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2020 (2) TMI 1076
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.... arguments, which are relevant to the issue in question, are as follows: (1) M/s. Firefly Creative Studio Pvt. Ltd. (Herein after referred to as Petitioner/Applicant/Operational Creditor). The Company was incorporated under the Companies Act, 1956, with CIN: U92114TG2003PTC041520. (2) M/s. Rockline Entertainment Private Limited (herein after referred as Respondent/Corporate Debtor/CD) was incorporated on 04.05.2005 under the Companies Act, 1956 with CIN: U32304KA2005PTC036224. Its Nominal Share Capital is Rs. 10,00,00,000/- (Rupees Ten Crores only) and Paid-up Capital of Rs. 4,76,00,000/- (Rupees Four Crores Seventy-Six Lakhs only). (3) The Operational Creditor commenced its business during the year 2001, under the name "firefly Entertainment" wherein Shri Nagesh HN was running it as a proprietor focusing its business on Visual Effects (VFX), User Interface Design, and Multimedia etc. Subsequentiy, it was converted from proprietorship into a private limited Company focusing chiefly on VFX services for feature films and also, Pre-and Post-production/design services for feature films. It received its prominent project, when it successfully developed the VFX....
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....work. On being completely satisfied with the groundwork done by Petitioner, the work was assigned to it. Accordingly, the Respondent paid a nominal amount of Rs. 4,50,000/- vide cheque (after 10% TDS deduction of Rs. 50,000/-, totalling to 5 Lakh) on 29th May, 2014. The Petitioner has diligently reviewed the work and suggested various creative inputs/newer technique, further De-aging tests and methods, Visual Effects samples which were indispensable to the very production and release of the film 'Lingaa' between June to August 2014 as the project initiated period. The Respondent took almost four months of time for signing a formal written agreement with the Petitioner. Since substantial groundwork was already done, the Petitioner urged the Respondent several times to come forward and sign the agreement. The agreement was finally signed on 25.08.2014 ("Agreement") and the original agreement is retained by the Respondent and a copy of the Agreement was handedover to the Petitioner. (6) The Petitioner had successfully completed such a humungous milestone within a short time period of six and a half months (between June and first week of December, 2014). The Petitioner....
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....l works and upon that excessive duration of work than agreed in the contract was put for execution without any provision of additional calendar dates for the Petitioner In the end, all works were submitted and approved by the Director for safe release of the film for public view. The film was released on 12th December, 2014. The invoice was issued on 4th December, 2014, as per the initial contractual terms. Due to lack of time to enumerate the exact quantum of work as everybody at CD was looking forward to complete the film to meet the film release deadlines and also, solely on the kind request from CD to bill the additional work later on; subsequently final invoice was released based on actual duration of work output as per terms mentioned in the Agreement. The CD had never questioned on the quality of service or any issue as regards the work of the Applicant during the currency of the assignment or thereafter. Until now the CD has remitted only a portion of the amount actually payable for the entire services rendered. After submission of all the works and after waiting 30 days from the release of the film as requested by the CD in the contract, the Applicant started pressing for ....
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.... sent SMS (text messages) between May, 2015 and September, 2015 to CD in 'Please intimate on taxes it has been long', 'waiting for your call'. The CD had replied on 09.06.2015 vide text message from +91 - 9341232275 'ok sir'. Thus, it was within the knowledge of the CD. (13) On or about July, 2015, the Applicant moved out of the old office premises due to huge liquidity crisis arising out of the default of the CD. The Applicant had immediately reflected the same on its website, the new office address. The Applicant had also been communicating with TFCC since 2015 and in all communication, the Applicant's new office address was set out. The said letter was also forwarded to TFCC and to the CD and it was well within the knowledge of CD that Applicant is operating out of a new office address. The TFCC had been contacting both CD and Applicant and there was no direct communication between them during this time. The Applicant has sent several emails between April, 2015 and June, 2016, however have failed to receive any response from the Applicant. (14) The CD filed an arbitration application AA 231/2017 on 06.05.2017, under Section 9 of the ....
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....sed and stamped as per the applicable laws, will not be considered for any purposes. Section 34 of the Karnataka Stamp Act, 1957 is clearly stated on this point. The law also gives this Hon'ble Court to impound the said document by virtue of section 33 of the Act. Hence there is no basis for the Applicant's claim. Under Rule 6 of the IB (Application to Adjudicating Authority Rules) 2016 an operational creditor will not be able to maintain any application seeking liquidation proceedings unless the application is presented along with all the legally admissible documents as contemplated under BBI (IRP for Corporate Persons) Regulations 2016. Hence the very application becomes non-maintainable under law and deserves to be dismissed at the threshold. (3) A conjoint reading of section 3(6), 3(10), 3(11), 3(12), 5(20) and 5(21) of the I&B Code 2016 makes it amply clear that to maintain application seeking CIRP proceedings before this Hon'ble Tribunal, existence of clear "operational debt" and an inferable debt liability either admitted or adjudged should be there. In the absence of same, a mere claim will not suffice to initiate proceedings under the provisions of Cod....
