TMI Blog2020 (1) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... nment or any Local Authority - there is no relation of operational creditor and corporate debtor. Operational creditor never supplied any goods and/or rendered services to the corporate debtor. However, the instant case is arising out of breach of MOU and certain promises made by the respondent. Even as per the MOU which has been entered between the parties only reflects the arrangement for selling of the goods by the applicant and certain percentages are fixed as reflected from Clause 7 of the MOU dated 15.01.2015 under the head Marketing (Page 61-64) which is self-explanatory - Under the circumstances, there is a breach of the said MOU which the petitioner entered with the respondent for getting certain benefit on the sale of the products. The scheme of the code is to ensure that when a default takes place, that is when the debt become due and if not paid, the Insolvency Resolution Process begins. The default is also defined in section 3(12) i.e. default means non-payment of debt, when whole or any part or an instalment or an amount of debt has become due and payable and if not repaid by the debtor or the Corporate debtor as the case may be . The Adjudicating Authority i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional creditor has stated that after execution of the Moll, it diligently started working as distributor of the corporate debtor in UAE. That, after a period of more than one year, the corporate debtor vide email dated 29.02.2016 had expressed its intention for transferring the stocks and settle the account of the applicant. That, pursuant to email dated 29.02.2016, the applicant had asked the corporate debtor to take back its goods at supply price as per clause 12 of the Moll and had further requested the corporate debtor to reimburse the marketing expenses incurred by the applicant. That, representatives of the corporate debtor had visited the applicant's warehouse on 13.03.2016 and had physically verified the stock lying with the applicant. That, the corporate debtor had also confirmed the debit notes raised by the applicant for marketing expenses. That, during the discussions it was further agreed that the corporate debtor will provide a plan for stock transfer from the applicant's warehouse. Accordingly, the applicant had written email dated 13.03.2016 to the corporate debtor detailing the minutes of the meeting that had happened between the parties. 6. The applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to the fact that as per clause 12 of the MoU dated 15.01.2015, the corporate debtor was required to take back its stock at supply price. 9. It is further stated by the applicant that legal notice dated 14.09.2017 was issued to the corporate debtor demanding an amount of AED 427,538.89 which was replied by the corporate debtor by email dated 14.09.2017 threatening the applicant to take criminal action. 10. Having failed to get any positive response from the respondent, the applicant was compelled to issue demand notice under section 8 of the I B Code on 23.08.2018 through its counsel demanding the corporate debtor to release the outstanding payment of AED 381652 (USD 103850) within fifteen days from the date of above notice along with interest @ 18% per annum for the period the above amount remained unpaid since the date of termination of Moll. 11. It is further stated by the applicant that, in response to the demand notice, the corporate debtor replied through its counsel vide letter dated 10.09.2018. That, there is no denial of payment due by the corporate debtor to the applicant and also no denial to taking back the goods, but, as a matter of fact, neither the payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and for the commencing from the date of signing this agreement and from 15th of January, 2015 and terminating on 14th of January, 2016 and to be renewed upon acceptance of the two parties. This agreement will be carried forward for further period of one (1) year each unless mutually agreed otherwise. 18. From the above it is evident that there is no such clause that the corporate debtor is liable to pay/compensate for the loss caused to the petitioner. Moreover, if at all there was any loss to the petitioner out of the MOU, then why the petitioner waited so long i.e. from 14.01.2016, till filing of the application. Admittedly, the instant dispute arises out of breach of contract i.e. MOU dated 15.01.2015 as alleged by the petitioner. 19. Admittedly, the petitioner used to purchase the material by paying an advance amount for the goods he is supposed to receive from the corporate debtor and, thereafter, reimbursement was made as per the MOU. For ready reference, clause No. 7 of the MOU is reproduced here below:- Clause 7 - Marketing: The marketing costs actually incurred by VV Sons (consumer promotion, primary displays, secondary display, listing cost and rebates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MOU which has been entered between the parties only reflects the arrangement for selling of the goods by the applicant and certain percentages are fixed as reflected from Clause 7 of the MOU dated 15.01.2015 under the head Marketing (Page 61-64) which is self-explanatory as already discussed in forgoing paragraphs. Under the circumstances, there is a breach of the said MOU which the petitioner entered with the respondent for getting certain benefit on the sale of the products. 23. Now on termination of the MOU, though the respondent consented to take back the goods from the petitioner, on his failure to do so, the applicant has disposed of the goods as the same are/were going to cross the expiry date(s), that too at a lower price and thus for the said variation/difference in prices, as the same caused loss to the applicant, the instant application is filed towards the claim in relation to the differences in price which the petitioner was required to pay. This itself shows that there exists no relation of operational creditor and corporate debtor, rather it is arising out of breach of MOU and loss incurred therein by the applicant out of breach of the MOU entered into between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eurship. It would also improve ease of doing business, and facilitate more investments leading to higher economic growth and development. 28. Even though, there might be a claim legally enforceable by the petitioner as against the respondent, however, such a claim in view of the limited scope cannot be enforced under the provisions of IBC, 2016 and for which the petitioner is required to have recourse before any other competent forum. 29. Under the facts and circumstances, as discussed above in sequence, taking into consideration the legal proposition, the Adjudicating Authority is not convinced that there exist between the Petitioner and the Respondent a relationship of an Operational Creditor and Corporate Debtor and that there is an Operational Debt of which a default has been committed and/or occurred. Hence, this Adjudicating Authority is constrained to dismiss this petition without cost. However, this will not stand in the way of the Petitioner invoking the appropriate forum seeking to enforce its claim as against the Respondent, as this petition has been dismissed on the issue of maintainability taking into consideration of the provision of IB Code, 2016. - - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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