TaxTMI 
TaxTMI 
2020 (9) TMI 799
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.... XPs Software Private Limited (Respondent/Corporate Debtor), is incorporated on 29.12.2006 with CIN: U72200KA2006PTC041328, having its Registered Office at #113/IB, 1st Floor, SRIT House, ITPL Main Road, Kundalahalli, Bengaluru - 560 037. (2) The Operational Creditor provides mentoring and consultancy services to the Corporate Debtor on regular basis. The total amount debt due is Rs. 13,26,340/- as on 31.01.2019.The Corporate debtor approaches the Operational Creditor seeking his expertise in providing mentoring and consultancy services for the Corporate Debtor Company. On request of the Corporate Debtor, the Operational Creditor agreed on an arrangement where, the Operational Creditor's services were retained by the Corporate Debtor. Monthly invoices were to be issued by the Operational Creditor, which would be paid by the Corporate Debtor. (3) As on 12.07.2016, an email was received from Rivi Varghese, the CEO of the Corporate Debtor, furnishing the terms of the engagement: * Amount of SGD 9999. * 33% each in 3 tranches for 3 months * Each, on or before 30,60,90 days * Engagement - advising the Company's CEO on marketi....
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....tsApp Messages dated 31.05.2017 and 16.10.2017 has acknowledged the liability. (8) The Operational Debtor having no other option issued a Demand Notice as prescribed under the Insolvency and Bankruptcy Code. Though the Corporate Debtor received the notice on 14.01.2019, failed to respond within the mandatory period of 10 days as stipulated under the Code. Further, pursuant to receipt of the notice, though the Corporate Debtor has reached out to the Operational Creditor, promising to pay from time to time, it has till date not made any payment, which establishes that the Corporate Debtor is insolvent and not in a position to pay its dues. Hence the petition. 3. The Respondent has filed a statement of Objection dated 30.06.2020 by inter alia contending as follows: (1) The Petition has been filed by suppressing material facts. The Respondent, through their hard work and dedication, has established good will in the market and has maintained good name by sheer hard work with meticulous business plans and professionalism. The Respondent maintains amicable relationship with its customers, vendors and services providers. The Respondent is a profit making company with s....
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....titioner. There is also a clear admission of having TDS deduction being submitted to the Income Tax Department and the same has been done without disbursal of payments which is clear violation of law. Further the corporate Debtor failed to produce the emails. Despite of emails the Corporate Debtor did not make any payments of the debt which it had duly acknowledged. (2) There is a proof of the acknowledgement of debt by the Director, Mr. Rivi Varghese through his whatsapp messages as well as there is no mention of unsatisfactory hence even the said ground of the Corporate Debtor is false. It is important to note that no dispute has been raised prior to the issue of demand notice to the Corporate Debtor and these alleged issues raised only after a month of receipt of the same. It is established law that any alleged dispute raised prior to issue of demand notice cannot be taken in consideration by the Hon'ble Tribunal. The Corporate Debtor failed to prove that there was any prior dispute. The interest charged at 15% is not absurd as alleged and is conservation by market estimates, however the Tribunal may decide on the question of interest. (3) It is further sub....
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....each invoice till 31.01.2019, at 15% compound annual interest. 8. It is relevant to refer the email dated 21.03.2019 sent by the Respondent to the Petitioner, which is extracted below for ready reference: "Hi Murli, This is the 3rd time I am communicating to you on this subject over time, hopefully I receive a response this time. We had an engagement in good faith with you. I will address this in two parts A) payment for the engagement B) comment on the engagement itself. A) Payment for the engagement We have accepted the invoices raised upon us, in good faith. We have complied with tax requirements in the applicable years and the tax is already paid to the govt and you can see that in you tax credits. Reproducing our statement of accounts as below: Invoice date Invoice No. Invoice details Gross Value TDS Payments made Balance payable 20.12.16 02 Founder Mentorship Service Sep to Nov 2016 493,9601 49,396 297,191 147,374 02.02.17 03 Founder Mentorship Service - Dec 2016 & Jan 2017 322,401 32,240 290,161 &nbs....
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....of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP on justified reasons. The Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018) 1 SCC 353, has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. In another latest judgement rendered in Transmission Corporation of A.P.Ltd. Vs. Equipment Conductors and Cables Ltd., (CA No. 9597 of 2018) dated 23rd October, 2018, (2018) 147 CLA 112 (SC) Supreme Court of India, it is, inter alia, held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of judgement, it is stated that Adjudicating Authority, while examining an application filed under Section 9 of Code, will have to determine: i. Whether there is an 'operational debt' as defined exceeding Rs. 1 Lakh? ii. Whether documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? iii. Whether there is existence of dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed be....