2021 (12) TMI 385 - AT - Insolvency and Bankruptcy

Tribunal Upholds Refund Order Post-CIRP Commencement; Services Not Essential

PJ Network Pvt. Ltd. Versus Mr. Pardeep Kumar Lakhani Resolution Professional of M/s. Dion Global Solutions Ltd.

The Tribunal upheld the Adjudicating Authority's decision to direct the refund of payments made by the Corporate Debtor post-CIRP commencement, totaling ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- From the perusal of the Reply Affidavit filed by the Respondent/ Resolution Professional shows that the Appellant herein have not taken the plea of Section 14(2) of the IBC before the Ld. Adjudicating Authority which he has taken valid service which was rendered by the Appellant fall within the definition of essential services. There is no illegality committed by the Ld. Adjudicating Authority while passing the impugned order therefore, we do not need to interfere in the impugned order - Appeal dismissed. Issues Involved:1. Legality of payments made by the Corporate Debtor post-CIRP commencement.2. Classification of services provided by the Appellant as 'essential services' under IBC.3. Applicability of Section 14(2) of IBC to the payments made.Issue-wise Detailed Analysis:1. Legality of Payments Made by the Corporate Debtor Post-CIRP Commencement:The appeal was filed by PJ Networks Pvt. Ltd. against the order dated 18.03.2021 by the National Company Law Tribunal (NCLT), New Delhi Bench-IV, which directed the refund of payments made by the Corporate Debtor on 19.08.2020 and 20.08.2020. The payments totaling Rs. 17,89,767/- were made to various creditors, including the Appellant, after the initiation of the Corporate Insolvency Resolution Process (CIRP) but before the Interim Resolution Professional (IRP) took charge. The payments were for services availed prior to the CIRP period.2. Classification of Services Provided by the Appellant as 'Essential Services' under IBC:The Appellant argued that the services provided, specifically 'Information Technology Services' including firewall services, were essential for the Corporate Debtor's operations and thus should be exempt from the moratorium under Section 14(2) of the IBC. The Appellant cited the purchase order dated 11.08.2020 and the ongoing use of these services by the Corporate Debtor as evidence of their essential nature.3. Applicability of Section 14(2) of IBC to the Payments Made:The Appellant contended that the payments for essential services are an exception to the moratorium as per Section 14(2) of the IBC. They referenced past judgments, including 'Dakshin Gujarat VIJ Company Ltd. Vs. M/s. ABG Shipyard Ltd. & Anr.,' to support their claim that essential services should continue to be paid to ensure the ongoing operations of the Corporate Debtor.Findings and Judgment:The Tribunal found that the Appellant did not raise the plea of Section 14(2) of the IBC before the Adjudicating Authority. The payments in question were made after the CIRP commencement order dated 18.08.2020, which imposed a moratorium on the Corporate Debtor. The Tribunal noted that the services provided by the Appellant did not qualify as 'essential services' under Regulation 32 of the CIRP Regulations, as they were a direct input to the output produced by the Corporate Debtor.The Tribunal upheld the Adjudicating Authority's order, stating that there was no illegality in directing the refund of payments made post-CIRP commencement. The appeal was dismissed, affirming the order dated 18.03.2021 by the NCLT, New Delhi Bench-IV.Conclusion:The Tribunal concluded that the payments made by the Corporate Debtor post-CIRP commencement were not for essential services as defined under the IBC and CIRP Regulations. The Appellant's claim for exemption under Section 14(2) was not substantiated, leading to the dismissal of the appeal and the affirmation of the refund order.