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TMI Blog2019 (12) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows: (1) Mr. Rahul Wadhwa (hereinafter referred to as 'Petitioner/Operational Creditor') is a resident of PIP Flat No. 112, Princeton Estate, DLF Phase-5, Gurgaon and he is inter alia engaged in the business of providing marketing and promotional services including of alcoholic beverages and liquor products. (2) M/s. Amrut Distilleries Private Limited (hereinafter referred to as 'Respondent/Corporate Debtor') is a Private Limited Company incorporated on 14.09.1972, under the Companies Act, 1956 with CIN: U51101KA1972PTC002246 and having its Registered Office situated at 7th Floor, JNR City Centre No: 30, Raja Ram Mohan Roy Road, Sampangirama Nagar, Bangalore-560027. Its Nominal Share Capital is Rs. 10,00,00,000/- (Rupees Ten Crores Only) and the Paid-up Capital is Rs. 6,20,00,000/- (Rupees One Crore Two Lakh Fifty Thousand and Ten Only). The Company is engaged in the business of manufacturing and processing of alcoholic beverages and liquor products. (3) It is stated that the Corporate Debtor and the Operational Creditor entered into an Agreement on 14.07.2015, under which the Operational Creditor was appointed as the marketing agent and promoter of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses incurred and the commission due and payable under the Agreement towards the sale effected. (6) Accordingly, the Operational Creditor has made investments of Rs. 30,03,874/- during the period 2015-16, Rs. 84,94,573/- during 2016-17, Rs. 56,57,803/- during 2017-18 and Rs. 3,60,000/- during 2018-19 towards sale commissioning, loading/unloading, office expense, trade scheme, special scheme, etc. (7) It is stated that, as per the Agreement, the Operational Creditor was also required to collect the dues under the invoices from the buyers and send the proceeds in respect thereof to the Corporate Debtor. The Operational Creditor performed the aforesaid obligation dutifully and remitted the aforesaid amounts to the Corporate Debtor. The Operational Creditor informed the Corporate Debtor regarding the expenses incurred in the process of performing the Agreement for the period 2015-16, 2016-17, 2017-18 i.e. towards marketing and sale of products and collection of dues. The Operational Creditor further informed the Corporate Debtor regarding the amount which became due and payable on account of commission under Clause 4 of the Agreement. In relation to the above the Operational Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bottles Debit Note 14 62,520/- 2. Stock Sampling FOC Bottles Hotel Leela Debit Note 13 32,000/- 3. Salary for Accounts for the year 2017-18 April 17 to March 18 Debit Note 12 1,20,000/- 4. Special Discount Commission for the year 2017-18 Debit Note 11 2,19,066/- 5. Stock Lifting for Personal used taken by Company 2017-18 24,200/- 6. Discount on Maqintosh Super 375 ML Debit Note 9 5,25,906/- 7. Godown Rent for the year of 2017-18 Debit Note 8 6,00,000/- 8. Agency & Freight Charges for the year of 2017-18 Debit Note 7 1,19,330/- 9. Misc. Expense for the year of 2017-18 Debit Note 6 3,20,000/- 10. Branding Spirit Magazine Debit Note 5 23,856/- 11. Label Registration Fees Excise Fees Debit Note 4 3,45,000/- 12. License Fees Investment Excise Debit Note 3 30,00,000/- 13. Reimbursement pending for the year 2016-17 Debit Note 2 1,87,725/- 14. Stock Lifting for Personal use 2016-17 D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor. (11) The Corporate Debtor in the reply, clearly as an afterthought has averred that it shall institutes civil and criminal proceedings against the Operational Creditor, which itself establishes that no such proceeding was pending, prior to the issuance of Demand Notice for any alleged act/omission of the Operational Creditor. Further, bald averments have been made in the reply that dues have been reimbursed in the bank account of the Operational Creditor, however no documentary evidence has been placed on record by the Corporate Debtor. Therefore, the reply in question is clearly an attempt to create a dispute, which otherwise neither exists nor is supported by any evidence. He has relied upon the judgment of Hon'ble Supreme Court in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, 2018 (1) SCC 533. The contents of the reply issued by the Corporate Debtor do not satisfy the tests laid down by the Hon'ble Supreme Court. Further, it is contended dues in question arise for provision of goods and services by the Operational Creditor, and thus, the same qualifies as an Operational Debt for the purposes of Code. The Corporate Debtor has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings before the Adjudicating Authority. Under the Limitation Act, Article 137 is attracted to applications filed u/s 9 of the Code. Article 137 of the Limitation Act, period of limitation is 3 years from the date on which the right to apply accrues. The Respondent has relied upon the judgment of Hon'ble Supreme Court in the case of BK Educational Services Private Limited v. Parag Gupta (2018 SCC OnLine SC 1921). (4) In the instant case, a substantial part of the claim/costs incurred accrued in the year 2015 and the present Insolvency Petition was filed in January 2019. Accordingly, a substantial part of the claim has to be prima facie dismissed as barred by limitation. Further, in relation to the claims arising in the year 2016-17, the claim is seriously in dispute. Pursuant to Clause 3 of the Marketing and Promoter Agency Agreement, the Petitioner, as a marketing agent and promoter, was obliged to perform certain duties. Some of the duties and obligations of the Petitioner are listed below: i. Pay for and obtain all the requisite licenses and registrations required for the Respondent to sell its products in Haryana. Pay also the fees every excise year in Haryana (Clause 3(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contended that the Petitioner was also authorized by the