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.... i.e. making the movie in multiple languages, selling the dubbing rights, sale of audio, sale of satellite airing rights etc., the producer were to recover the huge investments, and secured on heavy interest rates from various lenders in the market and from the banks, with a firm hope that the movie will make a bit hit and will generate good income. (6) It is submitted that in order to make a best quality High Definition movie the services of the vendor rendering the Computer Graphics, Designing, VFX Services, Special Effects, Services, De-aging finishes etc., has to be of an extremely good quality and timely services are all the more essential. Mr. Rockline Venkatesh was considering the options of vendors for the said services. During the relevant time, the Applicant, under the reference of Director of the movie, had requested for assignment of work to them. Since the Applicant was recommended by the Director of the movie and assurance of most competitive price, high quality and timely deliveries, Mr. Rockline Venkatesh agreed to assign the work of VFX services of Scenes and De-Aging to the Applicant. In pursuance to that a document dated 25.08.2014 came to be forwarded b....
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....ongly made it under duress to the Applicant and also the damages as is evidenced in statement of accounts and demand, which roughly accounted to a cumulative sum of Rs. 10 Crores as of then. Whereas, after the demand, the Applicant adopted evasive tactics and failed to come forward to settle the legitimate demand of the Respondent. Under the circumstances, having no other alternative left, the Respondent served urgent warning notice calling upon the Applicant to make good the amounts as demanded and has cautioned that they would be forced to legalize the situation. The Applicant though was served of the caution, paid no heed to the same and on the contrary they were making efforts to dilute the assets of the Company in order to escape a probable decretal liability. (10) Since the Respondent's efforts confront and convince them personally was not fruitful, the Respondent having no other way left decided to seek an award of recovery from the Arbitral Tribunal through arbitration and had addressed a demand notice in furtherance of the same to the Respondent. But the Applicant had not acted in terms of the said notice of demand and has pushed the same aside. Thereafter, pu....
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.... India in respect to the Order dated 05.07.2019. Therefore the alleged Claim is subject to Judicial Review. (13) The alleged Claim is subject to settlement of accounts between the Applicant and the respondent as the Parent Company of the Applicant namely GM Properties Private Limited, has availed an Inter-Corporate Deposit of Rs. 1,99,00,000/- on 24.07.2006 from the Respondent, which amount together with interest, though shown in the books of the respective parties i.e., the Applicant and the Respondent, has not been settled by the Applicant till date. Therefore, the accounts between the parties are required to be reconciled. (14) The Applicant has an effective and efficacious alternate remedy available under the provisions of the Arbitration and Conciliation Act, 1996 and this Hon'ble Tribunal cannot be used as an executing court for execution of awards. (15) The Respondent is a solvent Public Listed Company and has been declaring profits of approximately Rs. 90 to 100 Crores each year for the last three (3) financial years and is in active business and therefore, cannot be termed as a 'Corporate Debtor'. 4. Heard Shri Manu Kulkarni, learn....
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....i Sanghvi Motors v. Tech Sharp Engineers (P.) Ltd.[2019] 110 taxmann.com 338 (NCCL - AT) Mobilox Innovations (P.) Ltd's case (supra). 6. Shri M. S. Shyamsundar, the learned Senior Counsel for the Respondent, while reiterating various averments made in the reply, as briefly stated supra, has filed written arguments dated 5.12.2019, by inter-alia contending as follows: (1) Entire case and claim of the Applicant is based upon the so-called agreement dated 25.8.2014, claimed to have been entered into between the parties. There is no mention in the agreement as to where it is made. The Applicant has argued that it is made at Hyderabad-Andhra Pradesh to counter the argument of this Respondent that the agreement is chargeable with stamp duty under the Karnataka Stamp Act and it is not admissible in evidence since it is unstamped. Even if the argument of the Applicant is to be accepted, nothing ensures to its benefit because the Indian Stamp Act, 1899 which is applicable in Andhra Pradesh, also makes the Agreement relied upon by the Applicant a compulsorily dutiable document in terms of Schedule to the Indian Stamp Act. Precisely, in terms of section 35 of....
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....y the Applicant and the Application does not talk about the particulars as required under law. Prior notice alleged to have been addressed by the Applicant which is a sine qua nonfor institution of the present proceedings, has not even reached this Respondent. No proof of service is placed. What is produced are only some postal covers said to have been returned un-served. The IB Code ensures optimum adherence of Principles of Natural Justice and fair approach to law. When there are ample substitute ways available under law to put a person under proper notice, playing blind is inexcusable. Hence, the Application of the Applicant deserves to be dismissed. (5) In the records of AA No. 231/2017 placed by the Applicant alone, this Respondent has pointed out that while complaining to Film Chamber of Commerce, the Applicant has claimed more than 5 crores and odd, which is far larger than what is claimed in the present Application. The Invoices relied upon do not tally nor is there any proof of their admission by this Respondent. Some alleged approvals made by the Director or a strange person is being pointed out as if the admission by this Respondent, which is absurd. The scribbl....
