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TMI Blog2023 (8) TMI 617X X X X Extracts X X X X X X X X Extracts X X X X ..... notice by the Operational Creditor as contemplated in Section 9 of IBC - HELD THAT:- The existence of dispute and its communication to the Operational Creditor is statutorily provided for in Section 8. In the present case, it is an undisputed fact that demand notice was issued by the Operational Creditor on 01.10.2019 claiming an amount of Rs.9,26,970/- and interest amount of Rs.1,38,055/- from the Corporate Debtor. However, no notice of dispute was raised by the Corporate Debtor. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC. The Appellant has however explained that the cheques issued by the Corporate Debtor were not for payment towards services rendered but for security towards commission received in advance from the Operational Creditor and hence cannot be treated as legally enforceable debt. Further these cheques were dishonoured as the Operational Creditor had presented them to the bank without knowledge of the Corporate Debtor. In the absence of any contractual agreement, no comments provided on the nature of busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Resolution Professional would be outlandish and that too when there seems to be no possibility of revival of the Corporate Debtor - Keeping in mind the yardstick of reasonability, the fees of the Resolution Professional should be determined on the basis of work required to be performed or actually performed. Given the peculiar circumstances surrounding the present case, this is a fit case to invoke Rule 11 of NCLAT Rules, 2016 which provides that the inherent power of the Appellate Tribunal can be exercised to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal. With the closure of CIRP, the appeal has become infructuous and stands disposed of. - [ Justice Ashok Bhushan ] Chairperson And [ Barun Mitra ] Member ( Technical ) For the Appellant: Mr. Anurag Ojha, Mr. Deepak Somani, Advocates For the Respondent: Mr. R.V. Prabhat, Mr. Abhinav M. Goel, Advocates for R-1. JUDGMENT [ Per : Barun Mitra, Member ( Technical ) ] The present appeal filed under Section 61 of Insolvency and Bankruptcy Code, 2016 ( IBC in short) by the Appellant arises out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated that the freight charges for consignment delivery was to be collected by Respondent No.1 and a part thereof was to be paid as commission to the Appellant in return for having provided these clients. Further the cheques issued by them, which have been claimed by the Respondent No. 1 to be towards payment of consignment delivery charges, is misleading. These were actually security cheques against commission for providing customers which were given in advance. Given this nature of business relationship, it was claimed that it is the Appellant who is the Operational Creditor and thus the Respondent No. 1 was not entitled to file the Section 9 application. 5. Besides denying that any debt was owed by the Appellant to the Respondent No.1, it was stated that there were delays in the shipments on the part of Respondent No. 1 and hence consignees had not been clearing their payments. The recipient companies had made complaints to the Appellant regarding late delivery of goods and deficiency in the services of the Respondent No. 1 which in turn has affected their own reputation and caused financial losses. It was vehemently contended that the Adjudicating Authority by ignorin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the occurrence of a default, deliver a demand notice of unpaid operational debt or copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. (2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the invoice mentioned in sub-section (1) bring to the notice 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 payment of the operational debt in respect of which the default has occurred. 10. This now brings us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pute was raised by the Corporate Debtor. It is also an undisputed fact in the present matter that the Operational Creditor did not receive any payment from the Corporate Debtor and therefore proceeded to file an application under Section 9 of IBC. 13. It is the case of the Appellant that there are no purchase orders issued by the Appellant or proof of service receipts. The Respondent No. 1 by merely appending invoices without existence of any work order cannot stake claims for payment. Moreover, when the Corporate Debtor did not confirm the acceptance of invoices, no claim can be preferred against the Corporate Debtor. The amount claimed by the Respondent No. 1 was never admitted by the Appellant at any stage. Moreover, it was the obligation of the Respondent No.1 to collect freight from customers and for failure on his part to collect freight payment from the consignee, the Appellant cannot be held responsible. It is further the plea of the Appellant that Respondent No.1 was supposed to give commission out of the freight charges collected to the Appellant for having provided these customers to Respondent No.1. Thus, given the nature of business relationship between them, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the debt and assured that payments would be made. The Respondent No. 1 has placed on record the emails dated 16.11.2018, 05.03.2019 and 13.03.2019 to substantiate their assertion. It was therefore contended by the Learned Counsel of Respondent No. 1 that there was no ambiguity that the amount in default fell squarely in the category of operational debt and the claim of the Appellant that no dues were payable is false and lacks basis. 