TMI Blog2021 (7) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... its liability or obligation in respect of such outstanding claim . In the present case, the MGR was a fixed payment due and payable by the Corporate Debtor to the Operational Creditor under the Agreement and the non-payment by the Corporate Debtor, for using the Trademark which is the Licensed Product of the Operational Creditor, amounted to an operational debt under the IBC. It has been observed that time and again the Corporate Debtor has admitted its liability be it by way of making a part payment (first and second quarter payment) or by submitting before the Adjudicating Authority that admittedly the claim of the Applicant arises out of failure to pay the Minimum Guaranteed Royalties and were not paid on the condition that the Operational Creditor under the obligation to promote the brand for the Corporate Debtor therefore, it is a clear admission of default and this Adjudicating Authority does not have to indulge in the details or the terms of the Agreement. The Corporate Debtor did not raise any dispute in terms of Section 8(2)(a) read with Section 5(6) of the IBC, either with regard to the (a) existence of the amount of debt, (b) the quality of goods or serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products being (a) Deodorants, (b) EDT and (c) Hair gels; and to use, in any-other permitted manner, the said trademark on or in association with the licensed products manufactured/sold/distributed/advertised by the Corporate Debtor, for the term of the Licensing Agreement from 03.03.2014 to 31.12.2016. In consideration of having exclusive licensing rights under the licensing Agreement, the Corporate Debtor agreed to pay to the Operational Creditor, as compensation, the Minimum Guaranteed Royalties as stated under Clause 4 of the Licensing Agreement, towards the use of the Trademark. 5. Further it is stated by the Applicant that it was agreed under the Licensing Agreement (Clause 4) that the Corporate Debtor shall pay all the Minimum Guaranteed Royalties to the Operational Creditor, becoming due and payable for each calendar quarter, no later than 15 (fifteen) days following the last day of such calendar quarter, failing which, the Corporate Debtor will be liable to pay to the Operational Creditor, late charge interest at the contractual rate of 1.5% per month or the maximum rate permitted by law, whichever is less, on such outstanding royalty amounts. 6. Thereafter the Appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding royalty by 13.06.2015 and on non compliance the Applicant would terminate the Licensing Agreement for breach of contract. The Corporate Debtor in response to the above email agreed to transfer ₹ 5,00,000 on 13.06.2015 by RTGS and further agreed to give the Applicant cheques for the remaining balance amount. The said amount of ₹ 5,00,000/- was credited in the Applicant's account as on 16.05.2015 however, no cheques were issued for the remaining balance amount. The copy of bank statement, reflecting the said amount being credited in the account of the applicant has been annexed. 9. On various reminders and request made by the Applicant, the Corporate Debtor on 10.09.2015 issued a post dated cheque bearing number 589171 for ₹ 10,00,000/- which was due for presentation on or after 15.09.2015. The said cheque was presented by the Applicant at the bank on 16.09.2015 which got dishonoured on the account of payment being stopped. The Applicant again issued a show cause to the Corporate Debtor vide email on 29.09.2015 and in response to the same the Corporate Debtor vide email dated 01.10.2015 once again undertook to make the payment. On 20.10.2015 the Applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the applicant. That applicant was supposed to make a press release after receiving the payment from the corporate debtor but they have miserably failed to initiate any press release. The corporate debtor has produced an e-mailed dated 25.05.2018 which was sent by Mr. Pankaj (Chief visionary and brand strategist at Invision brand consulting) from his e-mail informing to the corporate debtor that once the payment is received by him he would initiate the press release and releasing of broadcast for the promotion of brand. 15. Further the Corporate Debtor submits in the reply that the instant Application filed by the Applicant herein is about the dispute between two parties which ought to be adjudicated by a Civil Court, on account of various triable issues between the parties and the instant Application is an attempt on the part of the Applicant to use the instant forum for the purposes of civil recovery, which is against the very objective of the Code. That the Applicant has failed to show or annex a single document wherein the Corporate Debtor had promised an assured amount as claimed by the Corporate Debtor. 16. The Applicant filed its rejoinder dated 20.11.2018 and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounts. Copies of the sad emails dated 11.06.2015 and 13.06.2015 are already on record as part of the main application. 18. Further it is submitted by the Applicant that the contention raised by the Corporate Debtor that present dispute between the parties ought to be adjudicated by a Civil Court is wrong and misleading. It is submitted that there exists no dispute between the parties as to the outstanding amount to be paid by the Corporate Debtor to the Operational Creditor since the Corporate Debtor had time and again unconditionally admitted its liability and obligation to pay the outstanding royalty amounts to the Operational Creditor. 