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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 ..... tiation of Corporate Insolvency Resolution Process ("CIRP" in short) of the Corporate Debtor. Aggrieved by this impugned order, the present appeal has been preferred by the ex-Director of the Corporate Debtor. 2. Coming to the brief facts of the case, Divineseair Logistics Pvt. Ltd - Corporate Debtor, who is the present Appellant had engaged into a business relationship with Kerry Indev Logistics Pvt. Ltd.- Operational Creditor, present Respondent No.1 providing their freight forwarding services since June 2018. Respondent No. 1 has claimed that having performed certain export services for the Appellant, certain dues remained outstanding for services rendered. The Respondent No. 1 sent a demand notice on 01.10.2019 under Section 8 of IBC claiming an amount of Rs.9,26,970/- and interest amount of Rs.1,38,055/- to the Corporate Debtor. No reply was received from the Corporate Debtor to the Section 8 notice following which the Respondent No.1 filed Section 9 application before the Adjudicating Authority. The Adjudicating Authority after hearing both parties admitted the Section 9 application which order has now been assailed by the Appellant. 3. Making his submissions, the Learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised invoices for which some payments had also been made by the Corporate Debtor. Since certain dues continued to remain unpaid and the cheques issued by the Corporate Debtor were dishonoured by the bank, they were constrained to send a demand notice. The Corporate Debtor had acknowledged their debt and confirmed that payment would be made in their emails dated 16.11.2018 and 05.03.2019. The Corporate Debtor kept on assuring the Operational Creditor that he would pay the balance amount in instalments which were all false. It was also asserted that the Corporate Debtor failed to produce any proof or evidence to substantiate their empty allegations of deficiency of service. The Corporate Debtor had not raised these disputes either before issue of demand notice or in their reply to the demand notice and were raised belatedly only to wriggle out of their liability to pay their dues. 7. However, the Learned Counsel for the Respondent No.1 had submitted that this Tribunal was apprised during the hearing on 10.05.2023 that it would not like to press the CIRP and that steps were being taken for withdrawal of CIRP. Further it was submitted that there were issues relating to the excessive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of IBC which is to the following effect: "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 sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process." Section 9(5)(ii) is as follows : "(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under subsection (2), by an order- (i)..... (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 payment of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; (d) notice of dispute has been received by the operational creditor or there is a record of dispute in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.05.2019, 05.06.2019 and 08.06.2019. Further the debt remained payable since these three cheques got returned dishonoured on presentation to the bank with the endorsement of 'Stop Payment'. 15. 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, we do not wish to comment on the nature of business relationship between the two parties except for stating that it is a well settled legal proposition that the operative requirement of operational debt is that the claim must bear some nexus with a provision of goods or services, without specifying who is to be supplier or receiver. 16. We find that in the context of operational debt, the Adjudicating Authority after due consideration of facts and circumstances is satisfied that this was a case of operational debt rightly claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in your office I already clarified you everything about payment delay so. We are seriously trying to allocate funds so that can clear your payment and assured that same will transfer before 20th March.
Best Regards/Laxman
Director
DivineSeair Logistics Pvt. Ltd.
From: Yogi Gupta [IN] X X X X Extracts X X X X X X X X Extracts X X X X ..... paras 12 and 14 of the impugned order has returned the following finding: "12. We have considered the objections raised by the corporate debtor regarding deficiency in services/delay in delivering goods to the parties. However, there is nothing on record to show that any complaint regarding delay in delivery was raised by any party. The Corporate Debtor has also failed to issue notice of dispute in reply to the section 8 notice, Form-3 and Form-4, denying the claim of the operational creditor." "14. The applicant has placed sufficient documents to show that the debt is payable by the corporate debtor and there is no dispute pending between the parties." 23. We are also satisfied with the findings of the Adjudicating Authority that there is nothing on record to suggest that the Appellant raised any such dispute before receipt of invoices or at any period prior to the issue of demand notice. There is no exchange of correspondence raising any dispute prior to issue of demand notice. Even the complaint of delay purportedly received by the Appellant from its customers does not seem to have been shared with the Operational Creditor prior to Section 9 application. Thus, we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r bonafide, it is submitted that the sole CoC member had approved fees of the IRP of Rs.2,00,000/- per month which the Resolution Professional reduced on his own to Rs.1 lakh per month being the minimum fees in consonance with the IBBI Regulation. Submitting details of fees/expenses, the Resolution Professional has submitted that the total CIRP cost so far is Rs.19,99,544/- of which the fees of Resolution Professional is Rs.18,00,000/- from 02.03.2022 to 31.07.2023. It has also been stated that an amount of Rs.8 lakhs has been received so far from Respondent No.1, being the sole CoC member and the balance to be received is Rs.11,99,544/-. It is also submitted that the Resolution Professional had explained to the Respondent No.1 the procedure which is required to be followed for filing the CIRP withdrawal application but the same was yet to be complied with. We notice that the Resolution Professional has advised Respondent No.1 to file Form A and submit bank draft/bank guarantee in respect of CIRP expenses. The total fees/expenses claimed is Rs. 19,99,544/- of which balance payable has been claimed to be Rs. 11,99,544/-. 27. Since the quantum of fees/expenses claimed by the Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claiming the fees and end up burdening the sole CoC member with a disproportionately heavy amount as fees/expenses. It was incumbent upon the Resolution Professional to keep in mind that the entire claim amount collated was only about Rs.10 lakhs. Moreover, there was no complexity in the CIRP proceedings which warranted any exceptional responsibility to be discharged by him. 30. Hence, to our mind, integrity and fairness demanded that the Resolution Professional ought to have facilitated the withdrawal of the CIRP application as was desired by the sole CoC member/Respondent No.1 without unduly prolonging the proceedings. It is commonsensical that for recovery of a claim of about Rs.10 lakhs, incurring an expenditure of Rs.19 lakhs by way of fees/expenses of the Resolution Professional would be outlandish and that too when there seems to be no possibility of revival of the Corporate Debtor. Without casting any aspersion on the conduct of the Resolution Professional, we cannot hold back from observing that the Resolution Professional could have exercised a modicum of restraint while projecting his fees/expenses. Keeping in mind the yardstick of reasonability, the fees of the Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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