AI Drafter 
TaxTMI 
TaxTMI 
2019 (11) TMI 422
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....o the issue in question as follows: (1) M/S. CloudWalker Streaming Technologies Private Limited ('Petitioner/ Operational Creditor) is a Private Limited Company, incorporated under the Companies Act, 1956 and it is engaged in the business of import and supply of LED TVs and is having its registered office at 503-505, Business Suites 9, S.V. Road, Santacruz West, Mumbai 400 054. (2) M/S. Flipkart India Private Limited ('Respondent/ Corporate Debtor) is a Private Limited Company was incorporated on 19.09.2011, under the provisions of the Companies Act, 1956, Its Nominal Share Capital is Rs. and that of Paid-up Share Capital is of Rs. 85,08,947/- It is engaged in retail sale of products on their online platform. (3) It is stated that the Corporate Debtor has contacted the Operational Creditor, and showed keen interest in selling its Products of LED TVs, as the same were having latest techn010U, features and several allied advantages over the competition. To that end, the Operational Creditor and Corporate Debtor entered into a Supply Agreement dated 29.12.2016. The Operational Creditor had been importing and supplying to the Corporate Debtor from tim....
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....was behind payments to the tune ofRs. 55.06 Crores. (5) It is stated that the Operational Creditor facing heavy financial losses issued a notice and invoked the Arbitration Clause of the Supply Agreement. The Corporate Debtor on receipt of the Arbitration Notice threatened to withdraw from the deal entirely and not collect any of the remaining shipments unless the Operational Creditor withdrew the Notice. The Corporate Debtor even sent a letter where they worded the withdrawal letter which they demanded that the Operational Creditor sign and send. There is currently no other dispute or litigation pending before any Court or Tribunal in relation to the present subject matter. The Operational Creditor constrained by various financial issues at this point had no choice but to accept the demands of the Corporate Debtor and continue on its terms. It is stated that the trailing emails dated 6th November, 2017 and 24th September, 2018 related to the warehousing issues allegedly faced by the Corporate Debtor along with arbitrary promise of providing a delivery schedule, demand of withdrawal of Arbitration Notice, demand of price reductions, promises of bearing excess storage and h....
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....professionalism, the Respondent maintains amiable relationship with its customers, vendors and service providers. The Respondent is a profit making Company with sufficient financial strength and is actively doing business in the wholesale B2B (Business to Business) sales. There is no admitted debt or liability in the present instance. The Respondent has already paid an amount of Rs. 85,57,OO,664/- towards the invoices raisexi by the Petitioner/ Operational Creditor. The Respondent/ Corporate Debtor is not liable to make any payment to the petitioner/Operationa1 Creditor. Therefore, the allegation that the Respondent has no money to pay the Petitioner to meet its current and existing demands/ liabilities is baseless, frivolous, bereft of truth and filed with mala fide intentions. (3) The Petitioner/Operational Creditor had approached the Respondent expressing its desire and interest in establishing a business relation with the Respondent for of the Petitioner's Products through the resellers of Respondent. Pursuant to due deliberations between the Petitioner and Respondent, the parties had entered into a Supply Agreement dated 29.12.2016.The relevant clause from the Sup....
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....livered in installments the Agreement shall be treated as a single contract and not severable". As detailed above Respondent is not obligated to indemnify the Petitioner against any risks or costs incurred by the Applicant. Further, it is agreed that the Petitioner shall bear all the expenses of packaging, storage and transportation of the Products. i.e., all deliveries made to Flipkart shall be free ramp, duty and tax paid. The Petitioners claim of Rs. 5,25,OO,OOO/- towards Customs charges is denied by the Respondent and it falls to the grounds based on the terms agreed by the Operational Creditor under Clause 2(g) of the Supply Agreement. a. It is submitted that, the Petitioner has failed to produce any document to show that there is an outstanding due amount of Rs. payable by the Respondent towards value of goods. The Respondent denies any outstanding due amount of Rs. payable to the Petitioner. The Respondent has cleared all dues payable to the Petitioner for the products delivered by them based on the PO's raised by the Respondent in accordance with the Supply Agreement. The Petitioner's claim of Rs. 7,25,OO,OOO/- as interest @12.65% is denied by the ....
