TaxTMI 
TaxTMI 
2018 (6) TMI 1261
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....Operational Creditor by authorisation letter/ Board Resolution dated 08.08.2017. 3. The Respondent/Corporate Debtor "M/s. Tricolor India Schauspiel Pvt. Ltd" is a company incorporated under the provision of Companies Act, 1956, bearing Identification Number U74120UP2009PTC037632. The Authorised Share Capital of corporate debtor company is 5,00,000/- (Rs. Five Lakh Only), and Paid-up Share Capital is Rs. 5,00,000/- (Rupee Five Lakh only). 4. Brief facts related to petition are as follows: (i) The Operational Creditor is operating in the field of Motion picture, radio, television and other entertainment activities. (ii) The Total amount of debt which fell due after the supply of services to the corporate debtor is Rs. 85,13,425/- (Rupee Eighty-Five Lakh Thirteen Thousand Four Hundred Twenty-Five Only) up till 5th August 2017, as claimed in Demand Notice Dated 10.08.2017. (iii) The applicant stated that written contract was executed between The Operational Creditor and Corporate Debtor on 01.06.2016 and Mr. Ketan Mehta (One of the Director of the Maya Movies Private Limited and the Actor and Artistic Director) was appointed as Visualizer Cum Artistic Director for Multi Laser S....
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.... the Corporate Debtor to the Operational Creditor till date. (viii) The Operational creditor has sent reminder dated 14.10.2016, 19.01.2017 and 25.01.2017 to the Corporate Debtor demanding remaining payments. The Corporate Debtor did not make the payment, and there was no denial by the Corporate Debtor of its obligation to make the payment to the Operational Creditor. Further, no allegation of any non-performance was raised by the Corporate Debtor. (ix) The Operational Creditor sent a Demand Notice under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules, 2016) to the Corporate Debtor on 10th August, 2017. (x) Operational Creditor further stated that on receiving the Notice, the Corporate Debtor replied on 21.08.2017, and therein wrongfully and falsely refused to pay the claim amount alleging first time that Operational Creditor had failed in performing its part of the Agreement, but there was no allegation of the existence of dispute before. (xi) The Operational Creditor contends that regarding the agreement dated 01.06.2016 he has rendered services to corporate debtor till November, 2016 by providing all the deliverables under the Agreeme....
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....der of the "Jang-E-Azadi Memorial Project". Project required detail study of Punjab History, the independence movement, understanding the sensitivities of audience, preparation of script in three different languages, visualization for different mediums of hydro shield, wall mapping to transform the structure in the context of the narrative, laser beam tunnel and animation, supervision and guidance of designing visuals for 2D and 3D Animation. Supervision of designing of the equipment placement, layouts for achieving the artistic effects, voice recordings etc. (v) Corporate Debtor stated that the show was of a substantial magnitude, the largest permanent multimedia installation in India till date which required specialised equipment and support. Visualization of such show cannot be claimed by the little breakdown of Topics of the show in 5 Pages, which according to the corporate debtor is only work done by Operational Creditor and Mr. Ketan Mehta. (vi) Corporate Debtor claimed that this mammoth installation required an International team which comprised of almost 100 people, including animators, programmers, 3D Artist, sound designer, shoot production managers, casting directors....
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....or has stated that the project at that time was already running behind schedule and the role of Mr. ketan Mehta was delineated. And upon execution of the agreement, The Corporate debtor paid 25% to the Operational creditor as a gesture of good will and hope that relation between them shall flow smoothly and further stated that this Payment of 25% did not correlate any step being complete after the agreement or any alleged work previously done. The payment was made upon the Execution of the agreement. Mr. Ketan Mehta had not made any suggestion to the dramatised script. He did not meet the clients regarding the change in the script. (xii) That the Corporate Debtor requested Mr. Ketan Mehta to work out on an urgent basis, a detailed visualization of the project and operational creditor on 23.06.2016 sent an email containing the alleged visualization of the entire show, but corporate debtor states that the same was not a visualization of the entire show at all but sketchy bullet points. (A copy of Email send by Operational Creditor to Corporate Debtor is Annexed). (xiii) Hence, The Corporate Debtor due to delays on the part of Operational Creditor had prepared its visualisation. T....
