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Judgment
PER: DR.P.S.N. PRASAD, MEMBER (JUDICIAL) UMESH KUMAR SHUKLA, MEMBER (TECHNICAL)
ORDER
The present petition is filed, under Section 9 of The Insolvency and Bankruptcy Code, 2016 (for brevity ‘IBC’/ ‘Code’), read with Rule 6 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by Ahuja Residency Private Limited (CIN No. U45400HR2011PTC043511) having its registered office at N-3/36, DLF City, Phase-II, Gurgaon-122001, Haryana and corporate office at The Palms Spring Plaza, Emaar MGF Building, Office No. #303/304, sector 54, Golf Course Road, Gurgaon-122002, Haryana (for brevity ‘Petitioner’/ ‘Operational Creditor’) through its Executive-Legal Department and Authorized Signatory, Mr. Anurag Kumar Sharma, with a prayer to initiate Corporate Insolvency Resolution Process (CIRP) against Primus Energy Solutions Private Limited (CIN No. U45400HR2011PTC043511) having its registered office at Plot No.1, Vijay Vihar, Behind IBM Tower Star Mall, Village Silokhra, Gurgaon-122001, Haryana (for brevity ‘Corporate Debtor’/ ‘Respondent’).
The Corporate Debtor, namely, Primus Energy Solutions Private Limited, is a Company incorporated on 27.07.2011 under the provisions of the Companies Act, 1956 and its registered office is in Gurgaon, Haryana India. Hence, the territorial jurisdiction lies with this Adjudicating Authority. A copy of the master data of the corporate debtor is attached with the main petition and marked as Annexure 2.
FACTS OF THE CASE
The facts of the case, as stated in the petition, is briefly summarized below:
The Operational Creditor is a company incorporated under the Companies Act, 1956 and engaged in the business activities with respect to real estate sector, guest houses, property maintenance services and individually tailored property maintenance services to both individuals and corporates.
The Corporate Debtor is a service provider for solar energy. The Corporate Debtor started procuring services of the Operational Creditor in the year 2018 and approached Operational Creditor for using one of its guest house. From time to time, in-specific from August 2018 onwards, Corporate Debtor booked the Guest House (namely 'Ahuja Residency Park Lane'; located at Phase-1, Gurgaon, Haryana) for some of its executives on a long-term/ yearly basis through Operational Creditor.
In consideration for rendering such services, the Operational Creditor raised several invoices on the Corporate Debtor from time to time. From the period 16.08.2018 till 31.12.2018, the Operational Creditor issued around 20 (twenty) invoices on the Corporate Debtor. Out of the said 20 (twenty) invoices, 14 (fourteen) invoices were full paid by the Corporate Debtor and 6 (six) invoices were paid partly. The total amount of the said 6 (six) unpaid invoices is Rs.4,42,277/-, out of which the Corporate Debtor has paid only Rs.50000/- (on 18.08.2018) and defaulted a sum of Rs.3,92,277/-. The Operational Creditor has requested the Corporate Debtor on numerous occasions to pay the Operational Debt, however, till date, Corporate Debtor has not paid the same.
The Corporate Debtor has total outstanding balance of Rs.4,24,197/-(Rupees four lacs twenty four thousand one hundred ninety seven only), which has not been paid for the guest house reservations made by the Corporate Debtor with the Operational Creditor despite the fact that the entire cost has already been incurred by the Operational Creditor. The aforesaid debt amount includes Rs.3,92,277/- as the principal debt amount and Rs.31,920/- as interest (at 18% p.a. from 01.01.2019 up to 15.06.2019).
The Operational Creditor sent a legal/ demand notice under Section 8(1) of IBC to the Corporate Debtor on 18.06.2019 seeking payment of the aforesaid outstanding amount (annexed as Annexure 10 with this petition), which has been delivered to the Corporate Debtor through speed post (Postal receipts and tracking reports are attached at Annexure 11 and Annexure 12 respectively with this petition).
The Corporate Debtor in his reply dated 26.06.2019 to the said demand notice (annexed as Annexure 14 with this Petition), has denied the existence of the Operational Debt by stating that the Operational Creditor has concealed a fact regarding the charge of the price of room on the context that the price stated by the Operational Creditor was on monthly basis, whereas the inquiry made by the Corporate Debtor was on yearly basis. The said fact has been stated to raise a frivolous dispute.
It is a presumed fact that amount of Rs.89,000/- excluding the taxes can never be justified as an amount to be charged for the entire year for a guest house located in an exquisite locality including all the services. According to the principle of "Caveat Emptor", the buyer should be aware/ responsible for the services used by it. It is the duty of the Corporate Debtor to enquire about the goods/ services in specific about the charges/ tariff. The above stated guest house of the Operational Creditor is available for booking on several websites stating the price of a room per day, which states that the Corporate Debtor advertently kept silent while booking the guest house. The Corporate Debtor deliberately defaulted on the payment of the outstanding debt, as it was aware of the prices of the guest house because the Corporate Debtor has used the services of the same guest house before August, 2018 as well. The Corporate Debtor was also aware of the prices of the guest house posted on several websites, because while booking the guest house, the Corporate Debtor asked for the best quotation directly to the Operational Creditor through emails, as the same was showing expensive on the websites as compared to the price quotation given by the Operational Creditor. Therefore, the Corporate Debtor was aware of the actual price of the guest house.
