TaxTMI 
TaxTMI 
2022 (11) TMI 1010
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....nitiated Corporate Insolvency Resolution Process ('CIRP' in short) against the Corporate Debtor. Aggrieved by this Impugned Order, the present appeal has been preferred by the suspended Director of the Corporate Debtor. 2. The brief facts of the case, as brought before us by the Appellant, are that M/s Falcon Business Resources Private Limited, the Corporate Debtor entered into EE Framework Reseller Agreement (hereinafter referred to as the Agreement) dated 20.03.2015 with EE Limited, the Operational Creditor/Respondent No.1 by which the Operational Creditor was to provide SIM cards to the Corporate Debtor for reselling to Indian clients travelling to U.K. to provide them mobile telecom services in U.K. The Agreement guaranteed the Operational Creditor a minimum spend commitment over 2 years of GBP 4,50,000 and required the Operational Creditor to maintain 7000 accounts. The agreement was valid for a period of 24 months and the parties had agreed on the price to be levied on the customers and also sharing all revenue between them. The contract between the two parties was terminable by giving 30 day notice. 3. Admitting that the Agreement was operationalised and the Operationa....
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....onal Creditor like the non-working of data services, meetings were sought for purpose of resolution, which did not materialize. The Learned Counsel for the Appellant also stated that the Corporate Debtor had also claimed entitlement to damages for sub-par service levels and compensation for suffering business loss. 6. Despite the Operational Creditor acknowledging the invoice related issues, the Learned Counsel for the Appellant submitted that the Respondent No.1 not only took no steps to correct the situation but instead disconnected the SIM cards in January 2017, which even by the contract date was 3 months earlier than the date of termination, without giving notice. This was a breach of Clause 20 of the Agreement which stipulated 30 days' notice prior to disconnection. Ignoring the fact that this sudden disconnection created inconvenience to the customers of the Corporate Debtor and caused huge loss and damage to the business of the Corporate Debtor, the Respondent No.1 had instead made a baseless demand of GBP 50000 in January 2017 to reinstate the network lines. 7. Eventually, the Indian Collection Agency of the Operational Creditor demanded GBP 78,296.31 from the Corpor....
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....dispute; (b) the payment of unpaid operational debt- (i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of the record that the operational creditor has encashed a cheque issued by the corporate debtor. Explanation: For the purposes of this section, a "demand notice" means a notice served by an operational creditor to the corporate debtor demanding payment of the operational debt in respect of which the default has occurred." 10. A reading of Section 8 of IBC indicates that the requisite conditions necessary to trigger CIRP under Section 9 of the IBC are existence of a debt due and its default by the corporate debtor; that there has taken place delivery of demand notice of an unpaid and undisputed debt; that there has been no payment of the unpaid and undisputed debt within the period of 10 days of receipt of demand notice and no real pre-existing dispute is discernible. 11. This now brings us to the impugned order which has been assailed by the Appellant. The relevant portion of the analysis and findings of the Adjudicat....
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....d the corporate debtor in this email has not stated that the amount of liability accepted by it in earlier emails dated 31.07.2017 or 18.09.2017 were not payable. Thereafter, correspondences with the counsel of the operational creditor has also happened and finally the legal counsel of the operational creditor vide its email dated 15.02.2019, it has been informed that outstanding dues of GBP 78,296.31 were required to be paid by the corporate debtor and failing to do so would result into initiation of legal proceedings against the risk and cost of the corporate debtor. 25. After carefully considering this chain of communication, we have no hesitation in holding that at two stages, definite liability to pay has been acknowledged and accepted by the corporate debtor. The said liability in both the situations is more than the threshold limit. Hence, having regards to various judicial decisions rendered by the Hon'ble NCLAT that in case of dispute, if the undisputed liability is more than the threshold limit, the application could be admitted." (Emphasis supplied) 12. From the findings of the Adjudicating Authority, we find that the Adjudicating Authority has held ....
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....ra 11 above that the Adjudicating Authority reached the conclusion that the Corporate Debtor had admitted a debt of GBP 23544.13 on 31.03.2017 and GBP 10000 on 18.09.2017 and since a definite liability to pay has been acknowledged and accepted by the Corporate Debtor and the liability amount having crossed the threshold limit of Rs. 1 lakh, Section 9 of IBC is attracted. It has also been held that in their email dated 18.09.2017, the Corporate Debtor had agreed to GBP 10000 as a full and final settlement and though this offer of settlement was made by the Corporate Debtor 'without any prejudice' to their legal rights and claims for damages, it has no adverse bearing on the acknowledgement of debt. 15. Interestingly, the impugned order also notes that with respect to liability of payment, the Corporate Debtor in an email dated 24.08.2017 addressed to the Operational Creditor raised some issues of general nature but held that these issues were not as if the Corporate Debtor had not accepted the liability to pay any amount. Though the contents of the e-mail dated 24.08.2017 as placed at page 334 of APB is self-explanatory, for reasons of clarity, we think it prudent to reproduce th....
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....017 as placed at Page 342-343 of APB with the additional sentences "Please be aware your client will be liable for extortion, breach of trust & compensation for fraudulent invoicing / loss of business. This email is without any prejudice to our legal rights." This validates the fact that both parties were aware of the invoice disputes and that counterclaims were made by the Corporate Debtor by way of demanding compensation for service disruption and damages for business loss. These two emails of 24.08.2017 and 13.10.2017 clearly indicate that there was serious ongoing dispute surrounding the liability amount which has erroneously not been taken into reckoning by the Adjudicating Authority. 17. Further, that the Corporate Debtor had not admitted definite liability has infact been acknowledged by the Operational Creditor themselves as is evident from an email sent by the Operational Creditor to the Corporate Debtor on 23.03.2017 seeking confirmation as to when payment will be received for "any undisputed amount". The e-mail as placed at page 281 of APB is as reproduced below: - Hi Mohan, I hope you are well? A couple of things from me if I may, ....
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....any dispute on the date of filing the application by the Operational Creditor under Section 9 of the IBC. 20. From the material of record, we find that one of the major areas of dispute was billing discrepancies arising out of inflated invoices which infact has been admitted by both parties. The Learned Counsel for Appellant has submitted that on 05.07.2016, the Corporate Creditor had sent an email to the Operational Debtor mentioning that 13000 GBP was receivable against inflated invoices raised by the Operational Creditor as placed at Page 72 of the APB. It is also seen from page 75-76 of the APB that vide email dated 20.07.2016 the Operational Creditor had not only agreed to the calculations made by the Corporate Debtor regarding inflated invoices but also agreed to re-calculate the credit payable to the Corporate Debtor. Similarly, another communication on billing discrepancy on data bundle from May-July 2016 had also been sent on 03.08.2016 by the Corporate Debtor to the Operational Creditor as placed at Page 77 of the APB. The ongoing credit issues with the Operational Creditor and wrong charging of tariffs had persisted even in subsequent months. Infact CDR disputes for t....
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....e application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." 23. If we apply the above-cited test laid down by the Hon'ble Supreme Court to the facts o....