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TMI Blog2014 (2) TMI 971X X X X Extracts X X X X X X X X Extracts X X X X ..... r. Inflow claims that Yahoo agreed to be bound by this 'escrow' arrangement. Certain products were routed from Inflow to Apara and then to Yahoo. Inflow's invoices are drawn on Apara and show Yahoo as the end-customer. Inflow claims that certain invoices, aggregating to Rs. 8,56,48,460.90, remain unpaid; and that Yahoo has not paid the invoices in this amount into the escrow account. Having heard Dr. Saraf for Inflow and Mr. Tulzapurkar for Yahoo, and, with their assistance, having gone through the record, I am not satisfied that there exists any creditordebtor relationship between Inflow and Yahoo, or that the amount claimed by Inflow is, in point of fact, legitimately due. Indeed, there is material to show that some, and perhaps all but one, of the invoice amounts claimed by Inflow have been paid by Yahoo, though not into the escrow account. Whether or not Yahoo was or could in law be bound by any such escrow agreement between Inflow and Apara is another question in doubt. I am unable to agree with Dr. Saraf's submission that Yahoo is indebted to Inflow and that it must be deemed to be unable to pay its debts. This petition must be dismissed, for the reasons that follow. 3. In 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce raised by Inflow on Apara, but a term in Apara's own corresponding invoices on Yahoo specifically required payment to be made to the joint escrow account with Axis Bank. This, Inflow claims in paragraph 16, resulted in an "understanding" between the parties and was sufficiently documented in the correspondence read with the backto- back invoices. The escrow mechanism is therefore described as "tripartite". Copies of the invoices (raised by Inflow on Apara and by Apara on Yahoo) are annexed. Inflow sent a statutory notice to Yahoo on 1st June 2011. Yahoo replied, and further correspondence was exchanged till about February 2012, with Yahoo maintaining that it had no contractual privity with Inflow and that while it had made some payments against Apara invoices into the escrow account, it had paid other Apara invoices directly and that there was, therefore, no liability at all. Inflow, for its part, contended that it was not concerned with any direct payments that Yahoo might have made to Apara, as there was a 'tripartite agreement' and that several invoices did not show payment into the escrow account and were hence due. 7. Prima-facie, this formulation of Inflow's claim is unco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read on which to hang such a claim. There is no unequivocal commitment by Yahoo to be bound by any such agreement for every invoice. The most that might be said is that for certain invoices, Yahoo agreed to make payment into the escrow account, and nothing more. 9. In its affidavit in reply, Yahoo raised these defences: First, that there was no debt, and no debtor-creditor relationship established. Evidently, this is pivotal, and it was for Inflow to establish the existence of such a relationship. Yahoo also pointed out that Inflow had already filed civil proceedings in Bangalore against Yahoo and others. Apara is a party to that suit. Relief is sought against both Yahoo and Apara jointly and severally. In September 2009, Apara had informed Yahoo of the creation of the escrow account because "certain reconciliations" were being carried out between Apara and Inflow. It asked Yahoo to make payment into the escrow account jointly held by Apara and Inflow. Yahoo also pointed out that Apara's letters of 29th July 2009, 26th February 2010, 15th March 2010 and 25th March 2010, all annexed to the petition as Exhibits "F" to "F-3", were merely requests or instructions from Apara as to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of purchase order at item (e), Yahoo again made as many as five direct payments to Apara. Again, Inflow makes no claim for any of these. After the purchase order at item (e) there are three further payments against three different purchase orders; all were made into the escrow account, but all three purchase orders were paid after Inflow's email of 2nd July 2010 to Yahoo. 12. The upshot of this is that Inflow's claim against Yahoo is in respect of, and only of, those payments that Yahoo made directly to Apara but which Apara did not then route into the escrow account. Where Apara did make such corresponding payments into the escrow account (i.e., by depositing into the escrow account the amounts it received from Yahoo), Inflow makes no claim at all, but accepts the payment. There are six such transactions, Yahoo to Apara and Apara to the escrow account. They are all after the socalled tripartite escrow agreement that Inflow claims binds Yahoo. In itself, this undoes Inflow's case of a tripartite and binding escrow agreement, and of Yahoo's direct payments to Apara being irrelevant or of no consequence. It is worth noting that the petition is entirely silent about these six payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow and Apara, one of no concern whatever to Yahoo. There is no cogent material that there ever existed any such tripartite escrow contract binding Yahoo such that its direct payments to Apara were to count for nothing. Inflow's suggestion is that if Yahoo paid Apara directly, it is Yahoo that should file recovery proceedings against Apara. That suggestion, wholly untenable, posits the existence of a binding and inflexible tripartite agreement with clearly spelled out terms applicable to all invoices and payments. There is none. Inflow's cause is also betrayed by its own conduct. For, in its email of 2nd July 2010, it spoke of future payments being made into the escrow account and sought payment advice details for past direct payments. That puts the matter beyond the pale. Mr. Tulzapurkar is, therefore, entirely correct in his submission that there is no debtor-creditor relationship between Yahoo and Inflow. The escrow account was but a mode of payment. It brought no privity between Yahoo and Inflow. None of Inflow's invoices are drawn on Yahoo, but always only on Apara. That they show Yahoo as the endcustomer does not establish any direct privity; it only specifies a destination, n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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