TaxTMI 
TaxTMI 
2026 (1) TMI 427
X X X X Extracts X X X X
X X X X Extracts X X X X
....ferred by the Appellant. 2. The brief facts of the case which are relevant to be noticed for consideration of the present appeal are as under: • On 04.06.2019, a Memorandum of Understanding ("MoU" in short) was signed between the Corporate Debtor/Respondent-Aarya Raj Club and Resorts LLP as the "First Part" and Lords Sai Maa Hotels Pvt. Ltd. ("LSMHPL" in short) as the "Second Part" wherein the Second part was represented by its authorised signatory Mr. P.R. Bansal. In terms of this MoU, the Second Part after an investment of Rs. 10 Cr. was to be inducted as a partner of the First Part and that professional management of Aarya Club/Resort would be exclusively assigned to the Appellant-Lords Inn Hotels and Developers Pvt. Ltd. ("LIHDPL" in short) through a different agreement. • A Sales and Marketing Agreement ("SMA" in short) was also signed on 10.06.2019 between LSMHPL; Aarya Raj Club and Resorts LLP and a third party, namely, IBFW Hospitality to conduct and promote the sales and marketing of the club/resort. In terms of this tripartite agreement, LSMHPL was required to bear the cost and expense towards marketing and promotional activities carried out b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....operational debt. When the Corporate Debtor continued to avail services from the Operational Creditor without terminating the agreements, they were under an obligation to pay to the Operational Creditor for the services consumed and in support of their contention, reliance was placed on the judgment of this Tribunal in Deepak Modi Vs Shalfeyo Industries Pvt. Ltd. in CA(AT)(Ins) No. 1019 of 2022. It was also asserted that the Corporate Debtor had availed and consumed the services of the Operational Creditor without raising any contemporaneous communication disputing the quality of services. Since the Corporate Debtor had failed to substantiate that it had communicated real- time disputes to the Appellant before the Section 8 Demand Notice shows that the defence raised by the Corporate Debtor was an afterthought and hence a moonshine defence. Even the invocation of arbitration proceedings was done after the filing of the Section 9 application and hence cannot be treated as pre-existing dispute. Reliance was placed on the judgment of this Tribunal in Next Education India Pvt. Ltd. Vs K12 Techno Services Pvt. Ltd. in CA(AT)(Ins.) No. 98 of 2019 to contend that disputes raised after dem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nauthorized cash transactions, unauthorized discounts, non-transfer of online booking revenues etc by the Appellant which all led to operational losses. The Corporate Debtor had sent several communications to the Appellant including legal notices against the claims and that the arbitration clause contained in the FMA was invoked by issue of notice under Section 21 of the Arbitration and Conciliation Act on 08.04.2023 which all clearly affirm that there was pre-existing dispute between the parties. The fact that the pre- existing disputes was well documented is substantiated by the fact that the arbitration petition had been allowed by the Gujarat High Court and an arbitrator had been appointed. It was contended that once the plausibility of dispute is noticed by the Adjudicating Authority, it was sufficient basis to admit the Section 9 application without entering into final adjudication with regard to existence of dispute by placing reliance was placed on the judgment of the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs Kirusa Software Pvt. Ltd. (2018) 1 SCC 353. 5. We have duly considered the arguments advanced by the Learned Counsel for both the parties and peruse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... their Reply to the Appeal at page 61 which is reproduced herein: ORDER Ld. Counsel for the applicant is directed to file written submission, not more than three pages, along with GST proof. Ld. Counsel for the respondent is also directed to file written submission not more than three pages. List the matter on 13.05.2024. The above order leaves no doubt that the Adjudicating Authority gave sufficient elbow room to the Appellant to submit proof of GST payment. 10. When Section 9 application was filed on the basis of proforma invoices which contained a GST number, it was incumbent on the part of the Appellant to make GST payment. When the Adjudicating Authority gave reasonable opportunity to the Appellant to submit GST details and yet the latter failed to furnish the same, it gave sufficient basis for the Adjudicating Authority to doubt the validity of the claim. Since the Appellant failed to provide the GST details inspite of being given a chance by the Adjudicating Authority to do so, the Appellant cannot justifiably assert any infirmity in the impugned order on this count. 