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TMI Blog2022 (11) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... es on the claims amount. However, going ahead therefrom, the Adjudicating Authority has taken a conscious decision to further find out if any part of the liability on the part of the Corporate Debtor is undisputed and if the amount exceeded the threshold limit to qualify for admission of the Section 9 application. The provision under Section 8(2)(a) of IBC makes it clear that the Corporate Debtor has to bring to the Operational Creditor the fact of the existence of a dispute within ten days of the receipt of the demand notice. The Corporate Debtor in its reply on 29.06.2018 to the Section 8 notice dated 21.06.2018 has denied the claim raised by the Operational Creditor on the grounds that they are not legally due or payable besides making a mention of ongoing and unresolved disputes related to the debt amount that has been claimed. Where operational creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two which however is not so borne out by the facts of the present case. The Adjudicating Authority committed serious error in admitting Section 9 application in the facts of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplaint e-mail was sent by the Corporate Debtor to the Operational Creditor on 07.07.2015 as placed at page 69 of Appeal Paper Book ( APB in short) clearly stating that the Corporate Debtor has not been able to use the EE Sim Cards for 3 months and therefore not able to generate revenues. 4. It was also emphatically submitted that the Corporate Debtor had regularly exchanged Call Details Record ( CDR in short) with the Operational Creditor to substantiate the wrong charging of tariffs and that they had claimed credits due to them. Stating that the Operational Creditor had repeatedly submitted wrong and inflated invoices, these billing discrepancies were communicated from time to time. It is submitted that disputes regarding January CDR was raised on 10.03.2016 and that later on 05.07.2016, the Corporate Debtor had mentioned that 13000 GBP was to be received from the Operational Creditor against inflated invoices raised by the Operational Creditor for the preceding months. Similarly, billing discrepancy on data bundle from May to July had also been sent on 03.08.2016 by the Corporate Debtor to the Operational Creditor. The ongoing credit issues with the Operational Creditor and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... system; inflated billings and claim for damages etc. To the Notice under Section 8 of IBC issued by the Operational Creditor on 23.06.2018, it was submitted by Learned Counsel for Appellant that the Corporate Debtor replied on 29.06.2018 denying the claim as false and fraudulent and that no adjudicated amount was due from them. Further, the Operational Creditor was also informed about the counter-claim against them. The Operational Creditor thereafter filed the Section 9 IBC application dated 08.10.2018 claiming a total debt of GBP 76,394.16 along with interest at the rate of 18% per annum. The Adjudicating Authority issued notice and after hearing the parties admitted the Section 9 application. The Learned Counsel for the Appellant contended that since the alleged debt claimed by the Operational Creditor being a disputed debt and in the face of sufficient cause to show that there was pre-existing dispute, admission of the Section 9 application by the Adjudicating Authority was erroneous. 8. We have duly considered the detailed arguments advanced by the Learned Counsel for the Appellant and perused the records carefully. The Respondent No. 1 was not represented during the final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion which arises for our consideration is whether undisputed amount of outstanding liability is more than the threshold limit as prescribed U/s 4 of IBC, 2016. As far as first aspect is concerned, there have been a number of communications between the operational creditor and corporate debtor which make it apparent that there are certain strong differences between the two. Thus, it becomes imperative for us to find out what is the undisputed amount of liability. 22. To find an answer to the above query, we have carefully gone through the emails exchanged between them. As per the email dated 31.07.2017 firstly the corporate debtor has agreed at a sum of GBP 23,544.13. Subsequently, an email was written by the corporate debtor on 24.08.2017, wherein various claims have been made. On this basis of this email, the corporate debtor has stated that corporate debtor had not agreed for the amount mentioned in the earlier email referred above. 23. We have noted the contents of the email dated 24.08.2017, it is of general nature, wherein claims for recovery of damages through litigation has been made. However, subsequently an email dated 18.09.2017, GBP 10,000 have been agreed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Adjudicating Authority has taken a conscious decision to further find out if any part of the liability on the part of the Corporate Debtor is undisputed and if the amount exceeded the threshold limit to qualify for admission of the Section 9 application. 