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....ving a keen interest in history. (ii) Mr. Hiamanshu Sabbharwal of the Corporate Debtor was fully aware of the stature and standing of Mr. Ketan Mehta in the Media field, approached Mr. Ketan Mehta on November, 2015 to provide his services as the "Creative Director" of a proposed sound and light show titled "Jang-e-azadi" at Jalandhar to be completed by October 2016, Mr. Ketan Mehta agreed to the terms and gave letter of consent for the same on 10-11-2015. So, Himanshu Sabharwal of the Corporate Debtor used the name of Mr. Ketan Mehta as the "Creative Director" in the Tender Application "to the Punjab government for getting the said project. (iii) Operational Creditor in their rejoinder further stated that Corporate Debtor also requested Ms. Deepa Sahi, the Managing Director of the Maya Movies Pvt. Ltd. to attend the Punjab Govt, approving committee meeting in Jalandhar on 23-11-2015. Ms Deepa Sahi not only attended the said meeting, she successfully pitched the project in front of the committee (Details of the Flight Ticket arranged by Corporate Debtor to Officials of the Operational Creditor is annexed as Annexure No. 3 in Rejoinder. (iv) Based on the Understanding Ketan Meh....
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.... the services. He did not reply nor did he pay. (xi) Operational Creditor further contented that Corporate Debtor with premeditated mala fide intention, approached Mr. Ketan Mehta to use his creative credentials and credibility to get the contract for the Project from The Punjab Govt, and used his services and creative expertise to develop the script and get it approved by the Govt, and get the detailed Creative Visualisation for the project, and once all this most crucial part of the process was completed, they then reneged on their commitments to pay the fee to Mr. Ketan Mehta, in spite of repeated reminders. 7. Heard the counsel for both the side at length and perused the record available. 8. The present petition is filed under the Provision of section 9 of IBC, 2016. Hence it is relevant to read section 8 of IBC, 2016 which reads as under: "(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice demanding payment of the amount involved in the default to the corporate debtor in such form and manner as may be prescribed. Persons who may initiate corporate insolvency resolution process. Initiati....
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.... In that afternoon I learnt a lot from you and was humbled by your personality, I truly value our working together. we are preparing the bid and would be sending it for your perusal soon next week. Meanwhile, I have attached the draft of the letter of consent as desired by you. Please be kind to reproduce this on your letter head and mail it back to us by Monday. I shall be in touch and would visit Bombay later in the month as agreed, to deliberate further on our partnership." Further, Corporate Debtor also sent email dated 19.11.2015 to Ms. Deepa Sahi, the Managing Director of the Maya Movies Pvt. Ltd. Informing about the arrangement of Flight to attend the meeting with Punjab Govt. Approving committee meeting in Jalandhar on 23-11-2015 and from the record it appears that Ms. Deepa Sahi of the Operational Creditor attended the said meeting, she successfully pitched the project in front of the committee (Details of the Flight Ticket arranged by Corporate Debtor to Officials of the Operational Creditor is annexed as Annexure No. 3 in Rejoinder). Hence from these two instances, it appears that Corporate Debtor in itself approached to Mr. Ketan Mehta and Ms. Deepa Sahi of the ....
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.... left to you alone. Moreover, Ross is a partner in Tricolor and I think it was agreed upon, that he would be making the content. Ketan ji need to visualise it, but he is not hand on graphic artist like Ross. So I don't understand, where is the problem in letting Ross work with the story board and take his inputs to move forward. Moreover, there is lot of mathematics involved apart from the aesthetics in transforming the architecture of the building to suit a certain context the time is too less to experiment, build a fresh team etc. and Ross cannot park himself in India for 2 months. (4) As we had discussed earlier, paying for, VO, Script, Music etc. and then paying for content, over and above that, when we have in-house expertise, doesn't work for either the budget or the time lines. Either you engage Ross and we pay him through you, we don't have issue with that. (5) I would suggest, that we sign up on the agreed fee for visualization and let Ross make content the content with Ketan Ji overseeing it. This is important; else we would never be able to finish this." 14. Hence from perusal of email dated 10.05.2016 it appears that Corporate Debtor in itself informed ....
