TMI Blog2020 (1) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 4-10-2019 - Janab Mohammed Ajmal, Judicial Member Sandeep Reddy Sama, Adv. for the Petitioner. Arun Kumar Satyavolu, Adv. for the Respondent. ORDER 1. In this Application under section 9 of Insolvency and Bankruptcy Code, 2016 (the Code) the Petitioner, an Operational Creditor (OC), seeks initiation of Corporate Insolvency Resolution Process (CIRP) in respect of the Respondent Corporate Debtor (CD). 2. The Petitioner is a registered Company incorporated on 02.01.2013 vide CIN: U64204AP2013PTC085196, under the Companies Act, 1956, with its registered office in Banjara Hills, Hyderabad. It inter alia carried on the business of establishment, set up of various types of technical and cable networks and cable TV channels etc. The Respondent is a Private Limited Company incorporated on 04.12.2012 vide CIN: U72900AP2012PTC 084596, under the Companies Act, 1956, with its registered office in Visakhapatnam. It inter alia carried on the business of trading in electronic media and distribution of satellite communication. Sometime in 2013-14, the Respondent approached the petitioner through a mutual friend namely Mr. Nitin Reddy to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heeded to, it issued a demand notice in Forms-3 4 under section 8 of the Code on 16.02.2018. The notices were served on the Managing Director (MD) of the Respondent on 27.02.2018. The Respondent did not respond to the notices within the statutory period of 10 days. However, the Petitioner's MD received an e-mail 28.03.2018, from the Respondent indicating that reply to the notice was sent on 08.03.2018 and the same was returned undelivered. A copy of the so-called reply, dated 08.03.2018, had been attached to the e-mail. The said reply raised disputes as to the deficiency in service and mala fide intention of the petitioner in harming the Respondent's business. Meanwhile the petitioner also by e-mail, dated 23.03.2018 requested the Respondent to pay support and maintenance charges in respect of Conditional Access System (CAS) licences. Since the debt was not paid the petitioner came up with the present petition. 5. The Respondent in its counter disputed the maintainability of the petition inter alia on the grounds of suppression and misrepresentation of material information. The Respondent has no debt to clear nor is it obliged to pay the amount claimed by the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le system. In the process, Hyderabad and Visakhapatnam were to be digitized before 31.03.2013. v. The shift from the analogue to the digital system required a subscriber to purchase a Set Top Box (STB) to be placed in his premises. By virtue of digitization, the MSO could monitor the exact number of subscribers, choice of their programmes, monitor the payments. Thus altogether shifting the control from LCO to MSO. vi. The STB is a device, when connected to a television allows a subscriber to receive in unencrypted/descrambled form subscribed pay channels through an addressable system. An 'addressable system' means an electronic device (which includes hardware and associated software) put in an integrated system through which signals of cable television network can be sent in encrypted form. These can be decoded by the device or devices, having an activated Conditional Access System (CAS) at the premises of the subscriber within the limits of authorisation made, through the Conditional Access System and the subscriber management system, on the explicit choice and request of such subscribers, by the cable operator to the subscriber. 'Subscriber Managem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the oral understanding in nine trenches of 5000 Nos. each at a cost of ₹ 53,55,000/-. The Respondent altogether paid an amount of ₹ 3,75,56,500/- (Rupees Three Crore Seventy Five Lakh Fifty Six Thousand and Five Hundred Only) by August, 2016. xiii. The Petitioner also represented that, it had an agreement, dated 21.02.2013, with IRDETO for incorporating or embedding 'CAS', for the STBs supplied. A copy of the said IRDETO Conditional Licensee System Agreement, was however not furnished to the Respondent. Later the Petitioner, sent an addendum No. 2 executed with IRDETO, confirming that, clause 4.1.1 of the original agreement was expanded to include the Respondent's site address and clause 4.1.5 of the license agreement was also expanded enabling the Petitioner to sub-license to the Respondent. xiv. The Petitioner showing the said addendum, induced the Respondent to pay the CAS Key activation fee directly to the Principal (IRDETO), assuring that the payment would be adjusted against the outstanding cost of the STBs. The Respondent paid ₹ 68,75,300/- equivalent to US$ 1,12,500/- @ US$ 2.5 per box by way of bank transfers between 26th Jun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiation of CIRP by the Petitioner is an abuse of process of law, since there is no element of default. xviii. The alleged second MoU of the even date regarding payment of the so-called Customs Duty is fabricated and contrived for the purposes of extracting and exploiting the transaction between the parties. There was only one MoU executed on 22.11.2015, between them. There is no whisper in the alleged second MoU regarding the alleged understanding that, the Respondent would reimburse the amount towards Customs Duty. The contention is an afterthought. It is improbable since the said amount is beyond the amount covered by the invoices. There was no such agreement in writing or otherwise to claim reimbursement of ₹ 1,28,81,798/- towards Customs Duty. xix. The Petitioner in its notice, dated 24.01.2018, clearly mentioned that they have imported 1,05,000 STBs from Shenzhen, China in the month of June 2013 and were simply lying in Customs bonded warehouse, Chennai due to their financial incapacity to release them and agreed to sell 45000 STBs @ ₹ 1020 per STB + tax, for a total sale consideration of ₹ 4,81,95,000/-. The Petitioner subsequently claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I: 8. There is no quarrel that the petitioner has supplied 45,000 DSTBs to the Respondent. It is not in dispute that the Respondent had not paid the total dues of ₹ 4,81,95,000/- (Rupees Four Crores Eighty One Lakh Nine Hundred Ninety Five only) and the petitioner had raised invoices for the said amount between 02.06.2014 and 20.08.2015. The Respondent had made payment of ₹ 3,15,56,500/- to the Petitioner. No payment was made after 20.08.2015. An amount of ₹ 1,66,38,500/- (Rupees One Crore Sixty Six Lakhs Thirty Eight Thousand Five Hundred only) remain outstanding. The parties entered into Memorandum of Understanding (MoU) on 22.11.2015, regarding payment of the outstanding dues. This is not in dispute. They allegedly executed another MoU for payment of ₹ 1,29,80,018/- (Rupees One Crore Twenty Nine Lakhs Eighty Thousand Eighteen only) towards Customs Duty. The execution of this MoU, dated 22.11.2015, is disputed. The Respondent has also claimed adjustment of ₹ 68,75,300/- (Sixty Eight Lakhs Seventy Five Thousand Three Hundred only) paid directly to the IRDETO towards activation of CAS against the total invoice amount of ₹ 4,81,95,000/- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code needs to exercise a summary jurisdiction and would not be required to conduct an in-depth enquiry into the allegations, counter-allegations by way of examination of witnesses and critical examination of documents. The Adjudicating Authority needs only to see if a dispute has been raised within the statutory period and has been brought to the notice of the petitioner. In the present case that has not been done. The Hon'ble NCLAT by order in Pedersen Consultants India (P.) Ltd. v. Nitesh Estates Ltd. [CA (AT) (Insolvency) No. 720 of 2018, dated 24-7-2019] held that the claim means a right to payment even if it is disputed. Therefore merely because the Corporate Debtor has disputed the claim by showing that there is certain counter, claim, it cannot be held that there is pre-existence of dispute. It further went on to hold that, The respondent disputed that the alleged debt is not the amount as shown in the Form. However, on mere dispute of amount, the application under Section 9 cannot be rejected, as in terms of Section 3(6) which defines 'claim' to mean a right to payment even if it is disputed. The Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI ..... 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