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TMI Blog2022 (8) TMI 836X X X X Extracts X X X X X X X X Extracts X X X X ..... products in India as well as on packaging, promotional and advertising material associated therewith - the 'Claim' of the Respondent is in respect of the provision of the Goods and Services for which the 'Corporate Debtor' is contractually obligated to make the payments towards such 'Claim'. The clauses of the Agreement provided for Royalties to be paid as a variable amount to the first Respondent and the minimum guaranteed amount to be paid as a fixed payment as stipulated under Clause 4.2 of the Agreement. The 'Claim' in respect of such provisions of goods and services , under the terms of the Agreement, fall within the ambit of the definition of 'Operational Debt' as defined under Section 5(21) of the Code. Pre-Existing Dispute between the parties - HELD THAT:- It is relevant to peruse the emails exchanged between the parties where nowhere did the 'Corporate Debtor' raise any dispute in terms of Section 8(2)(a)read with section 5(6) of the Code, either with regard to existence of the amount of debt or with regard to the quality of goods or services or regarding the breach of the representation or warranty either directly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of goods or services and also that Corporate Debtor has committed a default towards its liability or obligation in respect of such outstanding claim . We would also like to place our reliance on the judgment Broadcast Audience Research Council V. Mi Marathi Media Limited [C.P. I 688/IBC/NCLT/MB/MAH/2018] and we hereby observe that in the present case, the MGR was a fixed payment due and payable by the Corporate Debtor to the Operational Creditor under the Agreement and the non-payment by the Corporate Debtor, for using the Trademark which is the Licensed Product of the Operational Creditor, amounted to an operational debt under the IBC. It has been observed that time and again the Corporate Debtor has admitted its liability be it by way of making a part payment (first and second quarter payment) or by submitting before the admittedly the claim of the Applicant arises out of failure to pay the Minimum Guaranteed Royalties and were not paid on the condition that the Operational Creditor under the obligation to promote the brand for the Corporate Debtor therefore, it is a clear admission of default and this Adjudicating Authority does not have to indulge in the details o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor'. Learned Counsel placed reliance on the decision of this Tribunal in M. Ravindranath Reddy Vs. Mr. G. Krishan Ors. in Company Appeal (AT) (Ins.) No. 331/2019 in support of his case that any 'debt' arising without nexus to the direct input to the output produce or supplied by the 'Corporate Debtor', cannot be considered as an 'Operational Debt'. Learned Counsel also placed reliance on the Judgement of this Tribunal in 'Promila Taneja Vs. 'Surendra Design Pvt. Ltd.', Company Appeal (AT) (Ins.) No.459/2020, wherein this Tribunal has held that definition of goods and services cannot be lifted from taxation statues unless it is specifically provided for under the Code and once again reaffirmed the decision of M. Ravindranath Reddy (Supra). It is submitted that the first Respondent has failed to show that the Appellant has used the trademark of the first Respondent for the purpose of sale, marketing etc. that their claim is with respect to non-payment of Minimum Guaranteed Royalties which is not an 'Operational Debt'. 3. Submissions of the Learned Counsel appearing on behalf of Respondent No. 1: It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the late charge interest at 1.5% per month or the maximum rate permitted by law, whichever is less, along with any costs/attorney fee, etc., was payable on such dues as stated in Clause 4.4 and Clause 13.12 of the Agreement. It is further submitted that in terms of Clause 4 of the Agreement, Respondent No. 1 raised and served several Invoices upon the Corporate Debtor . However, the Corporate Debtor deliberately/intentionally did not make the payment of the total amount due and payable under the Agreement to Respondent No. 1. It is submitted that Respondent No. 1 has sent several reminders in this regard but the Corporate Debtor did not respond. Learned Counsel drew our attention to the emails dated 11.06.2015, 29.09.2015 and also the reminder emails dated 21.11.2015, 10.12.2015 and 21.12.2015 sent by the first Respondent to the 'Corporate Debtor' seeking payment of the amounts. While so, on 11.06.2015, the 'Corporate Debtor' gave a post-dated cheque for a sum of Rs.5 Lakhs issued by 'Xtreme Perfumes and Personal Care Private Limited, a Company in which the Appellant is also a director. But the first Respondent returned the said cheque as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 2(7) of the Sale of Goods Act, 1930 reads as follows: 2(7) goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale. 7. Section 3(27) of the Code is being reproduced as hereunder: 3(27) property includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property; 8. Section 2(jb) of the Recovery of Debts and Bankruptcy Act, 1993 defines property to include intangible assets like trademark, etc . 