TaxTMI 
TaxTMI 
2020 (10) TMI 63
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....Five Decimal Point Forty Six Only). 2. Mr. Andrea Colombo has filed this petition being duly authorised by Board Resolution dated 15.07.2019 passed by the Operational Creditor Company. Copy of the Board Resolution dated 15.07.2019 along with Power of Attorney dated 16.07.2019 is annexed to the Petition. 3. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are inter alia as under: (1) It is stated that the Corporate Debtor acted as the representative of the Operational Creditor in India for the period 2002 to 2018. In this period, the Corporate Debtor collected various payments due from the Operational Creditor's company's customers in India and remitted the same to the Operational Creditor. The Operational Creditor claims that the Corporate Debtor failed to make payments aggregating to USD 13,40,572.89/- in relation to freight charges for cargo on Board. (2) It is further stated that Corporate Debtor failed to make payments for the purchase of motor boat made in October 2015 to April 2017 from the Operational Creditor and the repair charges for the motorboat amounting to USD 1,41,072.57 (USD 6....
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.... made any payments of the outstanding amounts to the Operational Creditor. (8) It is stated that in the light of the aforesaid and the continuing default on the part of the Corporate Debtor, the Operational Creditor is constrained to file the present Application for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor in order to recover the amounts payable by the Corporate Debtor to the Operational Creditor. 4. The Corporate Debtor filed its Statement of Objection on 20.11.2019 which are relevant to the issue in question by inter alia contending as follows: (1) It is contended that the Petition is liable to be rejected solely on the ground that there exists pre-existing dispute with regard to the amount of debt. The Operational Creditor has relied upon the disclosures made by the Corporate Debtor to the statutory authorities to establish the existence of debt. However, the amounts disclosed in the Financial Statement towards liability is not matching with the amount claimed by the Operational Creditor. The differences between the amounts disclosed by the Corporate Debtors in its financial statement submitted to the statutory auth....
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....g regard to the fact that, there cannot be any debit note subsequent to the Bill of Entry for customs clearance in India Ports. All the cost and expenses of export are part of the export invoice raised in the year 2015. The invoices produced at page 76 to 82, and pages 88 to 91 are invalid and false claim having regard to the fact that all these invoices are pertaining to freight charges that are already raised by the Corporate Debtor Company on the Shipper (exporter), on behalf of the Operational Creditor Company. The claims made under several invoices are barred under the provisions of Limitation Act and hence liable to be rejected. (6) It is stated that merely by reason of not dealing specifically with any claims, allegations, contentions, insinuations or averments, the Corporate Debtor does not, nor shall the Corporate Debtor be deemed to have admitted the authenticity or the veracity thereof. The Corporate Debtor further submits that, all the averments contained in the Application, and the accompanying affidavit filed by the Operational Creditor, insofar as that which is not borne from record, are denied as false, and the Operational Creditor shall be put to strict pr....
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....s contended that the freight invoices were raised by the Corporate Debtor Company, only in Indian Currency value on behalf of the Operational Creditor, being its agent under the Agreement. The Corporate Debtor collected the invoice amounts in Indian Currency value from shippers (exporters). As such, invoices and debit notes produced by the Operational Creditor along with the Petition are false, fabricated and fictitious, created for the purpose of this case. The Operational Creditor has not chosen to produce before this Adjudicating Authority, all other material records such as, Bill of Entry, Bill of Lading, Ledger Account, and financial only with mala fide intentions of misleading this Bench. (11) It is contended that the Corporate Debtor purchased two (2) Second hand Gottawald Cranes from the Operational Creditor in the year 2005, to facilitate the cargo loading activities of the Operational Creditor Company. Mr. Andrea Colombo and Mr. Fernando Poletti were the Directors of the Corporate Debtor Company during 2005. The Corporate Debtor Company has paid the amount of INR. 3,38,29,915.00 towards customs duty payable. The said amount is liable to be adjusted out off the to....
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....14) Regarding Part B - Details of the amounts payable to the Operational Creditor towards Yacht Costs: it is not correct to state that, the Corporate Debtor Company is liable to pay the amount towards the invoices and amounts reflected in Part B. Some of the invoices and debit notes are fabricated, as explained hereinabove. It is pertinent to note that, to obtain a loan from any foreign company, the company needs to obtain prior approval from the Reserve Bank of India, under the Foreign Exchange Management Act, 1999. (15) Regarding Part C - As stated hereinabove, the freight invoices were always raised by the Corporate Debtor Company on behalf of the Operational Creditor in India currently value only, and collected these freight charges from the shippers (Exporters) in Indian Currency Value only, and not in US Dollars as claimed by the Operational Creditor. The Debit notes produced by the Operational Creditor are fabricated and concocted for the purpose of this case. (16) It is contended that the Operational Creditor has inflated its claim on various freights by producing false, fabricated and fictitious invoice copies, without producing the supportive material re....
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....porate Debtor. The actual freight amount as per the invoices raised by the Corporate Debtor of USD. 2,41,594.63 has been remitted by the Corporate Debtor on 11.05.2010 in pursuance thereof, to Navalmar UK Limited LINER DEPT IND, USD ACCT NR. 112, Cassa Di Risparmio Di Lucca Pisa Livorna Avenza, via Campo D'Appio 44 - Avenza, Carrara, Italy. 5. The Rejoinder filed by the Operational Creditor to the Statement of Objections dated 03.12.2019 which are relevant to the issue in question, is inter alia as follows: (1) It is contended that the in Re: Para 3(a) The Corporate Debtor has not initiated any dispute against the Operational Creditor till date. The Statement of Objections filed by the Corporate Debtor itself admits the various amounts payable to the Operational Creditor. This further establishes that there is no 'pre-existing dispute' and that the Corporate Debtor is merely attempting to create them in order to avoid the consequences under the Insolvency and Bankruptcy Code, 2016 ("Code"). In paragraph 8(i) of the Statement of Objections, the Corporate Debtor has admitted to receiving USD 2,54,000. In paragraph 7 (VIII) (A), the Corporate Debtor has admitte....
