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2020 (7) TMI 297
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....e prescribed Application discloses the details of the Corporate Debtor from which it can be ascertained that the Corporate Debtor as being incorporated on 28.12.2016. Nominal share capital and the Paid-up capital of the Corporate Debtor is stated to be Rs. 5,53,82,210/- and Rs. 5,53,80,950/- respectively. The registered office of the Corporate Debtor is stated to be situated at No.2B, Door No.AC 5, 2nd Floor, 2nd Avenue, Anna Nagar, Chennai - 600 040. 4. Part III of the prescribed Application also discloses name of the proposed Interim Resolution Professional viz., Mrs. Vijayakumari Natarajan, who is having Registration No.IBBI/IPA-001/IP-P00972/2017-2018/11602. 5. Part IV of the prescribed Application discloses that the amount claimed is in a sum of Rs. 3,38,09,878/- on the date of filing the petition and the said amount is claimed to be in default. 6. Part V of the prescribed Application discloses the documents to which the Petitioner seeks to rely upon for establishing the claim as a 'financial debt' which includes inter alia the Franchise Agreement dated 31.05.2018 as well as the statement of accounts as on 10.04.2019 annexed with the Petition as Annexure I (D). The ....
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....IBC, 2016 and the Petitioner can be categorized as a 'Financial Creditor' and thereby threatening the Respondent that it will be forced to initiate the proceedings under IBC, 2016 in case of non-payment of dues. However, the said notice neither elicited any reply nor payment has been made by the Respondent / Corporate Debtor and in the circumstances, the present Petition has been filed as the Corporate Debtor is liable to pay a sum of Rs. 3,38,09,878/-, particulars of which is as disclosed at annexure I (B) of the Petition. 10. From the record of the proceedings it is seen that on 25.09.2019 under the circumstances stated in the said order, the Corporate Debtor had been set as ex parte. However, it is seen that in relation to the Application filed in MA/1265/2019 preferred by the Corporate Debtor seeking to set aside the ex parte order dated 25.09.2019, the said Application had been allowed by this Tribunal vide order dated 10.12.2019 subject to the payment of a cost of Rs. 10,000/- to the Counsel for the Petitioner. Since the above order was abided on the part of the Corporate Debtor, the ex parte order was set aside and the Corporate Debtor was allowed to contest the cas....
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.... below:- "8.1 The Franchisee shall be entitled to a monthly minimum guaranteed return on Franchisee Investment made, a sum specified in Schedule 1 / Final Receipt / Addendum subsequently issued in this regard or 10% of the monthly Nett Turnover of the Store, whichever is higher ("ROI"). The Franchisee Investment amount as reflected in the Schedule I or subsequent Final Receipt / Addendum is hereby unconditionally promised / liable to be repaid by the Franchisor on an equal monthly instalment basis (termed as minimum guaranteed ROI), within a maximum period of 36 months from the commencement date. In a likely occasion of repayment of entire Franchisee Investment in less than 36 months (due to effect of 10% of monthly Nett Turnover or minimum guaranteed ROI whichever is higher payment factor) thereafter the monthly ROI shall be confined to only 10% of the monthly turnover for the remaining period of the Franchise Agreement. 8.2 ROI shall be computed by the Franchisee upon receipt of credible net turnover figures from the Franchisor submitted on or before 2nd of every succeeding month from the commencement date and respective invoice for the previous month shall be raised by t....
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....the Franchisor viz., Corporate Debtor. 18. Further in relation to the operational cost, it is also submitted that the Franchisor shall bear the same over and above whatever investments have been made by the Franchisee. 19. Taking into consideration cumulatively clause '8 and 9' of the Franchise Agreement, a sum of Rs. 65 lakhs being an investment on which guaranteed ROI was also promised is required to be treated as a 'financial debt' and that the payment of said 'financial debt' which stood defaulted and hence this Petition will lie before this Tribunal under IBC, 2016 in view of the ROI promised month after month being a consideration for time value to money not being remitted by the Corporate Debtor and in the circumstances the debt will be considered as 'financial debt' falling within the confines of Section 5 (8) (f) of IBC, 2016 and the Petition is hence maintainable before this Tribunal and the jurisdiction of this Tribunal to entertain this Petition cannot be questioned by the Corporate Debtor. 20. In opposition, Learned Counsel for the Respondent / Corporate Debtor relied upon the Franchise Agreement and points out to the promise on which the Agr....
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....days of signing this Agreement; in addition to the said Franchisee fee, the Franchisee shall also pay a sum of Rs. 16,00,000/- to the Franchisor, being the Security Deposit payable to the Landlord of the Store Premises by the Franchisor as per Store Lease Agreement, which amount will be refunded by the Franchisor to the Franchisee at the time of handing over vacant possession of the Store Premises back to the Landlord. 23. It is further pointed out by Counsel for the Corporate Debtor that in clause 7 of Franchise Agreement in relation to utilization of the Franchisee Investment, the same reads as follows:- The Franchisor, in regular consultation with the Franchisee, shall judiciously advise deployment and utilisation of the Franchisee Investment by obtaining proper invoices / receipts in favour of the Franchisee, towards the following. 7.1.1 nominate and employ designers and contractors for the conversion of the premises into a Store; 7.1.3 acquire in the name of the Franchisee, install and maintain all equipment and fit-out items that are necessary for the Store to function efficiently; 7.1.4 purchase, install, operate and maintain computer, network connectivity and other....
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....as a whole" the amount claimed to be in default on the part of the Corporate Debtor by the Financial Creditor cannot be considered as a 'financial debt' as defined under Section 5 (8) of the IBC, 2016 as the amount made available is for the benefit of the Petitioner and to be utilized for it and not otherwise sought to be projected. 26. In addition, Learned Counsel for the Corporate Debtor also pointed out in relation to the filing made by the Financial Creditor dated 05.11.2019 wherein the income tax returns for the financial year 2019-2020 along with the financial statement as well as the ledger statement of the Corporate Debtor in the Petitioner's book have been provided in the additional typed set of the documents. Particular attention of this Tribunal is drawn to page No.6 which according to Counsel for Respondent establishes that even in the books of the Financial Creditor / Petitioner as against the account of the Corporate Debtor, what has been provided is in the nature of professional services and not debited as a financial charge / interest recoverable from the Corporate Debtor. Consistently, it is also brought to the notice of this Tribunal that a sum of Rs.....
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....ry objective of the Franchisee is to utilize the trade name "Fipola" as has been established by the Franchisor in the open market by virtue of its operation over a period of time. Thus the exploitation of the trade name of the Franchisor seems to be the predominant motive or principal aim enuring to the benefit of the Franchisee and all the other clauses can only be considered as ancillary to the said motive including Franchisee investment committed and to be used for specific purposes for the benefit of the Franchise Store and not for the individual benefit of the Corporate Debtor. At best the Franchise Agreement if at all can be considered as a joint venture where the Franchisor makes available its trade name and expertise in the trade to be exploited by the venture, whereas the Franchisee is required to provide support including financial support to the Joint Venture. Clause 2.1 of the Franchise Agreement makes it abundantly clear allowing the Franchisee the right to derive profits from the venture. Further in relation to the same it is to be noted that payment of Rs. 5,00,000/- is required to be made as the Franchisee fee also establishes the above aspect. It is also required t....