11. We next come to the impugned order wherein it has been held that a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....also contended by the Respondent that the proforma invoices purportedly claimed to have been raised by the Appellant were neither delivered to them. 14. Having noted the rival contentions of both parties, we now feel it appropriate to look at the claims raised by the Appellant in the backdrop of the agreements executed between the two parties. 15. Firstly, we look at the FMA as placed at page 59 of APB. We find that one of the signatories is the Appellant-M/s Lords Inn Hotels and Developers Ltd. as the "operator" while the Corporate Debtor-Aarya Raj Club and Resorts LLP is the second party as the "owner". We find that Clause 9.2(b) of FMA provided for monthly service fee of Rs. 3 lakh payable by the owner for a period of two years and payment of service fees thereafter as percentage of gross revenue by the owner to the operator. The Appellant has claimed only Rs. 60.18 lakhs as principal amount outstanding in respect of management fees and we find that the Respondent has not disputed this principal amount. However, what has been disputed is the interest claimed by the Appellant on the outstanding management fees. Relying on Clause 10.3 of the FMA which provided that interest ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....agement agreement signed between both parties and will keep the lock-in period for 5 years starting from August' 2021." 19. When we come to the signatories of the MoU dated 26.08.2021 which appears at page 104 of APB, we find that it is signed between Mr. P.R. Bansal as first party and Aarya Raj Club and Resorts LLP as second party. The Appellant-LIHDPL undisputedly does not figure as a signatory. This claim of the Appellant basis this MoU, according to the Respondent, was not admissible since this arose out of an MoU which was not executed by the Operational Creditor. It is the case of the Respondent that as there was no privity of contract between the Appellant and the Corporate Debtor with respect to this MoU, no claim could have been made by the Operational Creditor qua the Corporate Debtor arising out of the MoU. Furthermore, it was contended that the Respondent was not even aware of this MoU of 26.08.2021 and the Corporate Debtor in their reply to the Section 8 Demand Notice had in fact sought a copy of the MoU dated 26.08.2021. We find force in the contention of the Respondent that the Operational Creditor not being a signatory to the MoU could not have made any claim und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....therein. The SMA was a tripartite agreement executed between LSMHPL, Corporate Debtor and IBFW with the Appellant clearly not being a party thereto. We, therefore, find substance in the contention of the Respondent that there was no privity of contract between the Appellant and the Respondent in respect of the SMA and hence the claim qua the SMA is misconceived as there was no contractual obligation on the Corporate Debtor. 23. This now brings us to the ground of pre-existing disputes which has been raised by the Respondent. It has been asserted that the Corporate Debtor can only be put into insolvency in clear cases where no real dispute between the parties in respect of the operational debt. Since the debt in the Section 9 application was disputed by the Respondent because of shortcomings in the delivery of services by the Appellant, the Adjudicating Authority was obligated to reject the Section 9 application. It was asserted that the Adjudicating Authority had rightly rejected the Section 9 application after noticing pre-existing disputes which find mention at para 9(iii) (iv) and (vii) in the impugned order. 24. When we have a look at the impugned order, we find that at p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was dispute between the two parties well before the issue of the Section 8 demand notice is also borne out from the Reply Affidavit of the Corporate Debtor to the Section 9 application as placed at page 565 of APB wherein there is a clear mention of a meeting held by them with the Appellant on 27.01.2023 regarding shortcomings and deficiencies in service. When asked by this Bench pointedly to the Learned Counsel of the Appellant on whether any such meeting was actually held on 27.01.2023, the same was not denied with the caveat that no minutes of the said meeting are available. It may be constructive to notice the relevant contents of the said reply of the Corporate Debtor which is extracted below: "19. The Corporate Debtor was shocked and surprised to receive the said email dated 04-04-2023 from the advocate of the Operational Creditor, since the Corporate Debtor had raised various grievances regarding the poor services being provided by the Operational Creditor and accordingly, the Corporate Debtor and Operational Creditor had engaged in various communications and discussions wherein the Operational Creditor had acknowledged poor services and breach of various terms of ....