TaxTMI 
TaxTMI 
2024 (11) TMI 1051
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....ief facts of the case giving rise to this Appeal are : i. A Master Service Agreement was executed on 27.01.2020 effective from 01.05.2019 between Amazon Seller Services Private Ltd. and Multiplier Brand Solutions Private Limited, the Appellant herein. ii. The Agreement mentioned that Agreement is entered into between the Amazon Seller Services Private Limited and any of its affiliates domicile in India that issue Work Orders under this Agreement, collectively Amazon of the first part and Multiplier Brand Solutions Private Limited for service provider as second part. iii. The Agreement provided that service provider will provide services to Amazon on non-exclusive basis in accordance with the terms and conditions of the Agreement. iv. A Novation and Substitution Agreement was entered on 01.04.2021 between Amazon Seller Services Private Limited, Transferor, Amazon Wholesale (India) Private Limited, Transferee and Multiplier Brand Solutions Private Limited for replacing the Transferee with Transferor in relation to under the Principal Agreement. v. The Agreement provided that Transferor will relinquish and waive of all its rights, interest,....
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....as replied by the Corporate Debtor vide email dated 18.11.2023 refuting the claim of the Appellant for payment of the amount. In the Reply to Demand Notice, the Corporate Debtor has detailed the correspondence between the Parties prior to issuance of Demand Notice where the Corporate Debtor has disputed the claim of the Appellant. xiv. Section 9 Application was filed by the Appellant on 29.11.2023. Appellant also on 01.12.2023 issued an Arbitration Notice for an amount of Rs.3,18,13,923/- which Arbitration Notice was also responded by Corporate Debtor. Respondent filed Reply to Section 9 Application to which Rejoinder was filed. Adjudicating Authority heard the Parties and by Order dated 05.03.2024, dismissed Section 9 Application on the ground that there are Pre-Existing Dispute between the Parties, hence the CIRP against the Corporate Debtor cannot be commenced. xv. Challenging the Order impugned, this Appeal has been filed. 3. We have heard Learned Sr. Counsel Mr. Neeraj Malhotra appearing for the Appellant and Learned Sr. Counsel Mr. Krishnendu Dutta appearing for the Respondent. 4. Learned Sr. Counsel for the Appellant challenging the Order contends tha....
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....lant dated 24.02.2023 and 30.03.2023, pertains to business transaction with Amazon Seller Services Private Ltd. and not with the Corporate Debtor. Appellant had Suo Motu taken cognizance of the allegation and engage Ernst and Young to conduct fact finding in the said matter. Investigation undertaken by Ernst and Young pertains to Vodafone Project which project was being undertaken by the Appellant with Amazon Seller Services Private Ltd. and not with the Corporate Debtor. 5. Learned Sr. Counsel Mr. Krishnendu Dutta appearing for the Corporate Debtor refuting the submissions of the Counsel for the Appellant contends that by Novation Agreement dated 01.04.2021, all the liabilities/rights, interest entitlement obligations inter see between Amazon Seller Services Private Ltd. and Amazon Wholesale (India) Private Ltd. have been taken over by the Corporate Debtor. Transaction between the Appellant and Amazon Seller Services Private Ltd. cannot be said to be alien to the transaction between the Appellant and Corporate Debtor. Corporate Debtor has taken liabilities under the Master Service Agreement. Corporate Debtor is entitled to review the earlier transaction though done much prior t....
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.... Brigade Gateway, 26/1 Dr. Rajkumar Road, Bangalore - 560055 and any of its Affiliates domiciled in India that issue Work Orders under this Agreement (collectively, "Amazon"), of the First Part; AND Multiplier Brand Solutions Private Limited (formerly known as Multipliermudra Brand Solutions Private Limited) a company registered under Companies Act, 2013 with PAN No. AAKCM7037Q and having its registered office at B-1/G-3 2nd Floor, Mohan Co-op. Industrial Estate, Main Mathura Road Delhi - 110044 (hereinafter referred to as "MBSPL" or "Service Provider" which expression shall unless repugnant to the subject or context shall mean and include its successors, permitted assigns, and administrators) of the other Second Part. For the purpose of this Agreement, the term "Affiliate" shall mean "any entity in which Amazon or its group companies have directly or indirectly, certain economic interest". For avoidance of doubt, any reference to an Affiliate of Amazon under this Agreement shall mean "an Affliate domiciled in India". Amazon and the Service Provider are hereinafter individually referred to as a "Party" and collectively referred to as "Parties"." 8. Clause 1.1 t....