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....ed by the Petitioner. In the event, the Respondent determines that the Products received are (i) in a damaged condition, (ii) not in accordance with the Supply Agreement, the Purchase order and/or in the Invoice raised by the Petitioner, and/or (iii) defective or deficient, it shall notify the same to the Petitioner. If there is a difference in the number of Products received by Respondent, the same shall be recorded by the Respondent at the bottom of the Invoice as short supply along with the Respondent's seal and signature. (8) It is stated that as detailed above the documents provided with regard to Transaction No. 1 & 2 clearly show the reason for disparities in the Invoice amount and the payment amount is due to the short supply of the Products which has been duly noted in the Invoice along with the Respondent's seal and signature. The difference in the number of Products mentioned in the invoice and the number of products received by the Respondent has been noted down at the bottom of the Invoice. It is also stated that a mere reading of the Petition will indicate that the Petitioner is really a claim for damages and not for debt. (9) The claim of th....
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....,664. Therefore, even as per own admission of Corporate Debtor, 18,04,99,336 is still outstanding from and out of total invoice amount. Therefore, the Petition deserves to be admitted on this sole ground. (4) The Corporate Debtor though in receipt of reply failed reply to it and pay outstanding amount and did not raise any pre- existing dispute as prescribed under the Code in order to avoid initiation of CIRP. And merely alluding to some form of without there being any deficiency in service, contemporaneous evidence at this stage after ignoring the demand notice is not sufficient to deny the legitimate claims of the Operational Creditor. 5. Heard Shri Ajit Anekar along with Ms. Urvi Vaidya, learned Counsels for the Petitioner and Shri Dhyan Chinnappa, learned Senior Counsel with Shri Chinmay J Mirji and Ms. Charitha.V, learned Counsels for the Respondent. I have carefully perused the pleadings of both the parties and also the extant provisions of the Code and the rules made there under and various decisions relied upon by the parties as mentioned supra. 6. The case is listed for hearing on admission on 29.07.2019, 19.08.2019, 09.09.2C19, 26.09.2019 and on 24.10.2019,....
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.... Ltd., MANU/NL/0136/2018 atparas 10 and 11. In fact the instant case is filed to claim alleged damages rather than to initiate CIRP basing on invoices and purchase orders, the issue of damages/ disputes cannot be decided under the provisions of Code and Civil Court is competent to decide those issues and in support of his contentions, he has relied upon the judgments as cited supra. At the end of his argument, the Learned Senior Counsel expressed his readiness to pay the outstanding amount, if the Adjudicating Authority determines the outstanding amount and will also furnish bank guarantee to the extent. 9. As stated supra, the Corporate debtor has inter-alia contended there is existing disputes between the parties, which are to be adjudicated by a competent civil court upon appreciating the evidence placed on record by the parties against each other's claim. And in the absence of full-fledged trial, this Petition cannot be adjudicated and the same deserves to be dismissed. And it is contended that the Respondent has without prejudice to its rights and contentions chosen to not initiated any legal action against the Petitioner due to the deficiency in service and has chos....
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....to hold beyond 1 more day as it would then start attracting demurrage charges. Kindly send the PO's today and oblige. Regards, Jagdish Rajpurohit Cloud Walker". Thereafter, an email reply was also given by Ms. Sita Subramanian from M/S. Flipkart India Pvt. Ltd. (Respondent) dated 06.11.2017 @12.45 P.M, to the CloudWa1ker Logistics, which reads as under: "Hi Sushma, As discussed With Ankur, please raise slot requests for the following quantities at the earliest. Hi Ankur - As discussed, owing to capacity constraints at out end, we wilt pick up the following on an immediate basis and the remaining in the 3rd week of November. FSN Model NLC Nelam- angala Hyderabad Chennai Bhiwandi Ahmedabad Kolkata Noida Luhari Patna Total TVSEYD EJHUCE 5ACH CLOUD TV 39SH 22500 43 33 46 36 25 15 10 45 3 256 TVSEYD EJPKHM ZC49 CLOUD TV 50SH 32400 35 27 37 29 20 12 8 36 3 206 TVSEYD EJ6TMY QDQZ CLOUD TV 50SU 37000 35 27 37 29 20 12 8 36 3 206 Again, Shri Jagdish Rajpuro....
