2018 (6) TMI 1261 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Petition, Declares Moratorium

The Tribunal admitted the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, declaring a moratorium and appointing an Interim ... Initiation of Corporate Insolvency Resolution Process - existence of Pre-existing dispute - Held that:- A perusal of record shows that Corporate Debtor has not annexed any evidence which shows that they were unsatisfied with this visualization provided by Operational Creditor and it is the first time during reply to demand notice Corporate Debtor have stated that Operational creditor has not performed the work as per Agreement. Corporate Debtor failed to point out single evidence/correspondence email prior to reply to Demand Notice where this Tribunal could establish that there was Pre-Existing Dispute between the Operational Creditor and Corporate Debtor for non-performance of the work as per Agreement. There has been no pre-existing dispute before the issuance of demand notice between Operational Creditor and Corporate Debtor. The Operational Creditor had not received the outstanding Debt from the Corporate Debtor, and the requirements as prescribed under IB Code have been completed by the Petitioner thus we are of the view that this Petition deserves 'Admission'. We admit the petition u/s. 9 of the code declaring a moratorium for the purpose referred to in section 14 of the Code Issues Involved:1. Whether the demand raised by the Operational Creditor is due from the Corporate Debtor under the terms of the Agreement dated 01.06.2016.2. Whether there was any pre-existing dispute regarding the due amount between the Operational Creditor and the Corporate Debtor before the issuance of the Demand Notice.Detailed Analysis:Issue 1: Demand Raised by Operational CreditorThe Operational Creditor, M/s Maya Movies Pvt. Ltd., initiated the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Tricolor India Schauspiel Pvt. Ltd., under Section 9 of the Insolvency and Bankruptcy Code, 2016. The Operational Creditor claimed an outstanding debt of Rs. 85,13,425/- for services rendered under an Agreement dated 01.06.2016. The Agreement stipulated a payment of Rs. 1,00,00,000/- for various stages of work, including supervision of script writing, voice recording, CGI, animation, and artistic direction.The Corporate Debtor initially paid Rs. 25,00,000/- against the first stage of the Agreement but disputed the remaining amount, arguing that the Operational Creditor did not perform the agreed services. The Tribunal noted that the Corporate Debtor had acknowledged the completion of the first stage by informing the Operational Creditor about the script's approval and subsequently making the payment. Emails exchanged between the parties indicated that the Corporate Debtor sought the Operational Creditor's assistance in securing the project and acknowledged their inputs in the script development.The Tribunal found that the Corporate Debtor itself had prevented the Operational Creditor from performing further stages by opting to use its in-house team for content creation. The Operational Creditor provided visualization inputs as required, and there was no evidence of dissatisfaction from the Corporate Debtor regarding these inputs before the demand notice.Issue 2: Pre-existing DisputeThe Tribunal examined whether there was any pre-existing dispute between the parties before the issuance of the Demand Notice. The Corporate Debtor claimed that the Operational Creditor had not performed its contractual obligations, but the Tribunal found no evidence of any dispute communicated before the demand notice. The Corporate Debtor's objections were raised for the first time in response to the demand notice, which did not establish a pre-existing dispute.The Tribunal referred to the Supreme Court's ruling in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd., which emphasized that the existence of a dispute must be genuine and not a mere bluster. The Corporate Debtor failed to provide any correspondence or evidence indicating a dispute before the demand notice, leading the Tribunal to conclude that there was no pre-existing dispute.Conclusion:The Tribunal admitted the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, declaring a moratorium and appointing an Interim Resolution Professional (IRP). The moratorium prohibits the institution or continuation of suits, transferring of assets, and other actions against the Corporate Debtor. The IRP was directed to make a public announcement of the CIRP immediately. The Tribunal's decision was based on the lack of a pre-existing dispute and the fulfillment of the requirements under the Insolvency and Bankruptcy Code by the Operational Creditor.