13. We would however like to proceed by analyzing from the facts of the case firstly, as to whether there was an admitted debt which was due and payable and, if so, whether, that a default in payment had been committed and thereafter find out whether the debt was disputed or not so as to take a considered view on the legal tenability of the impugned order. This analytical approach makes more sense being in consonance with the test which has been laid down by the Hon ble Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. (2018) 1 SCC 353 ( Mobilox in short) 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) (ii) Whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spute and are in discussions with [email protected] [email protected], and also mail was sent looping you, attached for your reference. We have already informed EE they have accepted: Overcharge in invoicing. Agreed to providing credit for invoicing and outstanding Compensate us for disruption of service caused due to faulty invoicing, non responsive attitude not providing services on time. EE suspended service on all our lines without proper or prior notice. This breach of contract has caused us significant loss of hard earned clients, revenue and reputation for our Company EE have accepted it in written/ on calls that the problem is at their end. If EE continues to pursue any of the overcharges, we will be required to pursue damages from EE for numerous breach of contracts, culminating with the disconnection of services. This clearly shows EE bad faith in its dealings with us, its wilful disregard of its contractual obligations, and its desire to cause damage to us and our customers. In light of all this, EE must immediately provide credit for all wrong invoicing settle credits for poor service. To this point it is clear that despit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability on their part. 18. More importantly, the provision under Section 8(2)(a) of IBC makes it clear that the Corporate Debtor has to bring to the Operational Creditor the fact of the existence of a dispute within ten days of the receipt of the demand notice. We find that the Corporate Debtor in its reply on 29.06.2018 to the Section 8 notice dated 21.06.2018 has denied the claim raised by the Operational Creditor on the grounds that they are not legally due or payable besides making a mention of ongoing and unresolved disputes related to the debt amount that has been claimed. It will be useful to extract the reply sent by the Corporate Debtor to Section 8 Notice placed at page 345 of APB: 1. That the claim of EE Ltd, Trident Place, Mosquito way, Harsfield, Hertfordshire, AL 109 BW, UK are false and fraudulent and totally lacking in details of the services rendered. 2.That they have already admitted wrong billing and as such there is no settled amount payable to them. 3.That there is no adjudicated amount due to them. 4.That we are advised that such fraudulent claims which have not been adjudicated do not come in the scope of proceedings under THE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We also cannot lose sight of the fact that the Corporate Debtor had sent emails to the Operational Creditor on 26.08.2016, 10.10.2016 and 24.10.2016 (as respectively placed at pages 168, 180 and 199 of APB) seeking a meeting with the Operational Creditor in UK to discuss the ongoing inflated invoice and to reconcile and settle these discrepancies. It is also the Appellant s case that the dispute between them and Respondent No.1 was on several counts and both parties were engaged in regular discussions with each other on this count. Moreover, the fact that these disputes had an early start is also noted from page 69 of APB wherein the Corporate Debtor has sent a communication on 07.07.2015 to the Operational Creditor that they have hit a roadblock since the Sim cards given to them were not working and affecting their commitments of getting revenue. Even the issue of non-working of data services was raised on 14.10.2016. 21. We find that the above instances of dispute were not isolated in nature and that they cogently establish that billing disputes between the two parties existed much before the issue of Section 8 notice and thus we find that there is sufficient force in the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is amply supported by material on the record. We do not wish to go into each and every correspondence as it is not the remit of IBC to investigate all related contractual disputes and look into their merits as long as it suffices that a plausible defence has been raised as has been done in the present case. In the present factual matrix, the defence raised by the Corporate Debtor cannot be held to be moonshine, spurious, hypothetical or illusory. And for such disputed amounts, Section 9 proceeding under IBC cannot be initiated at the instance of the Operational Creditor. 24. What also heavily weighs on our mind is that both the objective of the IBC and the settled proposition of law laid down by the Hon ble Supreme Court is that the provisions of IBC cannot be turned into a debt recovery proceedings. Reliance has also been placed by the Appellant on the judgement of the Hon ble Apex Court in M/s S.S. Engineers Vs. Hindustan Petroleum Corporation Ltd. MANU/SC/1146/2022 which has held that: 31. The NCLT, exercising powers under Section 7 or Section 9 of IBC, is not a debt collection forum. The IBC tackles and /or deals with insolvency and bankruptcy. It is not the object ..... X X X X Extracts X X X X X X X X Extracts X X X X
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