TaxTMI 
TaxTMI 
2020 (1) TMI 591
X X X X Extracts X X X X
X X X X Extracts X X X X
....unsel for the Petitioner submitted that, vide an Agreement for Legal Services dated 15.09.2014, the Operational Creditor was appointed as sole international legal counsel for the initial public offering of shares in the Corporate Debtor of India and concurrent private placements of shares in the Corporate Debtor outside India. Under the said Agreement, the Corporate Debtor had, inter alia, agreed to pay the Operational Creditor's fees and disbursements for its services, regardless of whether the Public offering and private placements of shares is completed or not. 4. It is submitted that, in accordance with the terms of the Agreement dated 15.09.2014, the Operational Creditor duly provided services and raised invoices in relation to the same. 5. The Operational Creditor had raised a total of three invoices upon the Corporate Debtor for the services provided in terms of the said Agreement, out of which the Corporate Debtor is liable to make payment to the Operational Creditor against one of the said invoices. The details of the said invoice are as under:- Invoice Invoice No.2134981 dated 09.12.2015 for USD 150,221.13. 6. It is submitted thus, the Corpo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. for the proposed Initial Public Offering (IPO) of shares of the Respondent and concurrent private placement of the shares of the Respondent in the United States of America to qualified institutional buyers. It is pertinent to note that the Petitioner was not acting as a counsel or advocate for the Respondent, and the services provided by it were not to the Respondent, but to the aforesaid financial institutions. The Petitioner was merely contracted by the aforesaid financial institutions to provide consultancy services of a legal nature. c. It is submitted that the Clause 2 of the Agreement (page 28 of the Petition) provides for the fees payable to the Petitioner for the services. The said services were to be in the nature of consultancy services. As per clause 2.1 of the Agreement, a fixed fee of USD 200,000/- was agreed upon subject to the Offering/IPO being completed within 12 months. As per Clause 2.4 of the Agreement, out of the said USD 200,000/, USD 50,000/- was to be paid within 7 days of the execution of the Agreement and USD 70,000/- was to be paid after the filing of the draft red herring prospectus ("DRHP") with SEBI. d. It is submitted that, as per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....king the said services ever furnished to the Respondent. Even the Agreement does not contain any such amounts or figures as "standard hourly rates". As such, there was never any Agreement on these "standard hourly rates" or on the hours spent by the Petitioner. g. It is submitted that if at all the Petitioner had truly undertaken the services as mentioned in Appendix-I of the Agreement (Page 31 of the Petition), it would have communicated the standard hourly rates, or issued an invoice, to the Respondent either before or immediately after the period of 12 months from the date of execution of the Agreement had elapsed, i.e., by 15.09.2015. However, this was not done by the Petitioner and it is only after 86 days after the 12 months period contemplated in the Agreement had expired that the Petitioner decided to arbitrarily, and at its own whims and fancies, issue a belated invoice for a hefty fee of USD 150,221.13/- despite the Petitioner neither having rendered any services to justify such an amount nor informing the Respondent as to why and for what such an invoice has been raised. Further, Appendix clearly states a list of 15 services to be provided by the Petitioner, yet....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... claim an admission of debt or promise to pay. A perusal of the e-mail dated 22.06.2016 sent by one Mr. Y.V. Rao in the employment of the Respondent, goes to show that the Respondent had indicated that a proposal may be forthcoming after internal deliberations. The respondent had also stated that the Respondent suffered heavily due to the IPO not being conducted because of the non-fulfilment of the terms of the Agreement by the Petitioner. Such communication goes to show that there is no acknowledgement, let alone any admission of debt or promise to pay, as falsely being claimed by the Petitioner. The Hon'ble High Court of Himachal Pradesh vide its Judgment in Satluj Jal Vidyut Nigam Ltd. v. Continental Foundation Joint Venture [2017] 200 Comp Cas 191 held as follows: "An acknowledgement of liability has to be clear, unambiguous, unequivocal and unconditional which is not the fact situation obtaining in the instant case. A company may deliberate on a number of issues and unless and until some decision is taken and thereafter conveyed to the opposite party, these would only remain and can only be considered as proposals or at best the internal matters of the compa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....attorney and legal assistant performing services on the matter. The hourly rates vary from person to person and are adjusted periodically (usually in January each year). We will be glad to provide you with a schedule of rates presently in effect for all the lawyer, paralegals and legal assistants who may be performing work on the matter if you so desire. However, as agreed, we will provide the services of the matter for a fixed fee of US$ 200,000. This fee is offered on the assumption that the Offering will be completed within 12 months. If the offering is completed, the Company agrees to pay us an additional fee of US$10,000 as additional consideration for us agreeing to draft the Industry section of the prospectus. 2.2.... 2.3 If the offering is not closed within 12 months of the date of this letter, the Company agrees that we will be paid for our work at our standard hourly rates, not to exceed the fixed fee amount above, and our disbursements and expenses. If the Offering is revived thereafter, the Company agrees to let you retain us to continue work on the matter and to mutually agree a revised fee arrangement for additional work. 2.4 The Company agr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....therefore no legal obligation is cast upon the Corporate Debtor to honour the invoice. • Raising such disputes the Corporate Debtor denied the claim made by the Operational Creditor. 16. It is noticed from clause 2.4 extracted supra, that the Petitioner was to be paid as under: i. USD 50,000/- within 7 days of signing of the Agreement; ii. USD 70,000/- on the filing of Corporate Debtor's draft red-herring prospectus with SEBI; and iii. Remaining amount of fixed fee USD 80,000/- (USD 2,00,000 - USD 1,20,000) on the closing of IPO or 12 months from Agreement date whichever was earlier. iv. Monthly disbursement of expenses as invoiced by the Petitioner. Admittedly, the Corporate Debtor had made payments at step (i) and (iv) above. There was no payment of amounts as at (ii) and (iii) above, as neither draft red-herring prospectus was filed with SEBI, nor the IPO offerings were made. Since these milestones were not achieved, no invoices were also raised by the Petitioner by 15.09.2015 i.e., on completion of 12 month's period. Further, since the IPO was not issued within 12 month's period, the Petitioner should have raise....