TaxTMI 
TaxTMI 
2020 (1) TMI 902
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....n Visakhapatnam. It inter alia carried on the business of trading in electronic media and distribution of satellite communication. Sometime in 2013-14, the Respondent approached the petitioner through a mutual friend namely Mr. Nitin Reddy to purchase 45,000 units of Digital Set Top Boxes (DSTBs) for its digital cable TV network in Visakhapatnam it was agreed between the parties each DSTB would be sold at the rate of Rs. 1020/- (Rupees One Thousand Twenty only) before taxes. They also agreed that the petitioner would bear the Customs Duty in respect of the consignment and the Respondent would reimburse the same within a period of one year from the date of delivery of the DSTBs failing which to pay interest @ 24% per annum on the outstanding dues. The petitioner supplied 45,000 DSTBs to the Respondent between 10.06.2014 and 22.08.2014 and raised respective invoices including 5% CST aggregating Rs. 4,81,95,000/- (Rupees Four Lakhs Eighty One Ninety Five Thousand only). In addition the petitioner also incurred expenses to the tune of Rs. 1,28,81,798/- (One Crore Twenty Eight Lakhs Eighty One Thousand Seven Hundred Ninety Eight only) towards Customs Duty. Thus, a total of Rs. 6,10,76,7....
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.... petition inter alia on the grounds of suppression and misrepresentation of material information. The Respondent has no debt to clear nor is it obliged to pay the amount claimed by the petitioner. The claim made by the petitioner is disputed and not playable. In addition the Respondent contended the following:- i. The Corporate Debtor Company is a "Multi System Operator", as provided under Regulation 2(m) of The Telecommunication (Broadcasting and Cable Services) Interconnection (third amendment) Regulations, 2006 and is engaged inter alia in the business of distribution/retransmission of Cable Television signals to the subscribers since 2012. ii. Analogue technology was previously used to transmit and retransmit the signals from the broadcaster to the viewers through the Multisystem Operators (MSO), the Corporate Debtor herein and the Local Cable Operators (LCO). The various stakeholders in the said process were the Broadcasters, the Multisystem Operators entities like the Respondent, who received the signals from the Broadcasters and transmitted them to the Local Cable Operators and the Local Cable Operators, in turn transmitted them to the viewers. The Central Government fou....
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....riber management system, on the explicit choice and request of such subscribers, by the cable operator to the subscriber. 'Subscriber Management System' means a system of device which stores the subscribers' records and details. vii. The Respondent Company being a MSO purchased STBs from various vendors, such as MICO and INOVO etc. Owing to increased pressure and demand of the local cable operators and deadlines fixed by Central Government, it was looking for a vendor who could supply STBs within a shorter period, unlike other vendors, who took a minimum of two months for supply of STBs. All vendors were located in China. viii. At such juncture, a close acquaintance, also a MSO, represented to the Respondent that he was unable to make payments for the STBs he had ordered. These supplied by Shenzhen Coship Electronics Co. Ltd (Coship), lying in Customs bounded warehouse in Chennai Port were incurring day-to-day demurrages. He persistently requested the Respondent to purchase the said STBs for seeding in its network. ix. The said acquaintance also knew the Petitioner. The Petitioner who had imported the STBs represented to the Respondent that the STBs manufactured b....
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....ox by way of bank transfers between 26th June 2014 and 30th January 2015. The payment was acknowledged by the Principal (IRDETO) for and on behalf of the Petitioner. xv. Since the CAS keys of the STBs supplied were not activated by the CAS Vendor, IRDETO, for default of payment of CAS keys by the Petitioner, with mala fide intention it dishonestly and mischievously induced the Respondent to make the payment directly to IRDETO, for and on its behalf, assuring to get it adjusted. Thus non-adjustment of the said Rs. 68,75,300/- paid towards CAS keys activation fee on the instructions of the Petitioner, against the total invoice amount of Rs. 4,81,95,000/-, is a clear act of misrepresentation and fraud. xvi. The Petitioner and IRDETO were fully aware that the license agreement, dated 21.02.2013, was between them and by virtue of the addendum, dated 20.06.2014, it expanded clauses 4.1.1 and 4.1.5 facilitating the Petitioner to sub-license the Respondent Company. Therefore, whatever payments the Respondent was constrained to pay to IRDETO was at the instance of the Petitioner and it was on account of the Petitioner. Therefore the invoice amount of Rs. 1020/- per box, was inclusive of....
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.... of Rs. 1,29,80,018/- and deliberately refused to adjust Rs. 68,75,300/- paid directly to the CAS vendor IRDETO towards CAS keys activation fees and denied the cash payment of Rs. 40 Lakhs, except for Rs. 10 lakhs. This clearly demonstrates that the claim made by the operational creditor is fake, false, fabricated and beyond the invoiced amount. xx. The Respondent altogether has paid Rs. 4,84,31,800/- (Four Crores Eighty Four Lakhs Thirty One Thousand Eight Hundred only), which is in excess of the invoice amount of Rs. 4,81,95,000/-. Therefore no 'debt' subsists within the meaning of definition u/s 3(11) of the Code. For the purpose of maintaining a claim, there should be an occurrence of a default and the Petitioner could only demand the amount covered by the invoices, which in the instant case has already been cleared. As indicated there has been no default. xxi. The total alleged Corporate Debt of Rs. 2,36,18,518 (Rupees Two Crores Thirty Six Lakhs Eighteen Thousand and Five Hundred and Eighteen only) along with interest @ 24% p.a. from 21.12.2016 is sham and cloak for an unacknowledged debt foisted on presumptions and assumptions. The alleged debt is a moonshine in ....
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....required to pay the Customs Duty which was the Petitioner's liability. 9. The Petitioner issued a Pleader's notice, dated 24.01.2018, bringing the fact of default to the Respondent. It was addressed to Mr. I. Rama Krishna Raju, the Managing Director of the Respondent in his correct address as given in the Articles of Association. The postal receipt shows that it was despatched on 24-01-2018 and delivered on 27.01.2018. The notice was not responded to Subsequently, the Petitioner issued the notice under section 8 on 16.02.2018, demanding payment of the outstanding dues to the tune of Rs. 2,36,18,508/- (Rupees Two Crores Thirty Six Lakhs Eighteen Thousand Five Hundred and Eight only) as per MoU, dated 22.11.2015. The notices were served on the Respondent on 27.02.2018. The Respondent did not reply within 10 days as statutorily required. It however sent an email 28.03.2018, enclosing the copy of a reply alleged to have been issued on 08.03.2018, informing that the said notice returned unserved. No material is placed before this Authority to show that the Respondent indeed had issued the reply on 08.03.2018. The reply is referred to only in the email, dated 28.03.2018. Section....
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....lakh or more (Section 4). In the circumstances, in absence of any pre-existing dispute, it was not open for the Adjudicating Authority to reject the application under Section 9. " 11. In the instant case it cannot be said that a debt, at least as far as the outstanding dues towards the cost of DSTBs is concerned, is not due and payable in law or in fact. The Respondent cannot shy away from payment of this amount. Therefore, the contention of the Respondent that there was a pre-existing dispute cannot be accepted. In that view of the matter the citations Innoventive Industries Ltd. v. ICICI [2017] 84 taxmann.com 320/143 SCL 625 and Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 would have no application in the facts of the case in support of the Respondent. The Respondent having defaulted in payment of the operational debt the Corporate Insolvency Resolution Process is triggered and the petition under section 9 of the Code is maintainable. The issue accordingly answered in the negative. In view of the finding the petition under section 9 deserves to be admitted. 12. The petitioner has not suggested the name of the Insolvency Resolut....