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....ctive or not in conformity with the requirements of this Agreement and the applicable Work Order. 1.3. On-Site Services. If Service Provider provides Services on Amazon premises, Service Provider will, and ensure that its Personnel will: (a) abide by all Amazon's rules, policies, and procedures regarding such matters as safety, security, health, environmental and hazardous material management, misconduct, physical aggression harassment and theft (collectively, "Rules"); and (b) at Amazon's request, remove and promptly replace any Personnel (defined in Section 6 below) performing Services who behaves in a manner that is unlawful or inconsistent with any Rules. 1.4. Payment / Records. Amazon will pay Service Provider as provided in the Work Order. Service Provider is entitled to no other compensation or reimbursement for the Services. The Service Provider shall be solely responsible for all other compensation to its Personnel, including any statutory contributions that are required and maintain all other compliances that may be required under applicable Laws in respect of its Personnel. In the event Amazon is required to make any payments in respect of any P....
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....nd 3. Multiplier Brand Solutions Private Limited, a company incorporated under the laws of India having its registered office at Multiplier Brand Solutions Private Limited, B1/3, 2nd floor, Mohan Co-operative Industrial Estate, Main Mathura Road, New Delhi - 110044 (hereinafter referred to as the "Company" which expression will unless / repugnant to the meaning or context thereof, be deemed to mean and include successors and permitted assigns). In this Agreement, Transferor, Transferee, and Company are collectively referred to as the "Parties" and individually as the "Party" Any capitalized term and expression used in this Agreement but not specifically defined herein, will have the same meaning and construction as defined or construed in the Principal Agreement (as defined below), unless the subject or context is repugnant thereto." 10. Clause 1 of the Agreement provides as follows: "NOW THIS AGREEMENT WITNESSETH THAT: 1. From and after the Effective Date: 1.1. The Parties hereby agree that Transferee will replace Transferor in relation to and under the Principal Agreement. All references to Transferor under the Principal Ag....
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....s, failure to follow protocol, all of which were motivated by the desire to illegally deceive and seek excess payments from AWIPL and its affiliates, including Amazon Seller Services Private Limited ("ASSPL) under the MSA. Amazon's review indicates that Multiplier was misrepresenting and inflating sales figures for the services it provided under the MSA. 5. As on date, Amazon's review based on limited information indicates that its entities have been defrauded in excess of USD 16.37 MM |~ INR 136,00,00,000/- (Rupees One hundred thirty-six crores only) on account of wrongful payouts towards sales incentives, asset management, service fee etc., under the MSA. This is still being investigated, despite Multiplier's refusal to provide information, though contractually obliged to do so, as well as Multiplier's failure to share its own finding into the fraud by its employees, despite repeatedly admitting that its employees were involved in fraudulent conduct. Multiplier's behavior is indicative of not just a contractual breach but also discloses a dishonest intention, as the withholding of information gives rise to the presumption that the information disclose....
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....spite repeated requests. In fact, Multiplier in various emails such as on June 30, 2023 and August 02, 2023 has itself admitted that its employees have been guilty of fraud, but have failed to share the basis for the same, despite repeated requests." 13. In the Reply Notice, further under the heading "Discovery of Multiplier's artificial and inflated invoicing" has been dealt in Paragraphs 19 & 20, which is as follows: "Discovery of Multiplier's artificial and inflated invoicing 19. Around the end of December 2022, Amazon grew suspicious about certain deficiencies and malpractices in the services provided by Multiplier under the MSA. Amazon observed high abuse of sales figures upon reviewing the sales data submitted by Multiplier for December 2022. Amazon informed Multiplier by an email dated February 09. 2023 about the possibility of high discrepancy in sales figures (of more than 99%. The deficiencies indicated the existence of a fraudulent design and put all the services provided by Multiplier into scrutiny. 20. The exact loss suffered by A WIPL cannot be quantified at this stage since the review and investigation is still ongoing and the docume....