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....e to ensure this is achieved to avoid problems with them besides lowering our interest payouts on the inventory which is now breaking our backs and is giving us tremendous problems. We also faced issues to execute the November order with PO's and slots being difficult to get where it took more than a week only to normalize the process. In view of this I suggest that December orders be processed and informed at the start itself so we can plan the month right now and be able to execute the orders in time and efficiently". Warm regards and awaiting your kind reply. The above correspondence, clearly established that the Petitioner imported goods in question as per purchase orders made by the Corporate Debtor and it is the Corporate Debtor, who has committed default to take some of goods due to its inability to lift them and thus committed default. 12. As stated supra, the Corporate Debtor admittedly did not raise any dispute with regard to alleged deficiency in service or brought to the notice of Operational Creditor about alleged breach of terms of Supply Agreement in question. Clause 8 of Agreement deals with particulars of delivery and clause 8(b) confer ....
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....r total of amount of Rs. 26.95 Cr. Consisting of Rs. 13.95 Cr. towards goods, Rs. 5.25 Cr. towards customer charges, Rs. 7.75 cr. towards interest @ 12.65 % on delayed payment till 31st March, 2019. A copy of Ledger Account (Customs duty) for the period 15th December, 2017 to 18th April, 2019 is filed in support of payment said customs duty. The Respondent cannot simply deny the payment of customs duty for the goods imported for it by the Petitioner. 14. It is also relevant to point out here that some of the cases similar to the instant case was dealt with by this Adjudicating Authority and those judgements were questioned before the Hon'ble NCLAT, as per Section 61 of Code. One of the case is filed by filed by M/S. Next Education India Pvt. Ltd. Vs. M/S. K12 Techno Services Pvt. Ltd., vide CP (1B)No.114/BB/2017, which was dismissed by this Adjudicating Authority, vide Order dated 20.12.2018, by inter-alia adverting as under: "13... The Hon'ble Supreme Court in the case of B.K.Educational Services Pvt. Ltd. Vs. Parag Gupta and Associates (2018) SCC Online SC 1921 , has inter alia held that provisions of Limitation Act will apply to proceedings or appeals before ....
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.... any of the correspondence to show that prior to Section 8 notice, the Respondent (Corporate Debtor) intimated that there were defective services provided by the Appellant. It is a settled law that if any dispute is raised prior to the issuances of the invoices or Demand Notice U/s. 8 (1) of the Code with regard to quality of services or goods or pendency of the suit or arbitration, in such case one may take the plea that there is an 'existence of dispute' but if any dispute is raised after issuance of Demand Notice U/ s. 8 (I) that cannot be tenned to be a 'pre-existing dispute'. We find that the Adjudicating Authority has failed to notice the aforesaid issue and observed that 'debt' in question is not only serious dispute but also barred by limitation and laches and not discussed under which provision the 'Master Service Agreement' with 'Sri Gowtham Academy of General and Technical Education' was consequently issued on 8th February, 2016 and the reply to the Demand Notice was issued on 8th August, 2017. For the reasons aforesaid, we set aside the impugned order dated 20th December, 2018 and remit the case....
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....nd thereafter pay such valid invoices within 15 business days. Further, as per Clause 4.5 of the Agreement, the Respondent was liable to pay interest at the rate of I. per month on any sums overdue after a period of 15 business days from the receipt of a valid invoice. 3. In between 2014-2015, the Appellant provided the said services to the Respondent from time to time for which the Appellant raised invoices at the end of every month towards the consumption of the said service in terms of the aforesaid Clause. The Appellant continued to provide services to the satisfaction of the Respondent and the Respondent did not raise any complaints about the services rendered by the Appellant or about the invoices raised by the Appellant in the years 2014, 2015 and 2016. 4. It is stated that for the first time Respondent defaulted in making the payment towards the invoices on 16th June, 2015 and had not made any payment towards the debt since then, as a result of which its services were discontinued after July, 2015. 5. On 15th April, 2017, the Respondent acknowledged the debt and informed that they were expecting some funds from its investors, which was delayed and....
