TMI Blog2022 (6) TMI 1332X X X X Extracts X X X X X X X X Extracts X X X X ..... nt case, the Petitioner at the first instance, issued Annexure-8 Demand Notice dated 04.09.2020 for which the Respondent/Corporate Debtor given a reply vide Annexure-A9 dated 03.10.2020, wherein categorically mentioned about the various disputes pending between the parties. Admittedly, the Petitioner having realized that Annexure-A8 demand notice dated 04.09.2020 was not in accordance with the facts and transactions occurred between the parties, issued a fresh Annexure-A10 notice dated 05.03.2021 again under Section 8 of the IBC, 2016 - the date of the valid Demand notice issued by the Petitioner was on 05.03.2021 (Annexure-A10) and the Respondent/Corporate Debtor is able to show that there were disputes between the parties vide Annexure-A6 dated 27.03.2020 i.e., even prior to the issuance of the discarded demand notice dated 04.09.2020 and also from the reply dated 03.10.2020 of the Respondent/Corporate Debtor which was much prior to the date of issuance of the demand notice dated 05.03.2021. The Respondent/Corporate Debtor able to show the existence of the dispute between the parties prior to the relevant date i.e., prior to 05.03.2021 - Petition dismissed. - C.P. (IB) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor raised 12 invoices on the Corporate Debtor between 04.02.2019 to 10.02.2020 and also raised invoices for the work done between 16.03.2020 and 06.08.2020. The aggregate principal sum of this amount is Rs. 2,36,59,289/-. However, on account of mutual set offs, deductions and statutory restriction in Section 10A of the IBC, 2016 a principle sum of Rs. 1,75,73,690/- is due from the Corporate Debtor to the Operational Creditor. 6. The Corporate Debtor acknowledged its debt vide email communication on 19.03.2020 and 27.03.2020. However, no payment was forthcoming. The Operational Creditor was constrained in the first instance, to issue a legal notice dated 13.08.2020 to the Corporate Debtor demanding payment for a principal sum Rs. 2,36,59,289/- for services rendered by the Operational Creditor and Rs. 44,73,424/- for services rendered by Fourthlion Technologies Private limited. 7. Due to lack of response, the Operational Creditor issued a Demand notice on 4th September 2020 demanding payment for the unpaid operational debt, being a principal sum of Rs. 2,36,59,289/-. By way of response dated 3.10.2020, the Corporate Debtor disputed the amount on the grounds that since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refused to accept the Demand notice dated 05.03.2021; x. Print out of email dated 17.03.2021 in which counsel of the Operational Creditor addressed to the Group CFO of the Corporate Debtor; xi. Print Out of the email dated 22.03.2021 issued by the Counsel of the Corporate Debtor and of the response thereto issued on that very date by the Counsel of the Operational Creditor; xii. True copy of the notice of dispute dated 26.03.2021 issued on behalf of the corporate debtor. xiii. True copy of the rejoinder dated 03.04.2021 issued on behalf of the Operational Creditor; xiv. Printout of emails issued by the senior functionaries of the Corporate Debtor including its CEO, appreciating the services provided by the Operational Creditor and screen shot demonstrating that the CCD mobile application was rated very high in the Google play store; xv. Master Data of the Corporate Debtor depicting its financial status a/w Balance Sheet, P L Account and Auditor's report of the Corporate Debtor. 10. The Corporate Debtor/Respondent while opposing the Company Petition has filed the reply/objections to the petition contending as follows: i. It is stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded up till 31.03.2018 and the assignment of Fourthlion's right, interest and liabilities under the Agreement in favour of its i.e., the Petitioner with effect from October 2016 was duly recorded and the total development cost was revised to INR 14,00,00,000/- of which INR 10,50,000/- was payable to both the Petitioner and Fourthlion jointly, and the balance of INR 3,50,00,000/- was payable to other entities engaged in providing ancillary services. v. Further, for the purposes of performing the work as detailed in the agreements the Respondent also provided/delivered/handed over to the Petitioner confidential and sensitive information pertaining to a) Customer database including, without limitation, all information pertaining to and/or collected, in any manner from Users of the CCD Mobile App or the Respondent's existing customers; b) Proposed and present businesses of the Respondent; c) Strategies and ideas with respect to marketing and business development; d) Financial statements, published and unpublished, including budgets, reports etc., e) Marketing plans, forecasts, f) Price Lists, quotes; g) Software programs; h) Technica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idering the Petitioner's failure to develop and provide the CCD Mobile App in terms of the Agreement and the technological advances that has taken place since, 2016, when the services of the Petitioner and Fourthlion were engaged to October 2018, the parties mutually decided to pivot from the CCD Mobile App to a Progressive Web App i.e., an application software delivered through the web, built using common web technologies including HTML, CSS and Javascript. xi. Further stated that in terms, of the Addendum, the term of the Agreement was extended upto 31.03.2019. Thereafter, until termination of the agreements, the parties continued the arrangement under the terms and conditions of the Agreement on an ad-hoc basis. In light of the Petitioner's refusal to perform any services with respect to the development of the CCD Mobile App with effect from September 2019, the Respondent has only made payments in respect of maintenance and hosting of the CCD Mobile App, to which the Petitioner has not objected. xii. The Respondent has till date, paid approximately INR 22,32,51,791/- to the Petitioner and Fourthlion for development of the CCD Mobile App, of which approximately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e email dated 27.03.2020 it becomes clear that the Respondent has merely stated that there was a reconciliation conducted by both the parties in the context of negotiation and disputes. This is exactly the reason why in the email dated 27.03.2020, the Respondent stated that the figures contained therein are under negotiation/dispute. In this light the email dated 19.03.2020 and 27.03.2020 cannot be relied on to claim, especially since the last email in the trail expressly states that the figures, although