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....nts can be relied upon for collateral purpose. In this context, it is necessary to refer the terms of Agreement under the title of Firefly Agreement 25 August, 2014,FF Agreement RL_01 Linga VFX&DeAging Budget V06, which reads under: To Mr. Rock Line Venkatesh Rockline Entertainment Put. Ltd. No. 96, Dr. Rajkumar Road, Rajajinagar, Bangalore. Date: 25 August 2014 Dear Sir, We thank you for considering Firefly Creative Studio to render VFX services for your upcoming prestigious film "Lingaa". Please find below our Price for scenes execution and De Aging. Scenes Sl. No. Min Sees Rate/Sec Price 1 45 2,700 8,500 22,950,000 2 Discount 2,950,000 3 Sub Total 20,000,000 De-Aging Sl. No. Mins Sees #Sec Rate Price 4 60 3,600 6,000 21,600,000 5 Discount 1,600,000 6 Sub Total 20,000,000 7 8 Sub Total (3+6) 40,000,000 9 Service Tax (12.36%) 4,9....
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....entre, Jubilee Hills, Hyderabad - 500 033. Bank Account Number: 30031546529 IFSC Code : SBIN0006130 Swift Code : SBININBB327 MICR Code : 500002062 , v Name of Company : Firefly Creative Studio Pvt. Ltd Company Address : 2nd Floor, Survey 64, NCC House, Madhapur, Hyderabad - 500081. Company PAN : AAACF7401K Company Service Tax No. : AAACF7401KST001 Read & accepted Read & accepted For Firefly-Creative Studio Put. Ltd For Rockline Entertainment Pvt. Ltd . Date: NIL Date : NIL 9. The above agreement is in a form of letter offering its services to the Respondent, and it did not say where it is executed especially by the Respondent. The Petitioner has mentioned that since they have no office in Bangalore, they have executed in Hyderabad and it did not say whether the Respondent has come down to Hyderabad, and signed there. And there is no date of execution under signature of the parties. Moreover, the Petitioner itself said the said Agreement was signed after lapse of four months, after substantial work was already done. Therefore, we agreed with the contention of Learned Senior Counsel ....
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....arties have resorted remedies available under law but in vain. The Petitioner has filed a Complaint dated 18.09.2015 with the President, Andhra Pradesh Film Chamber of Commerce, Hyderabad; the President, Telangana State Film Chamber of Commerce, Telangana; the President, South Indian Film Chamber of Commerce, Chennai; the President, Karnataka Film Chamber of Commerce, Karnataka, against M/s. Rockline Entertainments Private Limited, represented by its Directors Mr. Venkatesh Tirpathy Narasimha Naidu, alias Venkatesh T.N and Mrs. Krishnamurthy Naidu Pushpa Kumari for alleged non¬payment of service tax of Rs. 49,44,000/- with delayed interest thereon and TDS certificates of Rs. 40,00,000/-. They have also urged the Film Chambers to recommend to ensure that the entire billed amount of Rs. 5,70,24,200/- (excluding service tax) to be paid to Firefly to compensate for all the damages caused to it. Subsequently, the Telugu Film Chamber of Commerce, in turn has addressed a letter dated 27.10.2015, to the Corporate Debtor to furnish the reply immediately to the Telugu Film Chamber of Commerce. However, the matter kept pending since the Respondent approached Civil Court, under Arbitration....
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.... raised the invoices dated 05.12.2014 for an amount of Rs. 4,49,44,000/- as per the original contractual agreement. Subsequently, as per the revised invoice dated 10.03.2015, which is as per the actual work done and after allowing further discount extended for an amount of Rs. 4,88,76,600/-. Subsequently, Comprehensive Invoice dated 29.05.2017 was issued for an amount of Rs. 6,81,91,988/- out of the amount claimed, the Petitioner admitted that they have received the net payment of Rs. 3,60,00,000/- from the Corporate Debtor, after TDS deduction. Therefore, the present petition is filed to recover the alleged outstanding of Rs. 3, 21,91,988/-which is admittedly in dispute, as detailed supra. 14. By perusal of the Balance Sheet of the Corporate Debtor, it is clear that the Company is solvent and is having Assets of Rs. 83,22,73,787/- as at 31.03.2018 and Profit and Loss for the year ending 31.03.2018 is Rs. 1,20,11,394/- and total net worth of the Company is Rs. 16,89,69,046/- for the Financial Year 2017-18. The Company is also a going concern having so many people dependent on it. 15. It is a settled position of law that the provisions of the Code can be invoked where fundamen....