TaxTMI 
TaxTMI 
2020 (1) TMI 1263
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.... the Corporate Debtor, which were duly acknowledged by the Corporate Debtor. 3. As per averment, during the entire course of business the Corporate Debtor grossly failed and ignored its obligation to clear the dues as per the aforesaid bills. The Operational Creditor vide E-mail dated 18.04.2018 requested the Corporate Debtor to issue a brokerage statement. Towards the same, the Corporate Debtor vide its email dated 19.04.2018 sent an improperly computed brokerage statement to the Operational Creditor, which does not lie in accordance with the said bills(s). Thereafter, the Operational Creditor had several meetings with the Corporate Debtor and after reconciling the accounts the Operational Creditor vide email dated 21.05.2018 again shared service charges towards the sale of units in the project. Subsequently, the Corporate Debtor again requested for a complete reconciled statement and therefore the Operational Creditor vide e-mail dated 10.09.2018 shared a Reconciliation Comparative Statement with the Corporate Debtor. On account of Corporate Debtor's complete disregard to the debt/bills, the Operational Creditor vide email dated 08.04.2019 sent the final Statement of Accou....
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.... to be decided for adjudication of the present application are as follows: i. Whether the application is within limitation under Article 137 of the Limitation Act, 1963? ii. Whether implied acknowledgement is an acknowledgment under Section 18 of the Limitation Act, 1963? iii. Whether the dispute regarding quantum of debt amounts to a pre-existing dispute? iv. Whether brokerage services come under Operational Debt under Section 5(21) of the Code? v. Whether the proof of work relationship i.e. a written or oral agreement has been attached in the petition? 8. Since issue i. and ii. are related with each other so we would like to discuss these two issues together for the sake of convenience. Before considering the submissions made on behalf of the parties. We would like to refer the decisions quoted below:- The Hon'ble Supreme Court in BK Educational Services Private Limited v. Parag Gupta and Associates Civil Appeal No. 23988 of 2017 analysed the limitation period with respect to applications under Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016 and observed: "27. It is thus clear that since the Limit....
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.... The statement on which a plea of acknowledgement is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgement must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear, then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. Stated generally, courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship....
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....Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited- 2017 1 SCC OnLine SC 353", the Hon'ble Supreme Court analysed the meaning of dispute with respect to Operational Creditors and observed: "33. The scheme under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined, may, on the occurrence of a default (i.e., on nonpayment of a debt, any part whereof has become due and payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)}. What is important is that the existence of the dispute and/or the su....
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....ditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5(21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor-it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form, and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records req....
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....and, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise." 12. From the aforesaid finding of the Hon'ble Supreme Court, it is clear that the claim even if disputed, if default is more than Rs. 1 lakh, the Appellant will initiate the proceedings against the 'Corporate Debtor'. Submission is made on behalf of the Appellant that the amount disputed by the 'Corporate Debtor' amounts to existence of dispute but such submission cannot be accepted. It does not come within the meaning of existence of dispute. Dispute raised regarding quantum of amount in the absence of any suit or ar....
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....ployment or a debt in respect of payment of dues arising under any law for the time being in force and payable to Centre or State Government or local authority. It is thus clear that debt may arise out of provision of goods or services or dues arising out of employment or dues arising under any law for time being in force and payable to the Centre/State Government. The Framer of the code have also defined the expression 'Financial Debt' in Section 5(8) to mean a debt which is disbursed against the consideration of time value of money. However the framer of the Code has not included in the expression 'Operation Debt' as any debt other than the 'Financial Debt'. It is thus confined to aforesaid four categories like goods, services, employment and Government dues. In the present case the debt has not arise out of the provisions of goods or services. The debt has also not arisen out of Government or local body. The refund sought to be recovered is necessarily associated with delivery of the possession in immovable property which has been delayed. In "Swiss Ribbons Pvt. Ltd. v. Union of India- Writ Petition (Civil) No. 99 of 2018", the Hon'b....
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....tional debts also tend to be recurring in nature and the possibility of genuine disputes in case of operational debts is much higher when compared to financial debts. A simple example will suffice. Goods that are supplied may be substandard. Services that are provided may be substandard. Goods may not have been supplied at all. All these qua operational debts are matters to be proved in arbitration or in the courts of law. On the other hand, financial debts made to banks and financial institutions are well-documented and defaults made are easily verifiable." In the present case, the Bills raised by the Operational Creditor are in respect of the services provided to the Corporate Debtor. Hence, brokerage services would fall within the definition of Operational Debt under the Code. 11. Now we shall discuss issue v. It was an admitted fact that there was a work relation between the Operational Creditor and the Corporate Debtor whereby the Operational Creditor provided brokerage services to the Corporate Debtor and payments were remitted to the Operational Creditor for the same. The Corporate Debtor had not disputed or denied the fact that there was a work relation between the pa....