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.... we set aside the impugned order dated 8th November, 2018 and remit the case to the Adjudicating Authority for passing appropriate order taking into consideration the records submitted by the Appellant in the light of decision of Hon'ble Supreme Court in "Innoventive Industries Ltd. Vs. ICICI Bank and Ors. after notice and hearing the Respondent. In the meantime, it will be open to the Respondent ('Corporate Debtor') to settle the claim with the Appellant. Appeal is allowed with aforesaid observations and directions. No costs. 16. In another case, filed by M/S. Pedersen Consultants India Pvt. Ltd. Vs. M/S. Nitesh Estates Limited, this Adjudicating Authority has dismissed the Company Petition (1B)No.35/BB/2018 vide Order dated 05.10.2018, with the following reasons: "Hence, by exercising powers conferred on the Adjudicating Authority UIs. of IBC, 2016, is hereby rejected. However this order will not come in the way of Petitioner filing appropriate proceedings before Appropriate Court, having jurisdiction over the matter". And aggrieved by both the parties, the Petitioner has filed an Appeal before the Hon ble NCLAT, New Delhi in Company Appeal (AT) (Insolv....
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....agement with the Appellant, but such e-mail does not relate to any pre-existing dispute. VWtatever the stand taken by the 'Corporate Debtor' before the Adjudicating Authority, are afterthought which is after receipt of Demand Notice under Section 8(1) of the 'I&B Code' issued on 14th July, 2017. 3. The Adjudicating Authority has not rejected Section 9 application on the ground of pre-existing dispute, but rejected it on the ground that it, cannot enter into enquiry with regard to the disputed claim. 4. The Learned Counsel for the Respondent has disputed the contention of the Petitioner and the debt in question is a disputed and has pointed the averments stated in additional Statement of Objections as briefly stated above. The case is covered by the Apex Court judgement rendered in the Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited case. Therefore, this C.P.(IB) No.35/BB/2018 is liable to be dismissed. " 5. In an application under Section 9, it is always open to the 'Corporate Debtor' to point out existence of dispute, if any. Such existence of dispute should be that of a period prior to the issuance of the ....
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.... (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 6(2), the applicant is to dispatch by registered post or speed post, a copy of the application to the registered office of the corporate debtor. Under Section 9(3), along with the application, the statutory requirement is to furnish a copy of the invoice or demand notice, an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the 9 unpaid operational debt and a copy of the certificate from the financial institution maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor. Apart from this inforrnation, the other information required under Form 5 is also to be given. Once this is done, the adjudicating authority may either admit the application or reject it. If the application made under subsection (2) is incomplete, the adjudicating authority, under the proviso to sub-section 5, may give a notice to the applicant to rectify defects within 7 days of the receipt of the notice from the adjudicati....
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....l debt', the application under Section 9 cannot be rejected and is required to be admitted. 9. In "Innoventive Industries Ltd. v. ICICI Bank and Ann- (2018) 1 SCC 407", the Hon'ble Supreme Court while explaining the provisions of Section 9 observed and held: "27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code ....
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....d unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing- i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. " 10. From the aforesaid findings, it is clear that the claim means a right to payment even i....
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.... under provisions of section 9, inter-alia prescribes time lines for either for admission or rejection of case for 14/7 days, as the case may, therefore, the Adjudicating Authority cannot keep the case pending for the that purpose. 18. The above facts and circumstances of the case, when examined in the light of extant provisions of Code and the law, as discussed supra, leaves no iota of doubt that the Corporate Debtor has comrnitted Debt and default in question, which is established by the Petitioner. And there is neither pre-existing nor post-existing dispute made out by the Corporate Debtor. The Adjudicating Authority is satisfied that the instant Application/ petition is complete proviso 2 of Section 9 of the Code ; there is no payment of operational debt; the demand notice in question is delivered and no notice of dispute was received by the Petitioner; a qualified Resolution Professional by name Mr. Deepak Saruparia, bearing IP Regn. No. IBB1/1PA-001/1P-P00660/2017-18/ 11689, is suggested as Interim Resolution Professional to conduct the CIRP in respect of Corporate Debtor. He has also filed his written consent dated 31.07.2019 in Form-2, by inter alia stating that he is an....