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TMI Blog2021 (12) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the applicant under Section 9 is complete, demand notice was duly delivered and the amount claimed in Part-IV has not been paid as yet. There is no payment of unpaid operational debt or the invoices, notice for payment to the Corporate Debtor has been duly delivered by the Operational Creditor and no notice of dispute has been received by the Operational Creditor or there is no record of dispute - the applicant has fulfilled all the criteria as required under Section 9 (5) (i) of the IBC. Petition admitted - moratorium declared. - Company Petition (IB) No. 158/ND/2020 - - - Dated:- 21-12-2021 - Sh. Abni Ranjan Kumar Sinha, Hon'ble Member (Judicial) And Sh. Avinash, K. Srivastava, Hon ble Member (Technical) For the Applicant/Operational Creditor : Adv. Vivek Kishore, Adv. Zorawar Singh, Adv. Anamika For the Respondent/Corporate Debtor : Adv. Saurabh Sachdeva. ORDER AS PER: SH. ABNI RANJAN KUMAR SINHA, MEMBER, JUDICIAL The present petition is filed under Section 9 of Insolvency and Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule,2016 by the Applicant/ operational credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding operations and management services for 46 and 90 long-stay residents, respectively. vi. Further, Mr. JP Singh through the broker, Mr. Prafful Garg had shared the draft of Operations and Management Agreement for the Shakti Nagar Property with Ashimara vide email dated 14,05.2019. vii, That the Ashimara through its Director, Mr. Karan Kaushish executed 2 copies of the aforesaid Agreements on 2 stamp papers of INR 100/- each. Thereafter, the originals of both the Operations 85 Management Agreements were sent to Corporate Debtor's office for execution, viii. That simultaneously, the Corporate Debtor through Mr. JP Singh requested Ashimara to make payments of INR 32,43,000/-and INR 63,45,000/-, respectively as interest free deposit towards advance license fee for providing operations, and management services for 46 and 90 long-stay residents, respectively at the Shakti Nagar Property. ix. That the Ashimara issued and handed over 2 cheques (of which one was a post-dated cheque) to Mr. JP Singh towards the advance, one in the name of the Corporate Debtor and other in the name of Juve. x. That the particulars of these cheques are as follows: a, Cheque no, 0014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - being the principal amount outstanding along with 18% p.a. interest from 01.08.2019 till the date on the principal amount is Rs. 1,94,580/-. The total amount due is Rs. 34,37,580/-. 4. The Corporate debtor on notice appeared and made following averments in its reply dated 12.10.2019: i, That the present petition is not maintainable as there exists a dispute prior to sending of a demand notice by the applicant to the respondent as respondent is a director in another company namely, M/s Juvello Homes Private Limited (Juvello) and the present dispute arises out of the agreements executed between the applicant and the respondent and another with the M/s Juvello Homes Pvt. Ltd. That when M/s Juvello Homes Pvt. Ltd. had issued a legal notice under Section 138 N.I. Act, the applicant sent the Demand notice to the respondent, which is afterthought and result of the action taken by M/s Juvello Homes Pvt. Ltd. ii. Further, whenever there is an existence of real dispute, IBC provisions cannot be invoked as has held in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited (2018) 1 SCC 353 and same view was taken by Hon'ble Supreme Court in, Transmission Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant and respondent. xii. That the company M/s Juvello Homes Pvt. Ltd. has already initiated appropriate proceedings under the Negotiable Instruments Act, 1881 against the applicant. xiii. That the reply to the Demand notice dated 26.12.2019 was sent through Speed post as well as through E-mail which was received by the applicant xiv. That Mr. Prafful Garg accepted a commission of Rs.2,37,000/- from the respondent, however, the applicant did not pay any amount regarding the commission being Mr. Prafful Garg employee of the Applicant and this is one of the issues involved that become part of dispute apart from the other. Mr. Prafful Grag also worked as a student broker who used to fill accommodations in the property of the applicant, Pertinently, the applicant took another building bearing no, 39, Bungalow Road, Kamila Nagar with a capacity of 180 students from some other company/individual and since they were dependant on Mr. Prafful and his Sister to fill the accommodations at Bungalow Road as well as Shakti Nagar, which they could not fill and only able to fill 100 seats, out of total 180, and rest of the beds remain vacant, seeing this, the applicant left the Shakti Na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29.11.2019, Though, the said reply on behalf of the Corporate Debtor is pre dated as 26.12.2019 the same was only dispatched on 02.01.2020, as is evident from the postal receipts as well the tracking reports, which is after the advance copy of the Insolvency Application was. served/attempted to be served on the Corporate Debtor, as is clear [rom perusal of Annexure M (Colly) of the application to initiate insolvency against the Corporate Debtor, filed on behalf of the Operational Creditor. vii. That the insolvency petition under section 9 IBC can also be initiated on the basis of Agreement. viii. That the cheque no, 001428 for an amount of Rs. 63,45,000/- was not dishonoured. There was a specific instruction for stop payment of the same as there was a violation of the Operation and Management Agreement on behalf of the corporate Debtor and Juvello Homes Private Limited. On the relevant date, the Operational Creditor had sufficient balance in his bank account to clear the cheque in question. An email sent to the Corporate Debtor by the Operational Creditor on 31.07.2019, enumerates the list of defaults on behalf of the Operational Creditor leading to the termination of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant comes within the definition of the Operational Deb and vide order dated 13.09.2021 directed the Operational creditor to file an affidavit in this regard. 