After sending the Reply to the Demand Notice on 26.06.2019 the Corporate Debtor approached the Operational Creditor several times to settle the matter amicably. In all the meetings held between the Operational Creditor and the Corporate Debtor, the Corporate Debtor was keen on settling the matter for 50% of the total outstanding amount; however, no amount has been paid to the Operational Creditor till date.
On the basis of the above, it is clear that the dues of the Operational Creditor have the necessary ingredients as required under Section 5(21) of the IBC, so as to qualify as an operational debt. And, as the Corporate Debtor has not been able to make several payments towards settling its dues, it is subject to CIRP under the IBC.
REPLY BY THE CORPORATE DEBTOR
The Court notice along with a copy of this petition has been issued to the Corporate Debtor to show cause as to why this petition should not be admitted. The Corporate Debtor has filed a reply vide diary No. 00320/1 dated 08.09.2021 and short-written submissions vide Diary No. 00320/4 dated 20.09.2022, in which it has raised the following issues:
a. The Operational Creditor has concealed a very important and vital fact with respect to the existence of a pre-existing dispute pertaining to the claim and therefore, the present petition is a gross abuse of the provisions of IBC.
b. The petitioner initially, vide email dated 13.08.2018, had offered for yearly period of stay at Rs.89,000/- for double occupancy, which was confirmed by the respondent vide email dated 14.08.2018. Subsequently, the respondent vide its email dated 26.10.2018 had requested the petitioner to quote best price for one year for a deluxe room and in response to which the petitioner vide email dated 26.10.2018 quoted a price of Rs.63,000/- along with taxes for a single occupancy room and Rs.73,000/- along with taxes for double occupancy room. The copy of the email’s dated 13.08.2018, 14.08.2018 and 26.10.2018 are attached as Annexure R-2 of the reply.
c. The respondent had enquired for an annual quotation and the petitioner had reverted to the said email, which clearly shows that the quotation was for one year.
d. The respondent, vide its email dated 26.10.2018, had requested the petitioner to revise the quotation to Rs.63.000/- (Rupees Sixty Three Thousand Only) + GST for double occupancy room to which the petitioner vide its email dated 29.10.2018 offered the double occupancy room in Rs.70,000/- (Rupees Seventy Thousand Only) + Taxes and this email substantiate that the rate quoted was for one year. The copy of the email dated 29.10.2018 is attached as Annexure R-3 of the reply.
e. The petitioner vide its email dated 30.10.2018 had written to the respondent that monthly invoice will be shared with the respondent in response to which, the respondent contacted the petitioner over phone and categorically stated that the tariffs decided between the parties was fixed on an annual basis and there was no understanding of charging of any monthly tariff in response to which, the petitioner had written an email dated 24.11.2018, wherein it with a mala fide and malicious intention of extorting money from the respondent, for the very first time stated that the said charges were on a monthly basis. The respondent vide its email dated 24.11.2018 had written to the petitioner that the tariff was always discussed for a period of one year and there was no discussion whatsoever on the tariff on monthly basis. The copy of the emails dated 24.11.2018 of the petitioner and respondent are attached as Annexure R-4 of the reply.
f. Since the petitioner was using one or the other means tactics to grab more and more money, the respondent, vide its email dated 27.11.2018 had categorically requested to discontinue the booking of the room and had further requested the operational creditor to rent/ lease out the room for its guests until clarification of the terms and conditions. The copy of the email dated 27.11.2018 is attached as Annexure R-5 of the reply.
g. Thereafter, the respondent vide its email dated 06.12.2018 has clearly disputed the received Invoices, to which the petitioner vide its email dated 13.12.2018 has stated that the tariff was quoted on a monthly basis. Even in the email dated 13.12.2018, the petitioner has failed to point out a single correspondence/ email, wherein during the time of finalization of agreement, the petitioner has mentioned that the quoted tariff is on a monthly basis and not on an annual basis. The respondent vide its email dated 13.12.2018 had categorically stated that there is a complete misunderstanding over the whole issue and the petitioner had sent Invoices belatedly, because of which the respondent could not apprehend the gimmick played by the petitioner. The respondent has disputed additional payments for the rooms, as the same was never discussed and agreed upon by it. The copy of the email dated 13.12.2018 is attached as Annexure R-6 of the reply.
h. The amount claimed in the petition by the petitioner is completely false, frivolous, fabricated and bogus and it has played a very sharp tactic to trap the respondent to grab more and more money from it in a completely illegal, unjustifiable and unreasonable manner.
