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TMI Blog2024 (3) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... spute, it is noticed that the Corporate Debtor clearly articulated how the Agency Agreement was breached by the Appellant leading to forfeiture of their payments. It is an undisputed fact that in March 2011, the CBI had arrested some officials of the Appellant for paying illegal gratification. It is therefore the case of the Corporate Debtor that in terms of Clause 7(2) of the Agency Agreement, this constituted a breach of the said Agreement. Hence, they claimed to have terminated the Agency Agreement and consequently payments related to SAD invoices were also withheld by them. The Notice of Dispute thus makes it clear that the Corporate Debtor had not only denied their liability to pay the SAD claims but also laid the edifice of the ongoing disputes between the two parties. The issue of denial of payment and termination of Agency Agreement by the Corporate Debtor had continued to fester the business relationship of the two parties is reinforced by another communication sent on 12.03.2015 by the Appellant in which they have sought review of the termination of their services by the Corporate Debtor. This letter has been placed on record at pages 140-141 of the APB. The said communic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kruptcy Code 2016 ( IBC in short) by the Appellant arises out of the Order dated 06.12.2023 (hereinafter referred to as Impugned Order ) passed by the Adjudicating Authority (National Company Law Tribunal, Bench-VI, Mumbai) in CP(IB) No.2342/IBC/MB/2018. By the Impugned Order, the Adjudicating Authority has dismissed the Section 9 petition filed by the Appellant-Khimji Poonja Freight and Forwarders seeking to bring the Corporate Debtor-M/s Ingram Micro India Pvt. Ltd. under the rigours of Corporate Insolvency Resolution Proceedings ( CIRP in short) on the grounds of pre-existing dispute. Aggrieved by this impugned order, the present appeal has been preferred. 2. The Learned Senior Counsel for the Appellant making his submissions on the factual matrix stated that Appellant/Operational Creditor was engaged in the business of Freight Forwarding and related services. The Appellant had entered into a Customs Clearance Agreement ( CCA in short) on 27.11.2007 with Respondent/Corporate Debtor for clearing and forwarding goods of the Respondent. Subsequently on 22.10.2009, the two parties entered into an Agency Agreement vide which the Appellant was responsible for claiming and obtaining re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cided that the Respondent would release payment under the 8 SAD invoices by 23.04.2015. As the Minutes of Meeting ( MoM ) were duly signed by both parties, it signifies that the Respondent implicitly admitted the liability to pay the outstanding dues. It was pointed out that even for argument s sake, if it is accepted that there was a dispute surrounding the SAD claims and therefore excluded, yet the claims under CCA, on which there are no disputes, aggregate to Rs. 1,65,618/- only which amount is above the threshold level of Rs. 1 lakh prescribed under Section 4 of IBC. Hence, this outstanding amount was sufficient for admission of Section 9 application. 5. It was contended that the grounds of pre-existing dispute raised by the Respondent were illusory and created only to wriggle out from clearing the outstanding liability. The Adjudicating Authority had erroneously admitted the Section 9 application without looking into the plausibility of the alleged dispute. 6. Making counter submissions the Learned Counsel of the Respondent vehemently contended that the Appellant had clearly breached clause 7 of the Agency Agreement which is the fountainhead of pre-existing dispute between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Appellant with supporting invoices was legally due and payable for the period 2011-2014. It has also been argued that the Adjudicating Authority had mistakenly overlooked the fact that following the MoM drawn up between the two parties on 09.04.2015, the Respondent had themselves agreed to advise for release of dues under the Agency Agreement by 24.04.2015. Moreover, as this MoM was not disputed by the Respondent, the Corporate Debtor had implicitly admitted their liability therefore cannot deny payment by raising the bogey of pre-existing disputes. 9. It is also contended by the Learned Sr. Counsel for the Appellant that the purported termination of the Agency Agreement happened subsequent to the letter of 12.03.2015 sent by them to the Respondent asking for review of their business relationship. Hence, the Respondent was still liable to pay the debt under the invoices raised from 2010 to 2014 as they had accrued prior to the purported termination. It is also contended that several reminder emails were also sent by the Appellant for payment of outstanding dues which have been placed at pages 168-195 of the Appeal Paper Book ( APB in short). The fact that the Respondent di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by you for the work of SAD refunds, that relate to matter in dispute before the Special Judge, Mirzapur, Ahmadabad more particularly case Nos. 1/2012 and case no. 22/2011 and all other alleged claims have been