8, The Operational creditor vide affidavit dated 20.09.2021 submitted that: i. There is a binding contract between the parties as the parties performed their part of the Agreement i.e. the Operational Creditor gave a Cheque of Rs.32,43,000/- which was encashed by Corporate Debtor in terms of the Agreement. Hence, there is an agreement by performance of the Agreement and acceptance of Cheque of Rs.32,43,000/- by the Corporate Debtor, such contract is in terms of Section 8 of the Indian Contract Act, 1872. ii. The amount of Rs.32,43,000/- was paid to the Corporate Debtor in terms of Clause 5 of the Operator Management Agreement dated 15.05.2019, for running long stay accommodation business at the Corporate Debtor's premises with the intention to earn profit for both the Operational Creditor and the Corporate Debtor. The security amount is nothing more than a performance guarantee. As per Section 5(21) the Operational Debt is a Claim towards Goods or Services. The Agreement clearly states that the Operational Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the averments made in the Petition, Reply, Rejoinder and Written Submissions filed on behalf of the parties, we notice that itis an admitted fact that Rs. 32,43,000/- was paid as an advance to the Corporate Debtor by the Operational Creditor. This deposit is towards the advance licence fee, It is also an admitted fact that by filing this application, the Petitioner has claimed that since the amount was not refunded, therefore, there is @ default in payment of the amount, which comes under the definition of the Operational Debt. 13. Whereas the contention of the Corporate Debtor is that the amount deposited by the Petitioner do not come under the definition of Operational Debt, hence the present application is not maintainable. The other ground taken by the respondent is that there is a pre-existing dispute between the parties and the Respondent has raised the dispute in its reply to the demand notice sent on 26% December, 2019. It is further claimed by the Respondent that vide order dated 14.10.2019, the Respondent has served a legal notice under Section 138 of the NI. Act and so, there is a pre-existing dispute. We further notice that apart from that, the Respondent has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sold or availed of from the Operational Creditor. Payments made in advance for goods and services are not made to fund the manufacture of such goods or the Provision of such services. The advance payment being made for turnkey projects and capital goods, where customization and uniqueness of such goods are important by reason of which advance payments are made. The liability or obligation in respect of a claim is due from any person is de s Debt under Section 3 (11) of the Code. It provides that the Debt includes Financial Debt and Operational Debt. Further, the term Financial Creditor and Financial Debt! is defined under Section 5 (7) 5(8) of the Code. Section 5 (20) defines the term Operational Creditor as a person to whom an Operational Debt is owed and includes any person who has been legally assigned or transferred. Section 5 (21) defines Operational Debt as a claim in respect of the provision of goods or services including employment or a debt in respect of 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. 1.5... Since the Corporate Debtor was an agent and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on operations. Thus, the wholesale vendor of spare parts whose spark plugs are kept in inventory by the car mechanic and who gets paid only after the spark plugs are sold is an operational creditor. Similarly, the lessor that the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-year lease. The Code also provides for cases where a creditor has both a solely financial transaction as well as an operational transaction with the entity. In such a case, the creditor can be considered a financial creditor to the extent of the financial debt and an operational creditor to the extent of the operational debt (Emphasis Supplied) 18. The Learned Counsel contended that Lease Rentals are not service and do not fall within Regulation 32 (Insolvency Resolution Process for Corporate persons, Regulation 2016) read -12- Company Appeal (AT} (Insolvency) No. 229 of 2020 with Section 14 (2) which defines essential goods or services as follows; (1) Electricity (2) Water (3) Telecommunication Services (4) Information Technology Services To the extent, these are not direct input to the output produced or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services. As the premises the case on hand in leased out for Commercial Purpose , the cold storage owner/NAFED on collection is required to pay service tax which is reflected in the tax invoices and Ledger Accounts which is part of the record filed. 22. Therefore, keeping in view, the observations made by the Hon ble Supreme Court in Para 5.2.1 of Mobilox (Supra), and having regard to the facts of the instant case this Tribunal is of the earnest opinion that the subject lease rentals arising out of use and occupation of a cold storage unit which is for Commercial Purpose is an Operational Debt as envisaged under Section 5 (21) of the Code. Further, in so far as the facts and attendant circumstances of the instant case on hand is concerned, the dues claimed by the First Respondent in the subject matter and issue, squarely falls within the ambit of the definition of Operational Debt as defined under Section 5 (21) of the Code . 18 In the light of the decision referred to Supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution professional proposed under sub-section (4), if any. (ii) reject the application and communicate such decision to the operational creditor and the corporate debtor, if- (a) the application made under sub-section (2) is incomplete; (b) there has been 3[payment] of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (a) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; (e) any disciplinary proceeding is pending4 against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (i) give a notice to the applicant to rectify the defect in his application within seven days Of the date of receipt of such notice from the adjudicating Authority, 21. When we consider the prayer of the applicant in terms of Section 9 (5), then it is seen that the application filed by the applicant is complete, there is no payment of unpaid operational debt or the invoices, notice for payment to the Corporate Debtor has been duly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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