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TMI Blog2022 (10) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... of employment or a debt in respect of repayment of dues arising under any law for the time being in force payable to Centre or State Government or local authorities. It is, thus, confined to four categories viz. goods, services, employment and Government dues. From the material on record, facts and circumstances there arises no clear or unambiguous jural relationship between the two parties as one of Corporate Debtor and Operational Creditor. Rather both the Corporate Debtor and Respondent No. 1 are like the principal as well as the agent of the other party. This spirit is not only captured in the body of the agreement but also demonstrated in the actions and conduct of both parties in their role as general profit sharing partners - the claim is not in the nature of Operational debt, it need not be further examined whether there was any default in respect of a debt which had become due and payable and whether it was laced with pre-existing dispute. The Adjudicating Authority has erroneously admitted the application under Section 9 of the IBC - Appeal allowed. - Company Appeal (AT) (Ins.) No. 359 of 2022 & I.A. No. 1321 of 2022 - - - Dated:- 20-10-2022 - [ Justice Ashok B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the parties. An application under Section 11 of Arbitration and Conciliation Act was filed by Respondent No. 1 on 30.06.2021 which was dismissed on 17th August, 2021 following which petition under Section 15 of the said Act was filed on 21.09.2021 by Respondent No. 1. The Adjudicating Authority admitted the Section 9 application under IBC filed by the Operational Creditor and initiated CIRP against the Corporate Debtor vide impugned order on 15.03.2022. 3. Making his submissions, the Learned Counsel for the Appellant stated that the agreement entered between the Corporate Debtor and Respondent No. 1 was a Profit Sharing Agreement. It was emphasized that the agreement between the two parties clearly states that the parties agree to the following:- Abmay Health Ventures LLP and SRV Heart Centre of MHCPL will both be the general profit sharing partners of the Cath Lab Cardiac Surgery Department of SRV . From the above clause, it is clear that the agreement between both the parties was for the purpose of profit sharing and that the Corporate Debtor and Respondent No.1 were profit sharing partners. It was therefore contended that failure or breach of such a Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stent-pricing. That there was pre-existing dispute is substantiated by the e-mail dated 23.06.2018 sent by the Respondent No. 1 to the Corporate Debtor where the Excel sheet calculation in column 6 has been made as per SRV MHCPL share while column 8 calculation was done as new account as per MOU thus reflecting disagreement between calculations made by the Corporate Debtor and that by the Respondent No. 1. 7. Moreover, it was argued that the claim incorporated by the Respondent No. 1 in the Demand Notice was not in conformity with the terms of the agreement and the calculations made by the Respondent No. 1 are full of lacunas and actually an estimated share. Furthermore, the Corporate Debtor was to share the profit based on the total billing and on the patient foot-fall. It is further claimed that as per the terms and conditions of the Profit Sharing Agreement, the Corporate Debtor had paid the due share of Respondent No. 1 as per Profit Sharing Agreement of an aggregate sum of Rs. 3,50,83,400/- which has been admitted by the Respondent No. 1 in Form-5. The present dispute is due to difference in calculation; breach of representation and warranties in the Agreement by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been contended that if TDS deduction is viewed as criteria for treating the Respondent No. 1 as service provider, then it ought to have enjoined upon the Respondent No. 1 as a service-provider and the Corporate Debtor as Receiver of Services to be registered under the GST. But in the instant case, neither the Corporate Debtor nor the Respondent No. 1 raised any invoice which contains GST Registration. 11. Relying on the judgement of this Tribunal in Drulum India Pvt. Ltd. Vs. Sharma Kalypso Pvt. Ltd. in Company Appeal (AT) 351/2018 it has been added that the estimated share of Respondent No. 1 as per Form-5 does not reflect the calculations as per profit-sharing agreement, hence, it is a foundation to establish existence of dispute. Moreover pre-existence of disputes is well established by the fact that the Respondent No. 1 had invoked the Arbitration on 16.01.2020 prior to filing of Section 9 petition under IBC before the Adjudicating Authority. The pre-existence of dispute is fortified by the fact that the Respondent No. 1 invoked arbitration under Arbitration Clause as contained in Profit Sharing Agreement which is still pending at the stage of cross-examination. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 63,39,186/-. However, from April 2018, the Corporate Debtor stopped sending details of the bills generated on the patients to Respondent No. 1. The Respondent No. 1 has raised a total amount of bill aggregating to Rs. 8,00,20,864/-. It has been denied that the claim is over estimated. Moreover the Corporate Debtor by their own statement at page-233 of Appeal Paper Book had admitted outstanding amount of more than Rs. 16,000/- and also paid Rs. 5 lakhs each on 30.11.2019 and 30.12.2019. Further, the fact that the Corporate Debtor had transferred Rs. 5 lakhs to the Respondent No. 1 itself shows acceptance of liability of more than Rs. one lakh. 16. On the issue of pre-existing dispute, it has been stated that Respondent No. 1 had issued the Demand Notice on 07.12.2019 following which the Corporate Debtor submitted interim reply on 16.12.2019 followed by a final reply on 31.12.2019. In the reply, the Corporate Debtor had admitted the operational debt without however agreeing to the amount stated in the Demand notice. As regards certain e-mails referred to by the Corporate Debtor to substantiate existence of dispute in the year 2018, it has been pointed out that these were not menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guments and rival contentions advanced by the Learned Counsel for both the parties and perused the records carefully. 19. The primary issue before us for our consideration is whether claim raised by the Respondent No. 1 is actually an operational debt and whether the said operational debt exceeds an amount of Rs. 1 lakh. Only after we arrive at a determinative opinion on this aspect that we may then proceed to examine whether the debt has become due and payable and if any default has been committed by the Corporate Debtor in respect of payment of such operational debt and if so whether such debt is hemmed by any pre-existing dispute. This examination would be in consonance with the test which has been laid down by the Hon ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Ltd. (2018) 1 SCC 353 for the Adjudicating Authority while examining an application under Section 9, the relevant excerpts of which are as follows:- 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding Rs. 1 lakh? (See Section 4 of the Act) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al debt and whether the admission of the Section 9 petition under IBC by the Adjudicating Authority is legally tenable in the present case. 23. For this purpose, we may now turn our gaze towards some of the salient features of the agreement entered between the SRV Heart Centre Unit of Metro Centre Pvt. Ltd. (MHCPL) and SRV Hospital which have a bearing on the present matter and recite them as follows: The parties agree to the following: ABMAY HEALTH VENTURES LLP and SRV Heart Centre of MHCPL will both the general profit sharing partners of the Cathlab and Cardiac Surgery department of SRV Hospital. Whereas SRV Hospital agreed to outsource the Cathlab and Cardiac Surgery department to SRV Heart Centre Unit of MHCPL situated at Plot No. 178, Jawahar CHS Ltd., Jawahar Nagar Road No. 2, Kamala Charan Building, Near Railway Station, Goregaon (W) Mumbai 400062 on following terms and condition:- SRV Hospital will be responsible for: 1. Providing premises for Cathlab; 2. Providing electrical supply for Cathlab room as per the requirements of the Cathlab in conjunction with SRV Heart Centre and the Cathlab equipment manufacturer. Providing Airconditionin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e working under cardiology center will be complete responsibility of Metro. The billing system for the SRV Heart Centre will be through hospital used software-21st Century-All settlements of payments from MHCPL to SRV Hospital or from SRV Hospital to MHCPL will be done on a weekly basis. Simultaneously, all settlements of pharmacy pathology bills will be done on a weekly basis. All risk insurances in line with the hospital policies to be taken by Metro. Any discounts to be given to patients from the agreed pricing as mentioned above will be on a case to case basis and will be needed to agreed upon by authorized personnel from both parties. Duration: The duration of the Contract shall be for Five years with a lock in for three years. The Income sharing part can be reviewed every year with mutual discussion by both the Party. The above payment if liable for Tax Deduction at Source under Income Tax Act, 1961 will be deducted and balance payment will be made. The parties agree that any dispute which may arise regarding the activities or any other issue will be settled by mutual discussion or through arbitration. The parties may mutually agree to mod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cathlab equipment to the Corporate Debtor and made payments of Rs. 5 lakhs on 30.11.2019 and 30.12.2019 before and after the issue of Demand Notice has proceeded to admit the Section 9 petition. 27. It is of paramount importance to keep in mind the objectives of IBC which is, inter-alia, to promote entrepreneurship, maximize value of assets, make available credit, and balance the interest of all stakeholders, in a time bound manner. It is therefore equally important to always remain alert and cautious so as to prevent any stakeholder from taking any undue benefit of the provisions of the IBC and obligates that the nature of transactions alleged in a Section 9 petition gets properly examined and analysed so that the Corporate Debtor is not dragged into the rigours of the CIRP for facile reasons. 28. In the present matter, the clauses of the agreement entered between the two parties, who are described as general profit sharing partners therein, furnish the key to the minds of the makers of this agreement. The clauses of the agreement disclose an intent that both parties shall exercise joint control over the SRV Heart Centre and will be accountable to each other for their res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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