forfeited consequent to the termination of the Agency Agreement by our Client which fact also intimated to you and acknowledge by you. The Matrix of facts that has given rise of the dispute is detailed herein under: a. You are aware that there was an Agency Agreement executed between our clients and you [herein after referred to as said Agreement ]. By the said Agreement you were required to discharge the obligations in accordance with terms recorded therein. By virtue of Clause 7 of the said Agreement you were required to refrain from making payments to any government officials for the purpose of securing any advantage either in favour of our Clients or otherwise. Clause 7 of the said Agreement has been reproduced herein below for your ready reference: b. In breach of material representation as contained in clause 7.1 of the said Agreement, you entered into a series of transactions of payment of illegal gratification with the officers of the Customs and consequently, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Given this backdrop, it will be useful to find out how the Adjudicating Authority has considered the spectrum of facts and passed the impugned order rejecting the Section 9 application on the grounds of pre-existing disputes. The relevant portion of the impugned order is as extracted hereunder: 26. As regards the pre-existing dispute, the Corporate Debtor has drawn our attention to Clause 7 of the Agency Agreement which is reproduced below:- 7.1 In performing this agreement, Agent shall comply with all applicable laws, rule and regulations of the Territory and shall indemnity and save Ingram Micro harmless from agents s failure to do so. Furthermore, if this agreement, the relationship created hereby of the performance hereof is determined by Ingram Micro to be contrary either. (1) to the laws, rules or regulations of the Territory now or hereafter in effect, or (2) to Agent s representations set forth in this clause, this agreement may be terminated effective immediately by Ingram Micro upon written notice to agent and in such case, shall be deemed null and void from its inception and any compensation paid or accrued hereunder shall be forfeited by agent, and no further compen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve jurisdiction nor are otherwise required to adjudicate whether the termination of the Agency Agreement was lawful or not or whether the Operational Creditor under the present facts and circumstances is entitled to the balance payment or not as the proceedings before the Adjudicating Authority are of summary nature and any disputes relating to adjudicating of rights and liabilities of the parties are beyond the scope of the Adjudicating Authority under section 9 of the Code. As held by the Hon ble Supreme Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018) 1 SCC 353, what the adjudicating authority is to see 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 . 15. We however notice that the Appellant has assailed the impugned order and contended that the CBI proceedings were against officials of the Appellant in their personal capacity and not against the Appellant company and hence cannot be a ground f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t related dispute had been raised as early as 19.07.2011. 17. That this issue of denial of payment and termination of Agency Agreement by the Corporate Debtor had continued to fester the business relationship of the two parties is reinforced by another communication sent on 12.03.2015 by the Appellant in which they have sought review of the termination of their services by the Corporate Debtor. This letter has been placed on record at pages 140-141 of the APB. The said communication also reads like an admission of aberration committed on their part and failure to meet the exacting standards of compliance expected by the Corporate Debtor leading to the punitive action of termination of services. It is also pertinent to note that this letter again pre-dates the demand notice and relevant portions are extracted for convenience as under: From: JUBI-Khimji Poonja FPL[[email protected]] Sent: Thursday, March 12, 2015 2:37:34 PM To: [email protected] Cc: Blas [email protected] , DILIP MULANI , Dushyant Mulani Subject: Business Meeting- Request for Review M/s. Ingram Micro Ltd., (IMIL) Mumbai. Kind Attn: Mr. Jaishankar Krishnan-Managing Director Dear Sir, Re: Business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been filed by the Appellant. Hence this judgment does not come to the aid of the Appellant. The reliance placed on the judgment of this Tribunal in Apurva Prasad Vs. Sanghvi Movers Limited in CA (AT) (Ins.) No. 648 of 2022 also cannot assist the Appellant since in the present case the dispute was clearly raised prior to the issue of Demand Notice. 20. At this juncture, we wish to refer to the Mobilox judgement, which has been relied upon by the Adjudicating Authority wherein the Hon ble Apex Court while interpreting Sections 8 and 9 of IBC has laid down the guiding principles on how to examine the existence of disputes between the parties. It may be useful to notice the relevant part of the judgement as reproduced below : 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 arbi ..... 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