TMI Blog2020 (1) TMI 1263X X X X Extracts X X X X X X X X Extracts X X X X ..... are of the considered view the application is not barred by limitation rather under Section 18 the limitation shall run from the date of acknowledgment i.e. 19.04.2018 - thus, the present application is not barred by limitation and it is acknowledgment under Section 18 of the Limitation Act so these two points are discussed in affirmative. Whether the dispute regarding quantum of debt amounts to a pre-existing dispute? - HELD THAT:- The dispute must exist before the receipt of demand notice or invoice. In the present case, there is a dispute regarding quantum of the amount due to be paid by the Corporate Debtor - merely disputing the amount does not fall within the ambit of a pre-existing dispute under Section 9 of the Code. Whether brokerage services come under Operational Debt under Section 5(21) of the Code? - HELD THAT:- In the present case, the Bills raised by the Operational Creditor are in respect of the services provided to the Corporate Debtor. Hence, brokerage services would fall within the definition of Operational Debt under the Code. Whether the proof of work relationship i.e. a written or oral agreement has been attached in the petition? - HELD THAT:- I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor, which does not lie in accordance with the said bills(s). Thereafter, the Operational Creditor had several meetings with the Corporate Debtor and after reconciling the accounts the Operational Creditor vide email dated 21.05.2018 again shared service charges towards the sale of units in the project. Subsequently, the Corporate Debtor again requested for a complete reconciled statement and therefore the Operational Creditor vide e-mail dated 10.09.2018 shared a Reconciliation Comparative Statement with the Corporate Debtor. On account of Corporate Debtor's complete disregard to the debt/bills, the Operational Creditor vide email dated 08.04.2019 sent the final Statement of Account to Corporate Debtor and requested for clearing the outstanding dues. Despite sharing the said statement, the Corporate Debtor has grossly failed to clear the outstanding debts. The Corporate Debtor has failed to clear the dues pertaining to the brokerage/commission amounting to ₹ 85,33,967.00 and ₹ 15,56,561.00 towards the tax liability in the form of Service Tax. The total amount/debt liable to be paid by the Corporate Debtor is ₹ 1,00,90,528.00. 4. The Operational Credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elationship i.e. a written or oral agreement has been attached in the petition? 8. Since issue i. and ii. are related with each other so we would like to discuss these two issues together for the sake of convenience. Before considering the submissions made on behalf of the parties. We would like to refer the decisions quoted below:- The Hon'ble Supreme Court in BK Educational Services Private Limited v. Parag Gupta and Associates Civil Appeal No. 23988 of 2017 analysed the limitation period with respect to applications under Section 7 and Section 9 of the Insolvency and Bankruptcy Code, 2016 and observed: 27. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. The right to sue , therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear, then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. Stated generally, courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly without intending to admit the existence of jural relationship such intention could be fastened on the maker of the statement by an involved or farfetched process of reasoning. In construing words used in the statements made in writing on which a plea of acknowledgement rests oral evidence has been expressly excluded but surrounding circumstances can always be considered.... The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand notice of such unpaid operational debt or deliver the copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such dispute (Section 8(2)(a)}. What is important is that the existence of the dispute and/or the suit or arbitration proceeding must be pre-existing - i.e. it must exist before the receipt of the demand notice or invoice, as the case may be......... 34. Therefore, the adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an operational debt as defined exceeding ₹ 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 5(21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor-it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form, and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise. 12. From the aforesaid finding of the Hon'ble Supreme Court, it is clear that the claim even if disputed, if default is more than ₹ 1 lakh, the Appellant will initiate the proceedings against the 'Corporate Debtor'. Submission is made on behalf of the Appellant that the amount disputed by the 'Corporate Debtor' amounts to existence of dispute but such submission cannot be accepted. It does not come within the meaning of existence of dispute. Dispute raised regarding quantum of amount in the absence of any suit or arbitration or other evidence, it cannot be said to be pre-existing dispute. From the aforesaid decisions, it is clear that the dispute must exist before the receipt of demand notice or invoice. In the present case, there is a dispute regarding quantum of the amount due to be paid by the Corporate Debtor. Hence, we are of the view that, merely disputing the amount does not fall within the ambit of a pre-existing dispute under Section 9 of the Code. 10. Now we shall discuss issue iv. At this juncture, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money. However the framer of the Code has not included in the expression 'Operation Debt' as any debt other than the 'Financial Debt'. It is thus confined to aforesaid four categories like goods, services, employment and Government dues. In the present case the debt has not arise out of the provisions of goods or services. The debt has also not arisen out of Government or local body. The refund sought to be recovered is necessarily associated with delivery of the possession in immovable property which has been delayed. In Swiss Ribbons Pvt. Ltd. v. Union of India- Writ Petition (Civil) No. 99 of 2018 , the Hon'ble Supreme Court analysed the meaning of services with respect to Operational Debt and observed:- 23. A perusal of the definition of --financial creditor and --financial debt makes it clear that a financial debt is a debt together with interest, if any, which is disbursed against the consideration for time value of money. It may further be money that is borrowed or raised in any of the manners prescribed in Section 5(8) or otherwise, as Section 5(8) is an inclusive definition. On the other hand, an --operational debt would include a claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. In the present case, the Bills raised by the Operational Creditor are in respect of the services provided to the Corporate Debtor. Hence, brokerage services would fall within the definition of Operational Debt under the Code. 11. Now we shall discuss issue v. It was an admitted fact that there was a work relation between the Operational Creditor and the Corporate Debtor whereby the Operational Creditor provided brokerage services to the Corporate Debtor and payments were remitted to the Operational Creditor for the same. The Corporate Debtor had not disputed or denied the fact that there was a work relation between the parties. Further, the Operational Creditor has annexed Brokerage Bills and the Corporate Debtor has annexed Details of cancellations and adjustments by the customers as well as copies of provisional allotment letters of units and the proof of payment of refund amount. 12. It is seen that the amount in default in excess of ₹ 1,00,000/- being the minimum threshold limit fixed under IBC, 2016. Considering the circumstances this Adjudicating Authority is inclined to admit this petition and initiate CIRP of the Respondent. Accordingly, this petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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