19. Both the parties were heard and the contention on which the parties argued at length was, whether the Guaranteed Minimum Royalties to be paid quarterly by the Corporate Debtor as a consideration to grant of license and right to use the Trademark of the Operational Creditor on its Licensed Product (for manufacture and sale purpose) is an Operational Debt or not? The order was reserved with a direction to the parties to file their written submissions. 20. The Corporate Debtor contends in the written submission that the it is an admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r supplied by the Corporate Debtor, cannot, in the context of Code, be considered as an operational debt, even though. It is a claim amounting to debt. Further the Hon'ble NCLAT held an operational debt is essentially a claim in respect of (a) Provision of goods, (b) Provision of services, including employment or (c) a debt arising under any statute band payable to the Government/local authority. 22. The Operational Creditor submits in the written submission that the Corporate Debtor has made part payment for the invoices raised. The Operational Creditor has attached the certificate issued by Yes Bank dated 30.08.2018 along with financial statements reflecting the said payment being received. 23. The Operational Creditor submits that the terms goods and services are not defined under IBC and for such reasons these terms should be given a meaning that are ordinarily understood. The Operational Creditor has permitted the (a) use, manufacture, have manufactured, sell, distribute and advertise the Licensed Products and also (b) use the intellectual property right i.e. the trademark (Kolkata Knight Riders brand logo or such other trademark as the Applicant may designate, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermitting the Brewer to use UBL's intellectual property rights. Therefore, by virtue of clause 5(c) of Schedule II of the CGST Act, the said activity amounts to supply of services and Vikas Sales Corporation vs. Commissioner of Commercial Taxes AIR 1996 SC 2082 wherein the Hon'ble Apex court observed that even incorporeal rights like trademarks, copyrights, patents and rights in personam capable of transfer or transmission are included in the ambit of goods . 26. The Operational Creditor submits that the aforesaid judgments on which the Corporate Debtor has place reliance are not applicable in the facts of the instant case. Insofar as the judgment passed by Hon'ble Tribunal in Jindal Steel and power limited VS. DCM international Limited IB No. 200/ND/2017 is concerned, the issue in the said judgment was with regard to the default in non-refund of security deposit amount given by the Operational Creditor (lessee) to the Corporate Debtor (lessor). It is in that context, this Hon'ble Tribunal held in Jindal Steel (supra) that, 9. ...such claim cannot be considered as an operational debt especially when the Corporate Debtor is the lessor' of the property wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and the material available on record the Adjudicating Authority is of the view that for a claim to fall within the definition of 'operational debt', the operational creditor must establish that it has a right to payment in respect of the provision of goods or services and also that Corporate Debtor has committed a default towards its liability or obligation in respect of such outstanding claim . We would also like to place our reliance on the judgment Broadcast Audience Research Council V. Mi Marathi Media Limited [C.P.I. 688/IBC/NCLT/MB/MAH/2018] and We hereby observe that in the present case, the MGR was a fixed payment due and payable by the Corporate Debtor to the Operational Creditor under the Agreement and the non-payment by the Corporate Debtor, for using the Trademark which is the Licensed Product of the Operational Creditor, amounted to an operational debt under the IBC. It has been observed that time and again the Corporate Debtor has admitted its liability be it by way of making a part payment (first and second quarter payment) or by submitting before the Adjudicating Authority that admittedly the claim of the Applicant arises out of failure to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property by an owner or lessor where such property is occupied by or in the possession of the Respondent. (2) The supply of essential goods or services to the Respondent as may be specified shall not be terminated or suspended or interrupted during moratorium period. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process. 33. The Applicant shall deposit a sum of ₹ 2 lakhs to enable the IRP to meet the immediate expenses. The same shall be accounted for by the IRP and shall be reimbursed to the Applicant to be recovered as costs of the CIRP. 34. A copy of the order shall be communicated to the Applicant and the Corporate Debtor by the Registry. The said order shall be communicated to the IRP above named and intimate of the said appointment by the Registry. Applicant is also directed to provide a copy of the complete paper book with copy of this order to the IRP. In addition, a copy of said order shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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