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TMI Blog2023 (2) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... prevented from establishing by way of a Reply and relevant documents, any Pre-Existing Dispute or paid Operational Debt. There are force in the contention of the Learned Counsel for the Appellant that though a Rejoinder has not been filed, it cannot be construed that the pleadings in the Reply have been admitted to by the Appellant. The failure to file Rejoinder cannot be treated as Admission of the pleadings in the Written Statement. It is an admitted fact that there was an Agreement entered into for Season-2 dated 29.12.2016 whereby the total consideration was agreed at Rs.1.20Crs/-. A perusal of the record evidences that there are Claims and Counter Claims regarding the amount which was agreed upon. The email dated 22.11.2015 seen by the Appellant themselves shows the agreed value of the contract for the first Season as Rs.1.75Crs./-, whereas it is the contention of the Learned Counsel for the Respondent that the amount is not Rs.1.75Crs./- but is Rs.2,23,29,790/-. It is also the case of the Respondent that because of the deficient services rendered in Season-3, the cheque which was wrongly issued for Rs.34,46,000/-, was later instructed to the Bank to stop payment - Admittedly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply stated that it has paid an amount of 21.25 crores as against the agreement requirement of 21.20 crores in respect of Season 2 and has aid 21 crore in full and final settlement in respect of Season 3 for which no agreement was entered into. The petitioner, in spite of the specific averments made by the respondent-corporate debtor in its reply, has not chosen to dispute the same by filing any rejoinder to the said reply. The petitioner has also not denied the contention of the corporate debtor that the invoices raised in respect of Season 3 were not in accordance with the work done and the amount. for the service was over charged and accordingly an amount of 21 crore has been paid in full and final settlement of all the claims in respect of Season 3 In the absence of specific denial of the averments made by the corporate debtor and since the petitioner failed to prove the debt and the liability to pay the same by the corporate debtor, this issue is held against the petitioner." 2. Succinctly put, the facts in brief are that the 'Operational Creditor' is a Limited Liability Company which has provided services of Live TV Production of Season-1, Season-2 and Season-3 of the Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s interdict. Learned Counsel, placed reliance on paragraphs 35 and 38 of 'Mobilox Innovations Private Limited' Vs. 'Kirusa Software Private Limited' (2018) 1 SCC 353, in support of his submissions. The relevant paras read as follows: "35. …The corporate debtor is given 10 days from the date of receipt of demand notice or copy of invoice to either point out that a dispute exists between the parties or that he has since repaid the unpaid operational debt. If neither exists, then an application once filed has to be disposed of by the adjudicating authority within 14 days of its receipt, either by admitting it or rejecting it…." "38. It is, thus, clear that so far as an operational creditor is concerned, a demand notice of an unpaid operational debt or copy of an invoice demanding payment of the amount involved must be delivered in the prescribed form. The corporate debtor is then given a period of 10 days from the receipt of the demand notice or copy of the invoice to bring to the notice of the operational creditor the existence of a dispute, if any…." 5. It is submitted by the Learned Counsel for the Appellant that in Section 9(3)(a) an 'Operational Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that some of the documents filed by the Appellant herein (I.A.78/2022) were not part of the record before the Adjudicating Authority; that the Appellant did not choose to rebut the submissions made by the Respondent/'Corporate Debtor' before the Adjudicating Authority by filing a Rejoinder. The same was recorded by the Adjudicating Authority in their Order dated 04.09.2019. It is submitted that no Agreement was entered into for Seasons-1 & 3; that as per 'Settled Terms', total consideration for the services for PWL for Season-1 was Rs.1.75Crs./- and not Rs.2,23,29,790/- as claimed by the Appellant; after proper negotiations an Agreement dated 29.12.2016, was entered into for Season-2 for a total consideration of Rs.1.20Crs/- and it is an admitted fact that the 'Corporate Debtor' had paid Rs.1.25Crs./- after signing this Agreement; there was no agreement for Season-3 and admittedly an amount of Rs.1Cr./- was paid for the services rendered by the Appellant and there is no document on record to substantiate that this amount was paid only towards part payment; that the cheque of Rs.34,46,000/- was erroneously issued by the Accounts Department and this factor cannot be taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the operational creditor - (a) existence of a dispute, if any, or record of the pendency of the suit or arbitration proceedings filed before the receipt of such notice or invoice in relation to such dispute; (b) the payment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation. - For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding 3[payment] of the operational debt in respect of which the default has occurred. 9. Application for initiation of corporate insolvency resolution process by operational creditor. - (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under subsection (2) of section 8, the operational creditor may file an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or (e) any disciplinary proceeding is pending against any proposed resolution professional: Provided that Adjudicating Authority, shall before rejecting an application under subclause (a) of clause (ii) 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. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5) of this section." 13. It is observed from the aforenoted Sections that neither Section 8 nor Section 9 of the Code indicate that in event Reply to Notice was not filed within 10 days, the 'Corporate Debtor' is precluded from raising the question of dispute or pleading that there or no amount 'due and payable', the 'Corporate Debtor' is not prevented from establishing by way of a Reply and relevant documents, any 'Pre-Existing Dispute' or paid 'Operational Debt'. We place reliance of the Judgement of this Tribunal in 'M/s. Brandy Realty Services Ltd.' Vs. 'M/s. Sir John B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o indicate that there are pre-existing disputes in existence prior to issuance of demand notice under Section 8. We thus are of the considered opinion that mere fact that Reply to notice under Section 8 (1) having not been given within 10 days or no reply to demand notice having been filed by the Corporate Debtor does not preclude the Corporate Debtor to bring relevant materials before the Adjudicating Authority to establish that there are pre-existing dispute which may lead to the rejection of Section 9 application. In the above context, we may refer to Judgement of this Tribunal in "Neeraj Jain Vs. Cloudwalker Streaming Technologies Private Limited" (Company Appeal (AT) Ins. No. 1354 of 2019) decided on 24th February, 2020 in paragraph 50 following observations have been made by this Tribunal: "…Even otherwise, mere failure to reply to the demand notice does not extinguish the rights of the Operational Creditor to show the existence of a pre-existing dispute..." (Emphasis Supplied) 14. We find force in the contention of the Learned Counsel for the Appellant that though a Rejoinder has not been filed, it cannot be construed that the pleadings in the Reply have been adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Innovations Private Limited' Vs. Kirusa Software Pvt. Ltd.' while discussing the 'Pre-Existing Disputes' has observed as follows: "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 operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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