Respondent to represent the Respondent and invoice retailers and wholesalers on behalf of the Respondent. It is contended that for the year 2015-16, the Petitioner requested for 460 cases. The Respondent supplied the requested amount of cases. Upon supplying the cases, the Respondent invoiced for the supply of the cases at the agreed rates. The Petitioner managed to sell all the cases it requested for in the year 2015-16. Upon selling all the cases, as per the terms of the Marketing and Promoter Agency Agreement, the Petitioner collected all the dues from various retailers and distributors. After collecting the money, the Petitioner adjusted the same with the supposed fees and expenses due and payable to it. However, after all the reconciliation, the Petitioner was due to pay the Respondent an amount of Rs. 25,55,828/- (Rupees Twenty Five Lakh Fifty Five Thousand Eight Hundred and Twenty Eight Only). (7) It is further contended that the Petitioner collected the money on behalf of the Respondent in the year 2015-16, and adjusted it with the expenses incurred and after such adjustment, the Petitioner had to make additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-18. The Respondent did not supply any fresh stock for the year 2017-18 and the Petitioner managed to sell only some of the remaining stock left over from the previous year. The Petitioner could only sell 310 cases out of the remaining 1570 cases. Accordingly, 1260 cases of stock were still left unsold. The Petitioner applied for return of the stock and managed to retrieve a portion of the unsold stock. However, the Respondent was forced to handover/surrender some of the cases of stock to the excise department, thereby causing financial loss to the Respondent. (11) It is alleged that due to abject failure of the Petitioner, the Respondent was forced to withdraw its products from the lucrative Haryana market. The Petitioner has not produced any proof in his Petition that Respondent has received amounts due on sale of its products. The only proof provided by the Petitioner i.e. the cheques handed over to the Respondent, have been dishonoured and appropriate proceedings are pending. Further, the cheques collected by the Petitioner are only a small proportion of the total proceeds. Consequently, the Respondent has not received dues to it against sales proceeds. As per the terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once for all. He has insisted that the facts and circumstances establishes that there is pre-existing dispute for the belated claim made on frivolous grounds. He therefore, has urged the Adjudicating Authority to dismiss the petition. 7. Though the case was filed in the Tribunal on 3rd January 2019 and started listing it before the Tribunal starting from 23.01.2019, the case was adjourned on several occasions at the request of parties, on ground or the other and to also afford opportunity for the parties to explore the possibility of settlement of the issue, on finding that there are several legal impediments/lacunas in the Petition to initiate CIRP. However, the parties to settle the issue forcing the Tribunal to decide the case as per merits. 8. In the first instance, it is necessary to examine whether the Agreement dated 14th July Year Nil (marked as Page 54 of Petition) which is basis for the claim in the petition, is legally a valid Agreement so to enforce it in a court of law. In order to have any legal force to be relied upon in a court of law, Agreement/Contract should be properly executed with date, month and year of execution. Moreover, the Agreement contains several t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reply by inter alia contending as follows: (1) The Agreement in question was for fixed period of 2015-16 and 2016-17 and the amounts due as per Agreement were duly reimbursed into the Account of Petitioner under his acknowledgement. And subsequent to period of 2016-17, he was not having authority to deposit any amount and then claim on it. In fact, the Respondent is entitled for an amount of Rs. 82,08,389.88/- for failure to achieve targets fixed through email dated 28.03.2017 wherein targets were reduced from 26,000 cases to 20,000 cases during the meeting held with him and his partners Gagan Wines and others. And thus they are contemplating to initiate Civil as well as Criminal Proceedings. (2) The Petitioner has suppressed material information to disclose in the instant Petition and thus the Petitioner is liable to be taken up action under Sections 65 & 75 of the Code. (3) They have initiated separate Criminal proceedings against wine traders whom the Respondent has supplied various qualities and quantities of ADPL products on the basis of instructions of Petitioner. Therefore, they have denied the alleged outstanding amount as due and payable. 10. As stated supra, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of judgement, it is stated that Adjudicating Authority, while examining an application filed under Section 9 of Code, will have to determine: i. Whether there is an 'operational debt' as defined exceeding Rs. 1 Lakh? ii. Whether documentary evidence furnished with the application shows that the aforesaid debt is due and payable and has not yet been paid? iii. Whether there is existence of dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of demand notice of the unpaid operational debt in relation to such dispute? If any one of aforesaid conditions is lacking, the application would have to be rejected. 13. For the aforesaid reasons and circumstances, and the law on the issue, we are of the considered opinion that the Petitioner has failed to make out any case so as to initiate CIRP against the Corporate Debtor and thus the Petition is liable to be dismissed. 14. In the result, C.P. (IB) No. 36/BB/2019 is hereby dismissed. However, this order will not preclude the Petitioner from invoking any other remedy, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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