TaxTMI 
TaxTMI 
TaxTMI 
2021 (7) TMI 564
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Operational Creditor, is engaged in the business involved in Sporting and other recreational activities having its registered office at Backstage Plot No. 612, 15th Road Junction of Ramkrishna Mission Road Santacruz (West) Mumbai 400054. The Identification number of the Applicant is CIN U92412MH2008PTC179508. 3. The Respondent Global Fragrances Pvt. Ltd. is a company incorporated on 18.12.2008 under the Companies Act, 1956 having its registered office at C-138 Hari Nagr Clock Tower New Delhi 110064 and CIN U74120DL2008PTC185964. The Respondent is engaged in the business of Exporting, Manufacturer and supply of Perfume, body spray etc. 4. As per the averments made in the application, the Operational Creditor (Licensor) had entered into a licensing Agreement dated 03.03.2014 ("Licensing Agreement") with the Corporate Debtor (Licensee) and Invision Brand Consulting by way of the Licensing Agreement, the Operational Creditor granted the Corporate Debtor exclusive rights and license to use its trademark, being the 'KKR-Kolkata Knight Riders' brand logo; to manufacture, have manufactured, sell, distribute and advertise the licensed products being (a) Deodorants, (b) EDT and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he outstanding Royalty amount and in case of non-payment within seven days of receiving the notice, the License Agreement shall be susceptible to termination. The Corporate Debtor vide email dated 04.06.2015 through its Managing Director informed Invision brand consulting that the payment shall be made by 05.06.2015 however, no payment was made. 8. Further the Corporate Debtor on 11.06.2015, sent three post dated cheques bearing No. 599514 dated 20.06.2015, 599511 dated 25.06.2015 and 599513 dated 20.06.2015 respectively for the sum of Rs. 5,00,000/- each. The cheques were issued by Xtreme Perfumes and Personal Care Pvt. Ltd. which has common directors as the Corporate Debtor Company. The Applicant being unaware of the fact at that time returned the cheques due to no privity of contract with Xtreme Perfumes and Personal Care Pvt. Ltd. The copy of cheques issued by Xtreme Perfumes and Personal Care Pvt. Ltd. has been annexed. Thereafter vide email dated 11.06.2015 Invision Brand Consulting under the instructions of the Applicant company called upon the Corporate Debtor to pay the applicant the balance outstanding royalty by 13.06.2015 and on non compliance the Applicant would termi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Corporate Debtor. The notice was served upon the Corporate Debtor vide email dated 25.04.2018 on the email id of the company registered in the Company's Master Data and its directors Mr. Somesh Chowdhury and Mr. Sumit Sarkar. 12. The Applicant filed this application dated 30.08.2018 as an Operational Creditor praying for initiation of Corporate Insolvency Resolution Process of the Corporate Debtor for its inability to liquidate their claim of Rs. 22,99,312/- towards unpaid invoices along with an interest @ 18 per annum calculated upto 20.08.2018 of Rs. 12,41,628/-. The total amount being Rs. 35,40,940/-. The Applicant has complied with the requirements of the provision of 9(3)b and 9(3)(c). 13. Notice with respect to the application was issued to the Corporate Debtor vide order dated 04.09.2018 of the Adjudicating Authority. 14. The Corporate Debtor filed its reply dated 22.10.2018 and submitted that royalty was supposed to be provided by the corporate debtor to the applicant on the condition of the services to promote the brand image, initiated by the applicant. That applicant was supposed to make a press release after receiving the payment from the corporate debtor but t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9;Twitter' on 6th July 2014 to promote the licensed products of the Corporate Debtor. Copies of the said advertisements uploaded on 'Facebook' and 'Twitter are annexed. By and under an email dated 11.06.2015, the manager (namely Invision Brand Consulting, on behalf of the Operational Creditor, had explicitly clarified to the Corporate Debtor that neither the Operational Creditor nor the Manager had ever promised to market the products of the Corporate Debtor and the Corporate Debtor cannot use it as an excuse to delay the payments admittedly due to the Operational Creditor. Thereafter, in response to the said email dated 11.06.2015, the Corporate Debtor, by its email dated 13.06.2015, unequivocally admitted its liability towards the outstanding royalty amounts due and payable to the Operational Creditor and agreed and undertook to (i) transfer Rs. 5,00,000/- (Rupees Five Lakhs Only) to the Operational Creditor by 13.06.2015 by way of RTGS and (ii) issue cheques to the Operational Creditor for the balance outstanding royalty amounts. Copies of the sad emails dated 11.06.2015 and 13.06.2015 are already on record as part of the main application. 