TaxTMI 
TaxTMI 
2024 (1) TMI 458
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....ting Authority has rejected the Section 9 application filed by In Style Fashion - Operational Creditor seeking initiation of Corporate Insolvency Resolution Process ("CIRP" in short) against Aditya Birla Fashion and Retail Ltd. - Corporate Debtor. Aggrieved by the impugned order, the present appeal has been filed by the Operational Creditor-Appellant. 2. The Learned Counsel for the Appellant making his submissions stated that the Operational Creditor was acting as franchisee and commission agent for running the show room of the Corporate Debtor in terms of Agency Agreements dated 08.07.2011 (hereinafter referred to as "Planet Fashion Agreement") and 20.12.2011 (hereinafter referred to as "Allen Solly Agreement"). In pursuance of these Agency Agreements signed and executed between the Appellant/Operational Creditor and Respondent/ Corporate Debtor, showrooms had been opened, which however closed on 02.02.2016, which date was before the tenure specified in the Agency Agreements. It is submitted that following the closure of the showroom, the stock in trade was sent back to the Corporate Debtor by the Operational Creditor. Thereafter on the request made by the Corporate Debtor, the....
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....ua the invoices. Moreover, the Corporate Debtor had neither paid up fully the amount pending for commission. It is also contended that the Adjudicating Authority failed to appreciate the authenticated and verified record of default issued by the Information Utility registered with the IBBI. It was strongly contended that this is a case where operational debt clearly fell due and payable and there was default by the Corporate Debtor. 5. The Learned Counsel for the Appellant further stated that the Corporate Debtor has raised a spurious defence of pre-existing dispute by referring to a meeting supposedly held on 28.08.2012 between the Operational Creditor and the Corporate Debtor regarding payment of revised/reduced commission. It was vehemently contended that there was neither any meeting held on 28.08.2012 nor any such agreement entered into between the two parties on that date with respect to commission payment arrangement. Alleging further that the purported proceedings of the meeting were fabricated, it was added that the Adjudicating Authority wrongly relied on this meeting and mistook the forged meeting proceedings to be evidence of pre-existing dispute while dismissing the....
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....te Debtor has been proven to have become due and payable and if there has been a default in the payment thereof and whether there is any pre-existing dispute between the parties. This examination would be in consonance with the test which has been laid down by the Hon'ble Supreme Court in Mobilox Innovations (P) Ltd. v. Kirusa Software (P) Ltd. (2018) 1 SCC 353 ('Mobilox' in short) which is as reproduced below :- "34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? And (iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudic....
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....d shown as 28.04.2017. We also notice that part payment of Rs. 51,823 made on 28.04.2017 by the Corporate Debtor has also been brought on record and the relevant bank statement has been placed at pages 125-126 of the APB. In view of the last payment having been made on 28.04.2017 as noted above, the fresh period of limitation would start from that date and the Operational Creditor was entitled for taking benefit of 3 years period of limitation from the date of last payment. Therefore, the Section 9 application was filed well within time. Hence the objection on the ground of limitation raised by the Corporate Debtor basis the date of default mentioned in the demand notice while choosing to ignore the date of default shown in the Section 9 application lacks merit. 13. We are also not in a position to agree with the Adjudicating Authority on the inapplicability of the decision of this Tribunal in Atharva Auto Logistics Pvt. Ltd. v. Intec Capital Ltd & Anr. in CA (AT) (Ins.) No. 303/2022 on the ground that the present is a case relating to an application under Section 9 and not Section 7. This finding of the Adjudicating Authority is misplaced since the provisions of the Limitation ....
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....lity of the Operational Creditor and not reimbursable. Adverting attention to the clauses of Allen Solly Agreement, it was submitted that Clause 5.1 of the Agreement clearly stipulated that the Operational Creditor would invest at its own cost on the interiors as per the specification provided by the Corporate Debtor. Clause 6.10 further stipulated that the Operational Creditor at its own costs would undertake renovating the interiors of the premises to the satisfaction of the Corporate Debtor. Further, Clause 1.11 of the Agreement also provided that the investments made by the Operational Creditor towards the interiors would depreciate by 20% every year and that at the end of the fifth year, the title to such interiors would vest with the Corporate Debtor. It is therefore the case of the Corporate Debtor that the Operational Creditor were not entitled to make any claims against salvageable and non-salvageable items. 16. We notice that the Adjudicating Authority has taken notice of Clauses 1.11, 5.1 and 6.10 and held that in terms of these clauses, the claim raised by the Operational Creditor 'fall flat'. We have perused the above clauses of the Agency Agreements as has been pla....
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....eement. However, the dues in respect of the unpaid commission, as claimed by the Operational Creditor, was not correct since the monthly slabs of the commission were to be reduced in terms of a revised arrangement which was arrived at between the two parties pursuant to a meeting held on 28.08.2012. The proceedings of the said meeting are at page 162 of APB. It was emphatically asserted that the Operational Creditor had computed the commission amount wrongly by deliberately avoiding the arrangement/agreement recorded in the minutes of the above meeting dated 28.08.2012. The claim has been made on the basis of self-serving documents besides false and fabricated computation. It has been therefore claimed by the Corporate Debtor that this clearly signifies pre-existing dispute with respect to computation of the commission amount and therefore Section 9 application has rightly not been admitted by the Adjudicating Authority. 20. The claim made by the Operational Creditor that it had sent letters to the Corporate Debtor on 20.08.2018, 08.12.2018 and 24.06.2019 regarding their dues has also been stoutly controverted by the Corporate Debtor. It was submitted that these letters were nev....
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....ional Creditor. 23. We are inclined to agree with the Adjudicating Authority that the Operational Creditor has been blowing hot and cold in respect of the nexus and role of Nitesh Agrawal in the partnership firm. We do not countenance the arbitrary conduct and double standards of the Operational Creditor in choosing to rely on documents signed by Nitesh Agrawal when it is to their advantage and discounting the tenability of documents signed by the same person when it does not suit them. We are of the considered opinion that the Adjudicating Authority has rightly concluded that Shri Nitesh Agrawal had nexus with the business transactions of the Operational Creditor and was also their authorized representative and that the minutes of the meeting signed by him on 28.08.2012 has been the basis of a pre-existing dispute between the two parties. We also add here that the allegation of forgery of signature of Shri Nitesh Agrawal as raised by the Appellant is a subject which requires detailed investigation which is not possible to be carried out by the Adjudicatory/Appellate Tribunal given their summary jurisdiction. 24. It is relevant at this juncture to refer to the guiding princip....