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.... January but could not finalise the terms. Now that it is sorted, it will be done. Regards." 17. It is after such reminder conversation, Agreement was finalised, and Mr. Ketan Mehta of the Operational Creditor was appointed as "Visualizer cum Artistic Director" with the condition of payment of Amount of Rs. 1,00,00,000/-INR (Rupee One Crore Only) after completion of several stages. Terms and Condition of Agreement are reproduced here below: - "Payment terms for the entire job work." Stage 1-25% of the agreed amount against the approval of dramatised script in 1st language from the end client PFMMF. Stage 2-25% of the agreed amount against the submission of final track (includes voice recording, music, sfx, mixing etc.) of the show in all the Three languages and the approval of visualisation. Stage 3-35% of the agreed amount against completion of content generation 2D, 3D and Live Shoot (If required). Stage 4-10% of the agreed amount against the final programming, synchronisation and integration in all the languages and execution of any changes, if required by the client. Stage 5-5% of the agreed amount to be released after the handing over the show to the end clien....
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.... arises no question of payment for/these Stages and this remaining payment cannot be considered as Operational Debt. 22. Hence, there was burden of proof towards Operational Creditor to clarify such objection taken by the Corporate Debtor, Counsel for the Operational Creditor clarifying to such aspect again brought to our notice, E-mail dated 19.05.2015 sent by Corporate debtor to Operational Creditor and laid emphasis on points 3, 4, 5 of this Email that is as follows: - (3) Since you do not have a prior experience and a ready team familiar with mapping, it cannot be left to you alone. Moreover, Ross is a partner in Tricolor, and I think it was agreed upon, that he would be making the content. Ketan ji needs to visualise it, but he is not handing on graphic artist like Ross. So I don't understand, where is the problem in letting Ross work with the story board and take his inputs to move forward. Moreover, there is lot of mathematics involved apart from the aesthetics in transforming the architecture of the building to suit a certain context the time is too less to experiment, build a fresh team etc. and Ross cannot park himself in India for 2 months. (4) As we had discuss....
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.... Ketan Mehta was present at venue of the work, Counsel for the Operational Creditor has objected to such point and has stated that Mr. Ketan Mehta of Operational Creditor had met with Mr Ross of Corporate Debtor in London when he was visiting London for film festival in June,2016 and had a detailed discussion with Mr. Ross on the visual treatment of the sound and light show based on the visualized script developed by Mr. Ketan Mehta and for physical presence stated further that in Agreement in itself it is mentioned about presence, if required. A perusal of Email dated 9th August, 2016 of Deepa Sahi of Operational Creditor to Himanshu Sabharwal clarifies that Mr. Ketan Mehta and Mr. Ross had fruitful discussion in London related to script and Mr. Ketan Mehta has also given some suggestion, lastly in this email Operational Creditor had stated that" Please do let me know if you would like me to visit the location with Ross", Hence from perusal of this email it cannot be denied that Mr. Ketan Mehta has not met with Mr. Ross and given him some suggestion related to further working on project, even he asked them to let them know if they want him to visit the location, which shows Operat....
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....ute between the Operational Creditor and Corporate Debtor for non-performance of the work as per Agreement. 29. Hence, following the Principle laid down by the Hon'ble Supreme court along with the bare reading of above-stated provision along with the discussion above, it is seen that there has been no pre-existing dispute before the issuance of demand notice between Operational Creditor and Corporate Debtor. 30. 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'. 31. Accordingly, we admit the petition u/s. 9 of the code declaring a moratorium for the purpose referred to in section 14 of the Code with following Direction: (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely: - (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in....