9. The Learned Counsel for the Respondent submitted that the Hon ble High Court of Madras in Duro Flex (P) Limited Vs. Duroflex Sittings System , (2014) SCC OnLine Mad 8968, examined the issue of jurisdiction of the Court in case of infringement of the trademark and observed that the right and interest in a trademark is a Movable Property . The Hon ble Madras High Court has con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce rendered by the first Respondent and therefore falls within the definition of service and any amounts due and payable arising out of such service is an Operational Debt . Further, it is also the case of the first Respondent that they had paid Service Tax to the Government Authorities on the invoices raised against the Corporate Debtor . As the invoices itself contemplate payment of GST for the use of the services rendered by the first Respondent, on which GST is payable, the definition of service under the Central Goods and Services Tax Act, 2017 is applicable to the facts of this case. 13. The contention of the Learned Counsel for the Appellant that the term 'Service' has not been defined expressly under the Code and therefore the definition cannot be lifted from other statutes and that this issue is squarely covered by the Judgements of this Tribunal in M. Ravindranath Reddy (Supra) and 'Promila Taneja (Supra), is unsustainable, keeping in view the Judgement of a Five Member, Larger Bench of this Tribunal in 'Jaipur Trades Export Centre Private Limited' Vs. M/s. Metro Jet Airways Training Private Limited in Company Appeal (AT) (Ins.) No.423 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we answer the two questions referred to the larger Bench in the following manner: (1) Judgment of this Tribunal in Mr. M. Ravindranath Reddy (supra) as well as judgment in Promila Taneja s case does not lay down the correct law. (2) The claim of Licensor for payment of license fee for use of Demised Premises for business purposes is an operational debt within the meaning of Section 5(21) of the Code. (Emphasis Supplied) 14. Keeping in view the ratio of the aforenoted 'Jaipur Trades Export Centre Private Limited' (Supra) it is clear that the claim of licensor for payment of licence fee does fall within the definition of 'Operational Debt' within the meaning of Section 5(21) of the Code. We observe that the Judgements relied upon by the Learned Counsel for the Appellant namely M. Ravindranath Reddy (Supra) and 'Promila Taneja (Supra), were held to be bad in law. 15. In the instant case, the Respondent has permitted the (a) use manufacture, sell, distribute and advertise the licensed products (b) use of intellectual property rights i.e., the trademark Kolkata Knight Riders /( KKR ) brand logo and any other trademark which as the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... next week positively. On clearance of 10 lakhs we will discuss the matter once again with you to pay the balance and to discuss about how to way forward strategically with this brand. Remaining amount once our account confirmed about the actual amount we will pay max by end of this month. But from next month onwards after making all strategy we will do the needful on time. (Emphasis Supplied) 17. Therefore, we are of the considered opinion that there is a clear Admission on behalf of the 'Corporate Debtor' that the amounts are required to be paid and would be paid in time. 18. Now we address to the contention of the Learned Counsel for the Appellant that there was a 'Pre-Existing Dispute' between the parties and that Section 8 Notice was never served upon them with the complete set of annexures. A brief perusal of the email dated 25.04.2018, clearly shows that the annexures have also been appended. The contention of the Learned Counsel for the Appellant that in the very same email dated 25.04.2018, it is stated that the record establishes that the 'Corporate Debtor' had willfully and actively avoided service of the Notice and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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