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2022 (11) TMI 1010
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....ocess ('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 Operational Creditor had started providing the services, ....
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...., 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 Corporate Debtor and threatened initiation of legal proceedin....
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....y 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 Adjudicating Authority is as reproduced below: "21. This application complies with the basic requirements of Section 8/9 of IB....
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....re 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 that there have been a number of communication exchanged between the operational creditor and corporate debtor which make it apparent that there "are certain stron....
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....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 the contents of the said email. This e-mail is addressed to one Sarah of the EE Ltd., Operational Creditor by one Mohan, the representative of the Corporate Debtor is as reproduced below: - "Hello, Plea....
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.... 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, Can you confirm when payment will be received for any undisputed amount? When would you be free to discuss the future trading options in detail? Kind regards, Steven (Emphasis supplied) We also find emails dated 24.03.2017 and 30.03.2017 as placed at page 280 of the APB where the Corporate Debtor had so....
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....mail 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 the period as early as January 2016 had also been raised on 10.03.2016 as placed at page 109 of APB. We also note that on 09.05.2016, the Corporate Debtor took up the matter with the senior management of the Operational Creditor for early settlement of disputes relating to credits raised as placed at page 117 and 118 of APB and alongside raised issues on back-dating discounts applied on Data Bundle....
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....cating 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 of the present case, it is clear that the defence which was raised by the Corporate Debtor in its reply to Demand Notice as well as detailed reply filed in Section 9 Application cannot be said to be moonshine. The Appellants case is that there is voluminous correspondence exchanged between the Corporate Debtor and the Operational Creditor over a long period of time which clearly establishes that there was real ....