debtor has issued a Notice on 28.09.2016. As a counterblast the Respondent by misusing the five cheques which was to be returned and claimed to be lost, issued show cause notices under Section 138 of the Negotiable Instruments Act on 03.03.2017 and thereafter filed complaints before the Hon ble Principal JMFC at Chitradurga. 8) It is submitted that the claim of the Respondent to commence proceedings under Section 138 of the NI Act is that a memorandum was allegedly entered into on 08.06.2015 and that the Corporate Debtor purportedly agreed to pay a sum of ₹ 6 Crores to the Respondent. Further, the payment of the said sum was towards expenditure incurred for conversion of the said property to residential purpose, approval of provisional plan from BIAPPA, erection of fence around the wall of the said property. It is submitted that the Corporate Debtor issued twelve undated cheques each ₹ 50 Lakhs to the Respondent. 9) It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent submitted that the Respondent /Operational Creditor is a partnership firm engaged inter alia in the business of land development, construction and other incidental activities. 18) It is submitted that the Corporate Debtor purchased the above land from all the partners of the Operational Creditors vide Sale Deed dated 08.06.2015. While so, the Operational Creditor rendered certain services for the said property sold to the Corporate Debtor i.e. (a) carrying out the development in the said property, (b) expenditure incurred for conversion of the said property to the residential purpose (c) obtaining approval of provisional plan from the BIAPPA, (d) erection of fence around the compound wall of the said property (e) levelling of the said property and expenditure included for liaison of all such works. 19) It is submitted that the work rendered by the Operational Creditor was duly acknowledged by the Corporate Debtor and an amount of ₹ 6 Crores towards the service was ascertained and the Corporate Debtor agreed to pay the said amount by way of 12 cheques vide executing Memorandum of Agreement dated 08.06.2015. The Corporate Debtor categorically admitted its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Form-3 under Section 8 of IBC demanding the service fee due and payable by the Corporate Debtor to the Operational Creditor under the MOA. The Corporate Debtor replied to the demand Notice raising false allegations by denying execution of MOA by it and came up with cooked up story on issuance of 12 cheques, which are purely as an afterthought. 24) It is submitted that the Respondent herein rendered services to the Corporate Debtor and in pursuance of MOA claimed the amount for which the Corporate Debtor failed to pay the same. The Learned Adjudicating Authority rightly admitted the application and the Appellant has not made out any case seeking to set aside the said admission order. 25) Therefore, it is prayed that the Appeal may be dismissed. ANALYSIS / APPRAISAL 26) Heard the Learned Counsel appeared for the respective parties, perused the pleadings, documents and citations relied upon by them. After analyzing the pleadings, the issue felt for consideration is whether the Respondent is an Operational Creditor and whether the debt is an Operational Debt or not. 27) Now we deal with the issue. 28) The Adjudicating Authority vide order dated 16.04.2021 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid amount to the Respondent is its liability towards the Operational Creditor/Respondent. In clear terms, the MOU entered with a liability to pay to the Respondent and issued 12 cheques thereof. The MOU is entered only for the purpose viz. executing the work as stated therein and in consideration thereof. The Respondent is mainly relying upon the MOU, and filed Section 9 Application on that basis. 30) However, the Appellant submitted that the parties have entered Sale Deed dated 08.06.2015 between the Respondent and the Corporate Debtor whereby the Appellant purchased the property as prescribed in the schedule to the Sale Deed. In the Sale Deed it is mentioned that the total consideration of amount ₹ 24,06,00,000/- paid by the purchasers and it is also specifically mentioned that the entire sale consideration of the schedule property there are no amounts due to be paid by the purchaser for the conveyance of the schedule property thereby jointly and severally acquit and discharged the purchaser of all liabilities in respect thereof. 31) In view of the clear terms as stated in the Sale Deed, the Purchaser i.e. the Corporate Debtor had paid full amount to the vendors i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B Code, 2016, Operational Creditor means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred. Sub section 21 of Section 5 defined operational debt means a claim in respect of the Provisions 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. 36) In the instant case, the covenants as mentioned in the Memorandum of Understanding dated 08.06.2015 clearly mentions and admits that the payment of ₹ 6 Crores is a liability on the part of the Corporate Debtor for the services rendered. Therefore, the definition of Operational Debt clearly attracts in the instant case, since the Respondent had provided services and in consideration thereof the Corporate Debtor admit its liabilities for the said services. Further, the Respondent also clearly fall under the category of Operational Creditor since an operational debt is owed to the Operational Creditor. 37) The Learned Counsel for the Appellant relied upon the Judgment of the Hon ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings commencing against them. Such an anomaly cannot possibly have been intended by the legislature nor has it so been intended. We have also seen that one of the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties. 40) On the other hand, the Learned Counsel for the Respondent relied upon the Judgment of the Hon ble Supreme Court in Mobilox Innovations Pvt. Ltd. v Kirusa Software Pvt. Ltd. reported in (2018) 1 SCC 353 at Para 51 held as under. 51 It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under section 9(5)(2)(d) if notice of dispute has been received by the Operational Creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the opera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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