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TMI Blog2023 (3) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... Pavuluri, Advocate JUDGMENT ( Virtual Mode ) [ Per ; Ms. Shreesha Merla , Member ( Technical ) ] : 1. Challenge in these `Appeals' viz. Company Appeal (AT) (CH) (Ins.) Nos.158 & 170/2022 is to the `Impugned Orders' dated 21.03.2022 and 05.05.2022 passed by the `Learned Adjudicating Authority', (National Company Law Tribunal, Amravati Bench, Hyderabad) in C.P. (IB) No.9/9/AMR/2022 and in IA (IBC) No.33/2022 in C.P. (IB) No.9/9/AMR/2022 respectively. Since both these `Appeals' deal with common issues or fact in law, they are being disposed of by this `Common Order'. Company Appeal (AT) (CH) (Ins.) No. 158/2022: 2. By the `Impugned Order' dated 21.03.2022, the `Adjudicating Authority' has admitted the Application filed by the Respondent/`Operational Creditor' under Section 9 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as `The Code'). While admitting the Application, the `Adjudicating Authority' has observed as follows: "2. ... iii. The revenue share of the Operational Creditor is payable to him from out of the advances received by the Corporate Debtor pursuant to the sale of residential units, the Operational Creditor started tracking the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 022 was placed on record, the same conclusion, as was drawn in respect of the reply notice dated 04.10.2021, could have been drawn in respect of the said notice, since, no document in support of the proof of the contents of the notice dated 06.01.2022 also came forth. .................................................................. 20. From the conspectus of the judgements and the relevant provisions of law, it can be understood that in an application seeking to set aside the order of ex-parte, the Applicant needs to either prove that the service of notice is not effected on him or that he was prevented by sufficient cause not to appear before this Tribunal in spite of such service. In this case the pleas taken in the application are none of the above two. The plea taken is that the notice was refused as the Office was not functioning or that the office was functioning limitedly with skeleton staff, which can be held as not proved in the light of above discussion. The reply notices do not spell existence of pre-existing dispute in terms of section 8 of IBC. It is only the contentions in the demand notices that are disputed. According to section 8 of IBC a dispute should be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated winding up proceedings against the `Corporate Debtor' on 03.08.2016 before the Hon'ble High Court of Telangana under Sections 433 & 434 of the Companies Act, 1956, vide Company Petition No.190/2016. It is submitted that the same was subsequently withdrawn by the first Respondent and the same was not brought to the Notice of the `Adjudicating Authority'. 6. Another `Legal Notice' dated 20.08.2021 was issued on behalf of the first Respondent seeking payment of some amounts under the `Revenue Sharing Agreement'. Learned Sr. Counsel argued that Clause 3.10 of the same Agreement refers to `Arbitration', if any dispute arises between the parties. The first Respondent in invoking this Clause 3.10 himself `acknowledges' and `admits' that the `claimed amount' is disputed. 7. It is submitted by Learned Sr. Counsel, Mr. Satish Parasaran that the `Adjudicating Authority' has committed a `grave error' in holding that there was no `Pre-Existing Dispute' when the `Claim' was disputed since 2015 and placed reliance on the following documents: Reply dated 04.08.2015 to the `Legal Notice' dated 18.07.2015, denying all dues; Reply dated 04.10.2021 to the Letter dated 20.08.2021, denyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder' was pronounced on 21.03.2022. It was only on 23.03.2022, that the `Appellant' learnt about the present Proceedings, subsequent to which, I.A.33/2022 was filed under Rule 49(2) read with Rule 11 of the NCLT Rules, 2016, seeking to set aside the `Ex-Parte Order' of Admission dated 21.03.2022. The `Ex-Parte Order' was suspended vide `Order' dated 21.03.2022 and it remained in force till the pronouncement of the `Order' on 05.05.2022. Therefore, the `Appeal' filed before this Tribunal is well within the period of Limitation. The non-appearance of the `Corporate Debtor' before the `Adjudicating Authority' was not attributable in any manner to the inaction or negligence on the part of the `Corporate Debtor' but only on account of an inadvertent lapse. 