18. At this stage we may, prima-facie, determine whether there was any admitted debt on the part of the Appellant by perusing the emails exchanged with Respondent No. 1. Emails which have been placed on record by the Respondent No. 1 are reproduced below: From: Finance Dipl [email protected] Sent: 16 November 2018 12:13 To: viveksingh; Vikassharma CC: laxman Subject: RE: OUTSTANDINGS PAYMENT REQUEST DIVINESEAIR //DTD 28.10.2018 Dear Mr. Vivek, Sorry for your payment delay due to changes of our company one of Director banking so this is our last humble request assured that your payment we ll transfer committed by next Thursday on dated 22/11/2018. Best Regards Pankaj Singh Director Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of operational debt being due and payable. These emails have to be seen in the backdrop that no material has been placed on record by the Appellant controverting the content of these emails. We are, therefore, of the prima-facie view that the contention of the Corporate Debtor that there is no admitted debt is specious and lacks substance. 20. Having come to the conclusion that there was a legally enforceable debt, we now turn our attention to the issue of pre-existing disputes raised by the Appellant. We notice that in their reply affidavit to the Section 9 application, it is the contention of the Appellant that in respect of the goods delivered to Matak Tobacco Manufacturing Company ( Matak in short) through the Operational Creditor, the latter had complained about late delivery of goods. Because of delay in delivery by Respondent No.1, it has affected the reputation of the Appellant and caused financial loss. 21. It is the contention of the Respondent No. 1 that the Corporate Debtor has failed to produce any proof or evidence to substantiate the allegations of deficiency of service and that these grounds have been raised to wriggle out of their liability to pay the dues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xisting dispute discernible from the given facts. Given this backdrop, we are of the considered view that the Adjudicating Authority has not committed any error in admitting the Section 9 Application for initiation of CIRP of the Corporate Debtor. 25. At this juncture, we now proceed to take cognizance of the fact that the Respondent No.1/Operational Creditor, who is the sole CoC member with 100% vote share, during the course of previous hearing held on 23.01.2023 had apprised this Tribunal that he is desirous of taking steps for withdrawal of CIRP under Section 12A of the IBC. In the interim orders, this Tribunal had granted four weeks' time to the Respondent No.1 to do the needful and directed the Respondent No.2/Resolution Professional to continue the CIRP proceedings without taking up the resolution plan for consideration. It is pertinent to add that during the last hearing before this Tribunal on 25.07.2023, the Learned Counsel for Respondent No.1 reiterated that no purpose would be served by continuing on with the CIRP since the Corporate Debtor does not have assets sufficient for realization of the operational debts and no resolution was in the horizon for revival of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 06.10.2022. During the active CIRP period, we may quickly glance through the major tasks undertaken by the Resolution Professional. Altogether 3 CoC meetings were held on 31.03.2022, 09.08.2022 and 07.12.2022 which shows long periods of intervening gaps. Four valuers were appointed on 07.04.2022 and their reports received on 28.07.2022. Form G could be published on 12.08.2022 just a few days before expiry of 180 days of CIRP period. Only 1 EoI was received with EMD on 26.08.2022. From the above, we do not find much substantial progress to have been accomplished in insolvency resolution by the Resolution Professional despite lapse of sufficient time. It has also been admitted by the Resolution Professional that since no resolution plan was forthcoming, the sole CoC member had decided not to proceed with CIRP. 29. On 24.01.2023, Respondent No. 1 chose to withdraw from CIRP and on 25.01.2023, the Resolution Professional inter alia submitted cumulative CIRP expenses to the tune of Rs. 19.79 lakh for payment by the Respondent No. 1 being sole member of CoC. Coming to the issue of fees/expenses claimed by the Resolution Professional, we note that aggrieved with the hefty fees of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered view that instead of allowing the CIRP proceedings to drag on mechanically with insolvency resolution not in near sight, prudence demands that the ongoing stalemate should be put to an end by allowing the closure of CIRP in the ends of justice. We are of the considered view that given the peculiar circumstances surrounding the present case, this is a fit case to invoke Rule 11 of NCLAT Rules, 2016 which provides that the inherent power of the Appellate Tribunal can be exercised to make such orders or give such directions as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal. 32. In fine, to put an end to the impasse being faced by the sole CoC member from filing the CIRP withdrawal application, this Tribunal in exercise of its inherent powers under Rule 11 orders the closure of CIRP proceedings in the interests of justice. The Corporate debtor is released from the rigors of CIRP. The Resolution Professional will now close the CIRP proceedings. For reasons cited in preceding paragraphs, the Resolution Professional is not entitled to claim any fees/expenses beyond the sum of Rs.8 lakh which has already been received. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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