TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 836
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....nkruptcy Code, 2016 (hereinafter referred to as 'The Code'). By the Impugned Order, the Adjudicating Authority has admitted Application filed under Section 9 of the code observing as follows: "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 that for a claim to fall within the definition of 'operational debt', the operational creditor must establish that it has a "right to payment" "in respect of the provision of "goods or services" and also that Corporate Debtor has committed a "default" towards its "liability or obligation in respect of such outstanding claim". We would also like to place our reliance on the judgment Broadcast Audience Research Council V. Mi Marathi Media Limited [C.P. I 688/IBC/NCLT/MB/MAH/2018] and we hereby observe that in the present case, t....
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....,60,147/- towards is the Minimum Guaranteed Royalties payable by the 'Corporate Debtor' under the Licensing Agreement and in lieu of which the 'Corporate Debtor' made the payment of Rs.17,69,835/- upto 15.06.2015. * The invoices were raised towards payment of Minimum Guaranteed Royalties which were to be paid irrespective of the sales made by the 'Corporate Debtor'. It is submitted that 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'. * It is submitted that the amount claimed is not an 'Operational Debt' as there is no transaction having a correlation of direct input into the output levels or supplied by the 'Corporate Debtor'. Learned Counsel placed reliance on the decision of this Tribunal in 'M. Ravindranath Reddy' Vs. 'Mr. G. Krishan & Ors.' in Company Appeal (AT) (Ins.) No. 331/2019 in support of his case that any 'debt' arising without nexus to the direct input to the output produce or supplied by the 'Corporate Debtor', cannot be considered as an 'Operat....
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.... the Corporate Debtor, the Corporate Debtor was obligated to pay certain consideration in form of 'compensation' to Respondent No. 1 as stated in Clause 4 of the Agreement. Clause 4.1 of the Agreement provides for the payment of Royalties to Respondent No. 1 by the Corporate Debtor. Also, Clause 4.2 provides for a Guaranteed Minimum Royalties to be payable quarterly as per the schedule given in the Agreement. It was also provided that the Royalties due under Clause 4.1 shall take into account the Guaranteed Minimum Royalties paid for the corresponding period as stated in Clause 4.3.1 of the Agreement. The Agreement further provides that the Corporate Debtor shall pay all Royalties to Respondent No. 1 for each calendar quarter no later than 15 days following the last day of such calendar quarter, failing which the late charge interest at 1.5% per month or the maximum rate permitted by law, whichever is less, along with any costs/attorney fee, etc., was payable on such dues as stated in Clause 4.4 and Clause 13.12 of the Agreement. * It is further submitted that in terms of Clause 4 of the Agreement, Respondent No. 1 raised and served several Invoices upon the 'Corporate Debtor'. H....
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.... falls within the definition of 'Operational Debt' as defined under section 5(21) of the Code. 5. Section 5(21) of the Code which defines 'Operational Debt' reads as follows: "5 (21) "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the 1 [payment] of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;" (Emphasis Supplied) 6. It is the main case of the Appellant that the payment of 'Minimum Guaranteed Royalties' under the Agreement does not arise out of any 'goods or services' and therefore does not fall within the ambit of 'Operational Debt' as defined under Section 5(21) of the Code. Section 2(7) of the Sale of Goods Act, 1930 reads as follows: "2(7) goods means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be served before sale or under the contract of sale." 7. Section 3(27) of the Code is being reproduced as hereunder: "3(27) "property....
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....Tax Act, 2017 permits the use or enjoyment of any Intellectual Property Right as a 'supply of service'. The Hon'ble Madras High Court in the case of 'AGS Entertainment Private Limited' Vs. 'Union of India', 2013 SCC OnLine Mad 1823, examined that 'the issue whether the temporary transfer/permission to use the copyright in a cinematographic film granted by its owner to another person, amounted to the provisions of service'. The Hon'ble High Court held that the same constituted provision of service by the owner of the copyright to the other person. In this case, the 'Corporate Debtor' was permitted to use the trademark of 'KKR' in relation to its licensed products and hence we note that there was temporary transfer/permission to use, constituting 'provision of service' rendered by the first Respondent and therefore falls within the definition of service and any amounts 'due and payable' arising out of such service is an 'Operational Debt'. Further, it is also the case of the first Respondent that they had paid 'Service Tax' to the Government Authorities on the invoices raised against the 'Corporate Debtor'. As the invoices itself contemplate payment of GST for the use of the services....
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....orporate standards. Hence, the Licnesee was licensed for a particular kind of service for use by the Licensee for running a business of Educational Institution. Hence, in the present case, debt pertaining to unpaid license fee was fully covered within the meaning of 'operation debt' under Section 5(21) and the Adjudicating Authority committed error in holding that the debt claimed by the Operational Creditor is not an 'operational debt'. The judgment of this Tribunal in Promila Taneja's case reiterate the law as laid down in Mr. M. Ravindranath Reddy's case. We having held that judgment of Mr. M. Ravindranath Reddy's case does not lay down correct law, the judgment in Promila Taneja's case can also not be followed. 40. In view of the foregoing discussion, we answer the two questions referred to the larger Bench in the following manner: (1) Judgment of this Tribunal in Mr. M. Ravindranath Reddy (supra) as well as judgment in Promila Taneja's case does not lay down the correct law. (2) The claim of Licensor for payment of license fee for use of Demised Premises for business purposes is an 'operational debt' within the meaning of Section 5(21) of the Code." (Emphasis Supplied)....
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....erational Debt' and also whether there was any 'Pre-Existing Dispute'. The emails dated 01.10.2015 together with the cheques dated 15.09.2015 on 20.10.2015 issued for amounts of Rs.10 Lakhs each clearly construed the Admission of the 'Corporate Debtor' that the amount was indeed 'due and payable'. At this juncture, we find it relevant to reproduce the emails dated 01.10.2015 which read as follows: "As far as the royalty is concerned really we have not earned anything by last nine months still we will pay the royalty as per our commitments. Let's our account check what exactly the royalty amount will be after deducting TDS but to keep this brand in continue we will deposit 10 lakhs through rtgs by Tuesday next week positively. On clearance of 10 lakhs we will discuss the matter once again with you to pay the balance and to discuss about how to way forward strategically with this brand. Remaining amount once our account confirmed about the actual amount we will pay max by end of this month. But from next month onwards after making all strategy we will do the needful on time." (Emphasis Supplied) 17. Therefore, we are of the considered opinion ....