Tribunal Confirms Corporate Debtor & Operational Creditor Relationship Under IBC

The Tribunal determined that Katalist Viewpaper Pvt. Ltd. was the Corporate Debtor and Inspired Traveller the Operational Creditor based on the direct relationship evidenced by purchase orders and invoices. It concluded that there was no genuine dispute regarding the operational debt prior to the application under Section 8 of the IBC. The Tribunal dismissed the appeal, upholding the Adjudicating Authority's decision to admit the application under Section 9 of the IBC, with no costs awarded.

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Issues Involved:

1. Whether Katalist Viewpaper Pvt. Ltd. is the Corporate Debtor and Inspired Traveller the Operational Creditor with regard to the services provided.
2. Whether any real dispute exists regarding the operational debt between the corporate debtor and operational creditor prior to the filing of the application under Section 8 of the IBC.

Issue-Wise Detailed Analysis:

Issue 1: Whether Katalist Viewpaper Pvt. Ltd. is the Corporate Debtor and Inspired Traveller the Operational Creditor with regard to the services provided.

The Appellant, an erstwhile Director of Katalist Viewpaper Pvt. Ltd. (Corporate Debtor), argued that Katalist was merely an intermediary between Inspired Traveller (Operational Creditor) and Group M Media Pvt. Ltd. The Appellant claimed that Group M engaged the Operational Creditor for designing advertisements, and Katalist's role was limited to providing digital and documental support, issuing purchase orders on behalf of Group M, and routing payments from Group M to the Operational Creditor. The Appellant contended that there was no liability on Katalist to make payments, as Group M failed to release the payments to the Operational Creditor.

The Respondent No. 1 (Operational Creditor) countered that purchase orders for the services were issued by Katalist, and invoices were accepted for payment by Katalist. The Operational Creditor provided evidence of TDS deposited by Katalist and referenced the Balance Sheet and Statement of Profit and Loss, which showed the Operational Creditor as a creditor.

The Tribunal reviewed purchase orders, invoices, TDS certificates, and emails exchanged between the parties. It was established that Katalist issued purchase orders to the Operational Creditor, who raised invoices for the services rendered. Payments were made by Katalist for some invoices, but others remained unpaid. The Tribunal found that Katalist was the Corporate Debtor and Inspired Traveller the Operational Creditor, as the purchase orders and invoices indicated a direct relationship between the two.

Issue 2: Whether any real dispute exists regarding the operational debt between the corporate debtor and operational creditor prior to the filing of the application under Section 8 of the IBC.

The Appellant argued that the Adjudicating Authority failed to appreciate the existence of a dispute regarding the liability of payment. The Appellant claimed that the emails exchanged between the parties indicated that Group M was responsible for the payments, not Katalist. The Appellant also cited case laws to support the argument that CIRP cannot be initiated when the liability to pay the operational debt is disputed.

The Respondent No. 1 maintained that the purchase orders and invoices were undisputed and that Katalist had made partial payments against the invoices. The Respondent argued that the dispute raised by Katalist was a sham and did not constitute a dispute under Section 5(6) of the IBC.

The Tribunal examined the emails and found that the dispute was an afterthought by Katalist to escape liability. The Tribunal noted that Katalist had made payments for some invoices without raising any issues and that the emails indicated an internal account reconciliation issue between Katalist and Group M, which did not affect the Operational Creditor. The Tribunal concluded that there was no pre-existing dispute regarding the services rendered by the Operational Creditor and that the dispute raised by Katalist was spurious and illusory.

Conclusion:

The Tribunal found no merit in the appeal and upheld the Adjudicating Authority's order admitting the application under Section 9 of the IBC. The appeal was dismissed with no order as to costs.

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