TaxTMI 
TaxTMI 
2024 (11) TMI 675
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.... the case are that the Appellant- Operational Creditor had undertaken to provide services for production of Television Commercial (hereinafter called the 'TVC'), print shoot and digital content for the Respondent -Patanjali Paridhan Private Limited (hereinafter called the 'Corporate Debtor' or 'ÇD') under the terms of proforma invoice dated 17.10.2018. 3. It is the submission of the Operational Creditor that it had rendered services to the complete satisfaction of the Corporate Debtor and had raised final invoice on 29.01.2019 for sum of Rs. 2,06,50,000/-, out of which advance of Rs/ 87,50,000/- was already received by the Operational Creditor on 26.10.2018 and the balance amount of Rs. 1,19,00000/- was payable by the Corporate Debtor. 4. It is the submission of the Appellant that it had reminded the Corporate Debtor on multiple occasions including emails dated 13.04.2019, 16.04.2019, 25.04.2019, 26.04.2019, 02.05.2019, 03.05.2019, 08.05.2019, 09.05.2019 and as no payment was forthcoming, the Operational Creditor issued notice under Section 8 of the IBC on 12.03.2021 which was duly served on the Corporate Debtor on 15.03.2021. Since no payment was forthcoming from the ....
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....09.2020, the legal department of the Corporate Debtor had asked the Operational Creditor for the NOC. The reference was specifically made to para 2 of the said letter, reproduced below: "That in order to protect our Intellectual Property Rights in relation to "TVC", you have assured us of the NO OBJECTION CERTIFICATE (NOC) from the writer /lyricist, Music Composer, Whole TVC but it has been more than 22 months and we are yet to receive the NOC from your side. It is pertinent to mention that as per the agreed terms & condition as laid down in the proforma invoice dated 17-10-2018, it was your obligation to provide the NOC signed by the writer /lyricist, Music Composer." 7. In response to the said letter, the representative of the Operational Creditor, namely, L&L Partners replied through letter dated 13.09.2020 stating that no objection certificate was not required as the writer/lyricist of the song, in the TVC, was an employee of the Operational Creditor. They stated that the terms and conditions attached in the proforma invoice stipulate that in the event PPPL (the Corporate Debtor) intends to go for registration of the services then the Operational Creditor will provi....
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.... or apprenticeship, to which clause (a) or clause (b) does not apply, the employer shall, in the absence of any agreement to the contrary, be the first owner of the copyright therein;" 10. The Learned Counsel for Corporate Debtor, on the other hand, drew our attention to Rule 70 of the Copyright Rules, 2013. Specific mentioned was made to sub-Rule (3) of Rule 70 which specified the requirement of the original copy of 'no objection certificate' issued by the author in case the application is submitted by the owner of right. It was the submission of the Learned Counsel for the Corporate Debtor that the original no objection certificate is essential requirement for submitting application for registration of copyright. The relevant part of Rule 70 of the Copyright Rules, 2013 is reproduced below: "(3) Every application should be signed only by the applicant, who may be an author or owner of right. If the application is submitted by the owner of copyright, it shall be enclosed with an original copy of no objection certificate issued by the author in his favour." 11. The Learned Counsel for the Appellant, on the other hand, submitted that there was no need for NOC and that....
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....ied. 15. The following submissions were made by the Respondent in its reply dated 25.10.2023: "That by the non-issuance of the NOC under the agreement, the Appellant has breached the terms and conditions of the agreement as due to the non-issuance the TVC could not be registered preventing it to use the TVC by releasing it on Television and therefore, further causing substantial loss of revenue to the Corporate Debtor. That consequently it has failed to perform its part of the obligation under the proforma invoice by breaching its Clause 26 in view of not issuing NOC as demanded by the Appellant and therefore, the services rendered by the Appellant cannot be said to have been fulfilled, thereby disentitling the Appellant to raise any claim under the proforma invoice" 16. The Learned Counsel for the Respondent submitted that they have not used the TVC in absence of the copyright and they have, thus, also lost the advance given to the Operational Creditor. 17. We have heard both the sides and have perused the records. i. It is an admitted fact that service relating to TVC was provided by the Operational Creditor, for which 50% amount was paid upfront as advance b....
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....and notice or invoice, as the case may be. In case the unpaid operational debt has been repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or send an attested copy of the record that the operational creditor has encashed a cheque or otherwise received payment from the corporate debtor [Section 8(2)(b)]. It is only if, after the expiry of the period of the said 10 days, the operational creditor does not either receive payment from the corporate debtor or notice of dispute, that the operational creditor may trigger the insolvency process by filing an application before the adjudicating authority under Sections 9(1) and 9(2). This application is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents and records that are required under the said form. Under Rule 6(2), the applicant is to dispatch by registered post or speed post, a copy of the application to the registered office of the corporate debtor. Under Section 9(3), along with the appl....
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....)(d) refers to the notice of an existing dispute that has so been received, as it must be read with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution professional, the application may be rejected [Section 9(5)(ii)(e)]. 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 one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or rejec....
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....n for the purpose of adjudication. Taking note of the nature of the dispute of the respondent as referred hereinbefore in respect of the claim made by the appellant, we do not find any reason to disagree with the concurrent findings of the Tribunals that there existed a "pre-existing dispute" between the parties before the receipt of demand notice under Section 8, IBC. In other words, the dismissal of the application under Section 9, IBC on the ground of 'pre-existing dispute' cannot be held to be patently illegal or perverse. We also do not find any reason, in the facts and circumstances, to hold that the case set up by the respondent was a patently feeble legal argument. At any rate, we are not inclined to brush aside the case of the respondent as spurious. 57. We may hasten to add here that we shall not be understood to have held that the dispute set by the respondent regarding the dues is ultimately to be upheld. Certainly, when the expression "pre-existing dispute" is used it will only indicate the existence of a dispute prior to the receipt of a demand notice under Section 8, IBC, and the correctness or its truthfulness is a matter of evidence. In short, the responde....