reconciled are disputed. Unless put through the rigours of a civil trial, which is already afoot between the parties, the veracity or evidentiary value of the said emails cannot be adjudicated upon in summary proceedings under the IBC. xvii. It is further stated that aggrieved by the loss accrued owing to rendition of deficient services and illegal retention of source code and confidential information, the Respondent was constrained to file Com O.S. 229/2021 on 16.03.2021 against the Petitioner and Fourthlion, presently pending before the Hon'ble Commercial Court, Bengaluru (CCH-88) seeking certain prayers. Along with the plaint, the Respondent filed two interlocutory app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of both the parties. xx. It is manifest from the above, the Petitioner is taking undue advantage of its own shortcomings which resulted in the termination of the Agreements and is now attempting to extort money from the Respondent by way of this application. The Petitioner's intention to ensure that the source code that admittedly belongs to the CD is not returned duly. In the light of the above, the dispute truly exists in fact and is not spurious, hypothetical or illusory. The existence of a dispute is not only a plausible contention, and which requires further investigation, but is also one that is buttressed by the Petitioner's own admissions in its written statement and order of the Ld. Commercial court granting interim reliefs in terms of I.A. No. 1 . As such the application is liable to be rejected. xxi. It is stated that the suspension of initiation of CIRP has been in operation since 25.03.2020 and was extended for the period of 3 months from 25.09.2020 vide Notification bearing S.O. 3265 (E), dated 24.09.2020 issued by the MCA and thereafter for a further period of three months from 25.12.2020 vide Notification No. S.O. 4638(E), dated 22.12.2020 issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the amount due and when it is denied by Plaintiff by way of rejoinder or contention raised in the plain, then automatically, an issue would arise which requires consideration of the court to decide the liability of the Plaintiff by pay the amount. I find considerable force in the argument canvassed by learned counsel for the Plaintiff for the reason that when it is the specific case of the Plaintiff that the Defendant as have not rendered proper service regarding development of software and fact that when there is an admission of withholding of data belonging to the Plaintiff for payment of money due to the defendants, then issue No. 6 would be more important and same cannot be deleted. How, it prejudices the case of the defendants before NCLT is not stated. 10. ... The second decision is in the case of M. Bayanna vs. K Gudiyappa and another reported in ILR 2000 Kar 3008, which directly deals with framing of issues and therefore, when we read the pleading of the both the parties, then issue No. 6 would necessarily arise. .... 12. ...So, when we read the above decisions along with the pleading of the parties, this court has rightly framed issue No. 6 and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for any defaults on the Operational Creditor's part. It is clear from the mail that the Corporate Debtor while being highly appreciative of the services was compelled to discontinue the arrangement because of its own constraints in particular shortage of fund's at their end. iii. It is further stated that the Corporate Debtor conveniently filed a suit before the Commercial Court, Bengaluru Com. OS No. 229/2021 on 16.03.2021 a mere 11 days after the demand notice was issued by the Operational Creditor u/s. 9 of the IBC on 5th March 2021. Infact, the filing of the suit pre-dates even the Corporate Debtor's response to the Demand notice. It is also stated that at no stage prior to the filing of the suit had the Corporate Debtor demanded repayment of the amount that it now claims are payable from the Operational Creditor. It is therefore denied that the amount rightfully claimed by the Operational Creditor as an operation debt is under pre-existing dispute as alleged by the Corporate Debtor. iv. It is further submitted that the Corporate Debtor mischievously filed an application under Order XXXIX Rule 1 2 of the Code of Civil Procedure in the suit and obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is an operational debt as defined exceeding Rs. 1 Lakh? (See Section 4 of the Act) (ii) Whether the 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 a dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in relation to such dispute? If any one of the aforesaid conditions is lacking, the application would have to be rejected. Apart from the above, the Adjudicating Authority must follow the mandate of Section 9, as outlined above, and in particular the mandate of Section 9(5) of the Act, and admit or reject the application as the case may be, depending upon the factors mentioned in Section 9(5) of the Act. 16. The instant C.P. has been filed on 09.04.2021. The agreement for the Digital Application Development Services executed by the parties was on 05.05.2016 and the Addendum thereof was on 04.06.2018. The Annexure-A2, Statement of Accounts reflecting the amounts in default was consisting of various Invoices issued during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting on October 4, 2018, to review and suggest ways of improving the deficiencies in your client's services. The minutes of this meeting evidence that there was a dispute regarding the quality of the services provided and your client had agreed to aggressively pursue a Progressively Web App to achieve the goals set by our client. However, your client has failed to do so, even till date. Copy of the said Minutes is annexed herewith as Annexure-C. 10. On several occasions, your client had agreed that its services were deficient, including the security loopholes which caused losses to our client. Your client has also refunded amounts to our client in this regard. Evidence of the same is annexed herewith as Annexure D. The effect of such deficiency was that the fee to be paid to your client was also reduced from September 2019 onwards, which your client readily acceded to. 11. In June 2020, our client decided to terminate the Services Agreement between your client and our client, due to repeated breaches and deficient quality of services and despite sufficient time being provided to your client to cure its breaches. Copy of the email relating to termination is annexed he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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