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....resolution or liquidate the assets of the Corporate Debtor to ensure that creditors are paid. Any further delay will only enable the management to remove further funds from the Corporate Debtor and deny the creditors of their rightful dues. The latest annual accounts of the Corporate Debtor sets out that the total revenue from operations was Rs. 2,68,02,827. Page (internal page 19 of 22 sets out that the entire revenue from operations of Rs. 2,68,02,827 was earned from the Operational Creditor. As noted in paragraph 7 (v) of the Statement of Objections, the agreement with the Operational Creditor under which the Corporate Debtor was earning commission income has been terminated on September 5, 2018. It is clear from reading the accounts together with the fact of terminating of the agreement with the Operational Creditor that the Corporate Debtor has no other source of income. (4) It is contended that in Re: Para 7 (vii): The statements made by the Corporate Debtor are false, baseless and more importantly, irrelevant to the proceedings. This liability has never been that of the Operational Creditor. The latest annual accounts of the Corporate Debtor sets out the balances ou....
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....d expenses without providing any basis nor even informing the Operational Creditor. It may be noted that the Corporate Debtor has not mentioned its claim of having adjusted these amounts in its reply dated 01.07.2019 in response to the notice issued by the Operational Creditor dated 12.06.2019 under the Code. Therefore, it is clear that the Corporate Debtor has made up this reason as an afterthought. 6. The Written submissions dated 31.12.2019 filed by Corporate Debtor which are relevant to the issue in question, are inter alia as follows: (1) It is contended that the material documents produced by the Operational Creditor disclose that the Operational Creditor has confirmed the balance due as on 31.03.2015 as Rs. 5,43,24,255/- equivalent to USD. 8,72,356/-. Thereafter, there were only two transactions between the parties. At present, the Operational Creditor is claiming USD 17,35,645.46 in the demand notice, whereas in reply notice to the demand notice the Corporate Debtor has not admitted the quantum of the debt. Thus the documents placed on record clearly shows that there exists a dispute about the liability of the Corporate Debtor even prior to the issuance of the D....
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....editor and Shri K.R. Krishnamurthy along with Shri Abhinag S., learned Counsels for the Corporate Debtor. We have carefully perused the pleadings of both the parties and extant provisions of the code and the rules made thereunder. Material brought on record has been considered. 8. As per the General Agency Agreements from 2003 to 2017 between the Operational Creditor and the Corporate Debtor, the Corporate Debtor acted as an agent of the former in India, and collected various payments due from the customers of the Operational Creditor and remitted the same to the Operational Creditor. The Operational Creditor has annexed various invoices and debit notes with the Petition as evidence of the claimed amount. As the Corporate Debtor is an agent and service provider of the Operational Creditor, the amounts due under these transactions would fall within the ambit of 'operational debt' as defined in section 5(21) of the Insolvency and Bankruptcy Code, 2016. 9. At this point, it is imperative to mention the well settled legal proposition, as laid down by the Hon'ble Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd., is as follows: "51.... ....
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....ich is genuine and not a patently feeble argument, as held in the case of Mobilox Investment (supra). There was therefore no pre-existing dispute that comes in the way of these proceedings. 12. Even with regard to the semblance of dispute raised with regard to the amounts due to the Operational Debtor, we make it clear that this is not a dispute resolution forum nor one where we can undertake a detailed investigation. Any investigation into issues of fabrication/falsification of documents, invalid debit notes, Directors having a conflict of interest after leaving the Corporate Debtor Company etc., as now raised by the Respondent/Corporate Debtor are issues clearly outside the scope of these summary proceedings. These issues can be investigated elsewhere. We have taken into consideration only the material and accounts as brought on record. Further, the Petition has been filed by Mr. Andrea Colombo being duly authorised by Board Resolution dated 15.07.2019 passed by the Operational Creditor Company, a separate legal entity, and not in his personal capacity. Again, issues of violations of FEMA regulations by the Operational Creditor in making payments, as alleged by the Corporate D....
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.... petition. 16. It may also be mentioned that on the request of the Learned Counsel for the Corporate Debtor, parties were given an opportunity for settlement between themselves. Two week's time was granted and the matter was reserved for orders on 10.12.2019. The Corporate Debtor has failed to utitlise this opportunity to make arrangements for payment of the debt. The Corporate Debtor, although admitted its liability by seeking to settle the matter, has failed to discharge the same. In view of the above facts, it is clear that there is an admitted liability for an amount higher than Rs. One Lakh. 17. As regards the financial status of the Corporate Debtor, it has contended that this condition does not exist, that it is a going concern and can repay its debts from its existing and probable assets. However, a perusal of its latest Audited Financial Statement shows that the Company has incurred losses including cash losses and the net worth of the Company is negative. Further, from its Independent Auditors report it is seen that a material uncertainty exists that may cast a doubt on its ability to continue as a going concern. Further, while admitting the debt owed to the Ope....
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.... the following, namely: a. the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor/Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b. transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; c. any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; d. The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor; e. The supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period; f. The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. g. The order of moratorium....