TaxTMI 
TaxTMI 
2022 (9) TMI 221
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....ankruptcy (Application to AA Rules, 2016) against 'Madurai Krishna Network Private Limited/Corporate Debtor' (in short 'CD'). AA appointed 'Ms. Asha Rathod' as 'Insolvency Resolution Professional'. Aggrieved by this Impugned Order Appellant has filed this Instant Appeal. Brief Facts: 2. 'CD' is a licensed local cable operator distributing cable, TV signals through fibre net and set top boxes (in short STBs) in Tamil Nadu. CD also operates three TV channels- MK TV, MK Six & MK Tunes. 'Jiangsu Yinhe Electronics Corporation Limited is Operational Creditor' (in short OC) engaged in business of manufacturing and supply various electronic components including digital TV intelligent terminal equipment fields, e-component etc. having Registered Office in China and is represented by Authorised Signatory 'M. Gopirajan' based in Tiruvallur, Tamil Nadu. 'Akshaya Digital Cable Vision Pvt. Ltd.' (in short Akshaya) is a digital cable television network distributor and is operating in same industry as 'CD. In November, 2017 two shareholders of CD- 'Mr. S. Mohanna Prasath' (Appellant No. 2 herein) and 'Mr. S Poorna Prasath' acquired collectively 26% of Equity Shareholding in 'Aksh....
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.... 25.08.2021. 6. 'CD' in its 'Reply' dated 03.09.2021 to the demand notice has allegedly acknowledged the receipt of STBs from OC and outstanding payment of USD 6,38,157 but raised issues regarding non-payment by Akshaya as well as alleged pre-existing disputes. 7. OC, however, stated that the 'CD' on receipt of demand notice had neither provided any proof of payment nor provided any proof for pre-existing dispute towards the goods supplied but in order to escape from the clutches of IBC hastily provided sham reply under the guise of raising pre-existing dispute. 8. Hon'ble AA vide Impugned Order dated 22.07.2022 admitted Application under Section 9 of the IBC r/w Rule 6 of the Insolvency & Bankruptcy (Application to AA Rules, 2016) against CD. Aggrieved by this Impugned Order, Appellant has filed this Instant Appeal. Appellant's Submissions: 9. Learned Counsel for the three Appellants, out of whom two Appellant i.e. Appellant No. 1 & Appellant No. 2 were Suspended Director of CD, gave the facts of the case and described relationship between CD & OC and also relationship between CD & Akshaya. Learned Counsel for Appellants assailed the Impugned Order dated 22.07.2022 ....
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...., the application u/s 9 of the IBC should have been dismissed. Learned Counsel informed that STBs were sent in three separate shipments on February 2019, May 2019 and June 2019 and after the 1st Shipment arrived, CD specifically advised OC to intimate him before the next shipment. On being informed that the STBs were ready to be shipped on 07.05.2019, CD specifically advised OC to hold the order. Learned Counsel alleged that in spite of their clear instructions, CD came to know that the remaining two shipments had arrived, and that the customs duty had been paid by Akshaya. When the OC started asking for payments from the CD, the CD replied OC stating that OC payments need to follow from Akshaya directly. AS per Learned Counsel this clearly establishes that the CD always denied his liability to pay the OC. Learned Counsel brought to the notice that CD had written several emails prior to receipt of Form 3 Notice sent by the OC establishing pre-existing dispute. 13. Learned Counsel cited the case of Mobilox Innovations Pvt. Ltd. v Kirusa Software Pvt. Ltd. wherein the Hon'ble Supreme Court of India held that under section 9(5)(ii)(d) it is enough if the OC receives a notice of dis....
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.... Counsel brought out that the Appellants in the Appeal filed before this Hon'ble Tribunal had challenged the Impugned Order mainly on the ground that prior to issuance of the Demand Notice, pre-existing dispute between the parties was in existence. Learned Counsel mentioned that the AA in the Impugned Order had already taken note of these alleged pre-existing disputes pleas and after due deliberation, AA dismissed the contentions of CD about any pre-existing dispute between the parties. 22. Learned Counsel assailed that the Appellants had projected few mail communications as proof of pre-existing dispute between the parties including allegation that despite instructions through email dated 07.05.2019 of the CD not to ship the second shipment, the OC had shipped the same. Learned Counsel stated that CD in its reply to the demand notice had admitted that the entire shipment was delivered to the CD and subsequently sold the same to Akshaya and received money. Therefore, it is very clear that subsequent to the aforesaid mail, the CD had taken delivery and possession of the STBs and also has resold the same to Akshaya and hence the mail which was being projected as pre-existin....
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....ice they had without any reference to the same had admitted debt. 27. Concluding his pleadings, the Learned Counsel for Respondent No. 1 requested to dismiss the Appeal filed by the 'Appellant' and uphold the 'impugned order' dated 22.07.2022. Findings 28. Heard Learned Counsel for the Parties and also perused record available along with Written Submissions by Parties. Several issues have been raised in the Appeal which are required to be deliberated upon before coming to final conclusion. Based on Appeal, averments made by both Learned Counsel, following issues needs to be decided:- (i) Whether there was a debt due of which default was committed by the Corporate Debtor entitling the Operational Creditor to file an Application under Section 9 of the IBC? (ii) Whether there was a pre-existing dispute between the parties prior to issuance of Demand Notice under Section 8 of the IBC dated 23.08.2021. 29. It will be necessary for us to take issue by issue discussion and we shall proceed accordingly in subsequent discussion Issue No. (i) Whether there was a debt due of which default was committed by the Corporate Debtor entitling the Operational Creditor....
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....for supply of 66,000 STBs for consideration of USD 6,38,157. As per purchase order 15% of the total purchase order value was to be paid as in advance and remaining outstanding 85% cost to be paid within 180 days from the date of delivery. It has been established that in three shipments all 66,000 STBs were supplied and received by CD. It is also admitted fact that CD has filed necessary bill of entries with customs and took the delivery of STBs which establishes receipt of STBs and its liability towards payment to OC. CD has brought out that he was merely acting as an agent on behalf of his principal Akshaya and was entitled for 3% commission. CD taken the plea that as an agent he has no responsibility to pay to OC and it is responsibility of Akshaya, on whose behalf 66,000 STBs were procured from OC, to make payment to OC. CD alleged that since Akshaya did not make payment of CD he in turn could not make payments to OC. 29(d). From the various records made available as well as based on averments made by Counsel for the Parties, it is clear that the contact was entered directly between OC & CD and it was responsibility of CD to make payment to OC. At this stage, CD cannot take s....
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....y to CD and CD has acknowledged the fact in bill of entries filed in customs. According to OC, there were dispute between CD & Akshaya for which CD had filed Section 9 Application before the AA after issuing Form 3 Demand Notice on 23.11.2020. However, based on compromise memo dated 24.03.2022 between CD and Akshaya, AA dismissed CD's Section 9 Application against Akshaya for want of prosecution. 30(c) We take note of all material available and averments made by Counsel of both the Parties. We note that there are two distinct contracts entered by CD i.e. one with OC, whereby, CD was to receive 66,000 STBs from OC and Second Contract with Akshaya to whom such STBs were to be supplied admittedly at 3% commission. Since, both are separate commercial transactions, the rights and liabilities are distinct of both contract and cannot be intermingled. We observed that at one hand CD has initiated Section 9 Application against Akshaya and later based on compromise memo was filed before the AA and claimed outstanding dues from Akshaya. Admittedly he has received certain consideration for supply of STBs to Akshaya but has raised 31. We also observe that AA has correctly pointed out clau....