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....estigation and that the decision regarding payments, including payments from AWIPL, could only be made after the review was completed. 25. Amazon continued to follow-up for the pending documents. Multiplier shared partial information on the Vodafone Project and the Devices Project by an email dated July 24, 2023. This clearly demonstrates the understanding between both parties that the concerns regarding inflated invoices and phantom services infected all services provided by Multiplier, including the invoices being demanded by Multiplier in the Demand Notice. These included services provided to AWIPL as well as services issued under the MSA, which was subsequently assigned to AWIPL. Therefore, AWIPL had a claim under the MSA as a counter-party to Multiplier both prior to the assignment as well as post assignment till the termination of MSA." 15. When we look into the Reply given by the Corporate Debtor to the Demand Notice, the Reply Notice clearly indicates that Notice of dispute was issued by Corporate Debtor, raising several issues, including the Pre-Existing Dispute. 16. Learned Counsel for the Appellant has contended that issue of fake invoices which has been r....
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....sue of inflated invoices, Appellant itself has commenced investigation and filed the Police Complaint as well as directed for investigation through Ernst and Young, which is an admitted fact. Appellant in his Appeal has brought on record the Police Complaint which was submitted by Appellant on 24.02.2023. In the Police Complaint under the heading "suspected fraud related details" following has been stated: "Suspected Fraud related details; A couple of months back we had replaced handsets at these 400 outlets pan India in which, we replaced the Demo handsets with the new ones in each of these 400 Stores. During this coordination and replacement of Handsets from the Vodafone stores, in one of the courier assignments of old Demo Handsets, we found that 43 numbers of handsets worth approximately Rs. 9 Lacs (Nine Lacs) were missing which was sent from Bangalore Multiplier office on 28* July 2022 to Delhi Multiplier office by one of the team leader Mr. Deepak Kharakia. We immediately enquired about the missing mobile handsets and on our repeated questioning to the employee, himself i.e Deepak Kharakia and the other 15 handsets were possibly taken out by courier company ....
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....d demand notice, Mr. Krishnendu Dutta submitted that the Corporate Debtor has raised the dispute regarding genuineness of the claims/invoices raised by the Petitioner right from the year 2017. The e-mail reads thus:- From: RUHIL, DEVENDER [email protected] Date: Friday, 2 June 2023 at 6:47 PM To: Sameer Mehta [email protected], Rupinder Singh [email protected] Cc: Ajmani, Gaurav [email protected] Subject : Privileged and confidential_Data needed Dear Sameer and Rupinder, This is in reference to our meeting today. As discussed, request if you could share the following data at the earliest : # Particulars 1 Demo data since program initiation i.e. Q4 2017 till date 2 Records maintained, if any to follow up with customer 3 Sales data since program initiation i.e. Q4 2017 till date 4 Incentive paid to promoters, cluster managers and program head, etc. - detailed break up with computation 5 List of all the stores along with the start date of the operations 6 List of all the employees working on the program along with their date of joining compensation details, designa....
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....nder, You are requested to take note that since the data compilation is voluminous and taking a lot of time for us, we are in the process of collating the same and hence are sharing the data on a financial year basis. The below indicated data is for the period of FY 2022- 23 for Amazon Vodafone Project. As your have been aware, we have always been totally transparent on the data and Standard Operating Procedure (SOP) adopted with the Amazon team, and we assure you that the same transparency and adherence to the SOP shall continue from our side for your records and verifications. We request that on the basis the information shared with you, our due payments for (Amazon Device, Amazon Global, Amazon Design team) be released which as of now are kept on hold by your team, this is required your urgent attention ! Needless to say, we shall be pleased to provide our best at all times. Best regards, Praveen Choudhary" 21. The above email which was sent by the Appellant relates to the claim of Appellant for payment for Amazon Device, i.e. subject matter of Section 9 Application. The email itself mentions that the amount has been of no....