18. Further it is subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is due. To the contrary, the claim arises out of non payment of minimum guaranteed royalties, which admittedly does not arise out of non-payment of any goods or services and therefore, cannot be an Operational Debt. 21. The Corporate Debtor has placed its reliance on the judgment of Jindal Steel and power limited VS. DCM international Limited IB No. 200/ND/2017 it has held in Para No. 10 of the Judgment that "...Operational Debt unless such a transaction having a correlation of direct input Into the output produced or supplied by the Corporate Debtor and hence we do have any hesitation looking at any way in holding that the petitioner will not fall under the definition of Operational Creditor and the claim which is sought to be made cannot be considered as an Operational Debt." In the matter of Mr. M. Ravindranath Reddy vs. G. Kishan & Ors. Company Appeal (AT)(Insolvency) No. 331 of 2019 has held that (Page No. 6, Page No. 7, Page No. 8, Page No. 9) "any debt arising without nexus to the direct input to the output produced or supplied by the Corporate Debtor, cannot, in the context of Code, be considered as an operational debt, even though. It is a claim amounting to debt." Furt....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "operational debt" under the IBC and the application of the Operational Creditor was admitted." 24. The Operational Creditor further submits that Section 7 "Scope of supply" read with Schedule II "Activities or transaction to be treated as supply of goods or supply of services" of Central Goods and Services Tax Act 2017 also substantiates the submission made by the Applicant. Entry 5 of Schedule II provides: "5. Supply of services The following activities shall e-treated as supply of services namely:- (c) temporary transfer or permitting the use or enjoyment of any intellectual property right" Therefore, under the CGST Act, permitting the use or enjoyment of any intellectual property right is treated as a supply of services. 25. The Operational Creditor has also relied on the judgment of United breweries limited vs. Assistant Commissioner of Central tax KAR/111R/03/2018-19 dated 23.10.2018 wherein the Hon'ble Karnataka Appellate Authority for Advance Ruling (GST) held that "All there amount to permitting the Brewer to use UBL's intellectual property rights. Therefore, by virtue of clause 5(c) of Schedule II of the CGST Act, the said activity amounts to supply of s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e advance paid in receipt of goods and services. The Hon'ble Appellate Tribunal adopted a wide interpretation and not limited to the monetary claim of the provider of the goods and services. 28. The date of default is 15.09.2015 as the aggregate outstanding royalty amount fell due on the expiry of 15 days from the last invoice dated 31.08.2015, and the present application is filed on 30.08.2018. Hence the application is not time barred and filed within the period of limitation. 29. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. 30. We would like to draw conclusion as per the judgment Vikas Sales Corporation vs. Commissioner of Commercial Taxes AIR 1996 SC 2082, hence we are of the view that incorporeal rights like trademarks, copyrights, patents and rights in personam capable of transfer or transmission are included in the ambit of "goods". Further having considered the facts and circumstances and the material available on record the Adjudicating Authority is of the view that for a claim to fall within the definition of 'operational debt', the operational creditor must....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id: [email protected] Phone No. 9891446721. She shall take such other and further steps as are required under the statute, more specifically in terms of Section 15, 17 and 18 of the Code and file his report within 30 days before this Bench. 32. A moratorium in terms of Section 14 of the Code is imposed forthwith in following terms: "(a) the institution of suits or continuation of pending suits or proceedings against the Respondent 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 Respondent 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 Respondent in respect of its property including any action under the Securitization 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 Respondent. (2) The supply of essential goods or services to the Respondent as may be specified shall not b....