12. The `Adjudicating Authority' did not appreciate the various communications exchanged between the parties and came to a finding that there was no `Pre-Existing Dispute' which was observed in the `Impugned Order' dated 05.05.2022, despite the fact that this `Order' was passed against Application I.A.33/2022, wherein and whereunder the `Adjudicating Authority' ought to have either rejected the Application or allowed it without trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the `Appellant' is only trying all possible ways to avoid payment to the first Respondent. Learned Sr. Counsel placed reliance on Clause B of the `Revenue Sharing Agreement', which is detailed as hereunder: "It has been agreed between the Parties that in consideration of the services rendered by Ajay Kumar to the Company in terms of the Executive Director Agreement, Ajay Kumar shall be entitled to receive consideration from out of the sales proceeds of the Project Components of the Company which shall be exclusive of the remuneration received by him in terms thereof." 15. It is submitted that the said Clause clearly establishes that the first Respondent is entitled to a share in the `revenue' generated by the `Appellant Company' and is exclusive of the remuneration received by him under the `Executive Director Agreement'. Both the Agreements are independent of each other and cannot be said to be co-terminus. The delay in implementation of the Project was purely due to lack of funds which the `Appellant Company' had failed to organize. It is submitted that the first Respondent is not aware of the `Legal Notice' or the `Reply' dated 04.08.2015, as the Advocate who issued the `Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or an application has been heard ex-parte against a respondent or respondents, such respondent or respondents may apply to the Tribunal for an order to set it aside and if such respondent or respondents satisfies the Tribunal that the notice was not duly served, or that he or they were prevented by any sufficient cause from appearing (when the petition or the application was called) for hearing, the Tribunal may make an order setting aside the ex-parte hearing as against him or them upon such terms as it thinks fit..." 20. It is the case of the Respondent that the `Appellant' herein admittedly states that the `Notice' was refused, but only on account of limited functioning of the `Corporate Debtor' and this cannot be a satisfactory ground for the `Adjudicating Authority' to have allowed the Application under Rule 49 of the NCLT Rules 2016. It is contended that the `Appellant' did not satisfy either of the two conditions as provided for, to invoke the said Rule. Learned Sr. Counsel Mr. Arun Kathpalia has fairly conceded that the `Notice' was `refused' but it was only on account of the fact that most of the staff was infected with Corona and were functioning from home. It was only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under subsection (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. (3) The operational creditor shall, along with the application furnish- (a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor; (b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the unpaid operational debt; (c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor confirming that there is no payment of an unpaid operational debt by the corporate debtor, if available; (d) a copy of any record with information utility confirming that there is no payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.01.2022 and the copy of the `Reply Notice' was delivered to the first Respondent on 08.01.2022; that the matter was listed before the `Adjudicating Authority' on 10.02.2022 and on 17.03.2022, but the Respondent had failed to place this `Reply' before the `Adjudicating Authority' either on 10.02.2022 or on 17.03.2022; this Tribunal is of the earnest view that in the `interest of justice', an opportunity be given to the `Appellant' herein to be heard `on merits'. 24. The `Adjudicating Authority' in their `Ex-Parte Order' dated 21.03.2022 has observed that 'whereas, by virtue of the documents filed by the `Operational Creditor', his case stands proved prima facie. Since his case is non-controverted, which has to be accepted as true'. The first `Respondent'/`Operational Creditor' ought to have placed the Section 8 `Reply Notice' before the `Adjudicating Authority' at that point of time, for the `Adjudicating Authority' to have taken a comprehensive note. Though the Learned Sr. Counsel Mr. Arun Kathpalia has drawn our attention to the various documents on record to establish his case that there was a `Pre-Existing Dispute' between the parties, we refrain from addressing to the `meri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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