The bare perusal of the emails exchanged between the parties clearly shows that there is an existence of pre-existing dispute with respect to the claim and said emails show that at the time of finalizing the commercials/ agreement, the petitioner had never mentioned that the tariff is on a monthly basis. The respondent had invited the quotations clearly on yearly basis to which the petitioner responded without mentioning anything that the said tariff is on a monthly basis and thereafter, the petitioner sent the invoices belatedly in order to trap the respondent.
j. The respondent denies that an amount of Rs.4,24,197/- (Rupees four lakhs twenty four thousand and one hundred and ninety seven only) is due and payable to the petitioner. The respondent has already cleared all the charges for extra bedding and room service and the said fact is an admitted fact. However, Invoices pertaining to the charges of room is disputed, as there was no such understanding of charging of monthly tariff.
k. The agreement between the operational creditor and the corporate debtor is a void in terms of Chapter-2 of the Indian Contract Act, 1872.
l. Since the very beginning, the respondent has disputed that there was any agreement regarding any kind of monthly tariff and therefore, due to a pre-existing dispute, the present petition under Insolvency and Bankruptcy Code, 2016 is not maintainable. Even in its demand notice, the petitioner has not uttered a single word with respect to pre-existing dispute with respect to its claim, which clearly shows that the respondent is trying every means to grossly abuse the process of law by concealing material facts and approaching this tribunal by way of false and frivolous petition.
REJOINDER OF THE PETITIONER
The rejoinder was filed by the petitioner vide Diary No. 00320/3 dated 09.02.2022 and short-written submissions vide Diary No. 00320/5 dated 30.11.2022, wherein it has reiterated the pleadings made in the petition and denied all other allegations made by the Corporate Debtor in its reply are false, baseless and are specifically. It has been stated that the Respondent, in its reply, has stated that there is a pre-existing dispute between the parties, however, the contents of the email do not imply any kind of dispute being raised by the Corporate Debtor. In fact, the said emails imply acknowledgement of the Operational Debt on the part of the Corporate Debtor. There is no pre-existing dispute between the parties. In specific, no dispute has been raised by the Corporate Debtor in writing, before the issuance of the demand notice by the Operational Creditor. On the contrary, the Corporate Debtor has duly acknowledged the debt by part-payment of invoices and approached the Operational Creditor several times to settle the matter amicably. The reliance has also been placed on the judgments of Hon'ble National Company Law Tribunal, Mumbai in the case of Olevia.com vs. Topsgrup Service (India) Limited (CP 479 (IB)/MB/2019) and Hon’ble Supreme Court in the case "Mobilox Innovations Private Limited V. Kirusa Software Private Limited, (2018 1 Supreme Court Cases 353).,
ANALYSIS AND FINDINGS
We have heard the learned counsel for the Petitioner and Respondent and have carefully gone through the pleadings and the written submissions submitted by both the parties.
The first issue for consideration is “Whether demand notice was properly served”. As stated in the petition, the Operational Creditor had served the demand notice dated 18.06.2019 in form 3 and the same was delivered to the Corporate Debtor on 20.06.2019. The Corporate Debtor replied to the demand notice vide letter dated 26.06.2019, which is well within 10 days of receipt of the notice. In reply to the demand notice, the Corporate Debtor mentions about the existence of dispute between the parties. The Operational Creditor in his section 9(3)(b) affidavit stated that apart from the frivolous disputes raised by the Corporate Debtor in its reply dated 26.06.2019, there is no notice given by the Corporate Debtor relating to existence of any dispute for the unpaid operational debt, in terms of Section 9(3)(b) of the Insolvency and Bankruptcy Code, 2016. The demand notice dated 18.06.2019, therefore, have been served properly on the corporate debtor.
The next issue for consideration is “Whether the petition is within the period of limitation?” The date of default as mentioned in the petition is 01.01.2019, the date when the last unpaid invoice was raised is 26.11.2018. The date of demand notice is 18.06.2019. The petition is filed on 24.02.2020, which is within the period of limitation. Further, the issue of limitation has not been raised by either of the parties.
The next issue for consideration is “Whether there is pre-existing dispute between the parties”.
It is deposed by way of an affidavit under Section 9(3)(b) by the Operational Creditor that no notice of dispute was raised by the Corporate Debtor regarding unpaid operational debt. However, the Corporate Debtor has centered its defense primarily around the contention that indeed there were pre-existing disputes between the parties.
The definition of a ‘dispute’ has been provided in sub-section 6 of section 5 of the Insolvency and Bankruptcy Code, 2016 is as follows-
“5.Definitions. – In this Part, unless the context otherwise requires, – ……………..
(6)“dispute” includes a suit or arbitration proceedings relating to–
(a)the existence of the amount of debt;
(b)the quality of goods or service; or
(c)the breach of a representation or warranty;”
The Hon’ble Supreme Court in Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited (2018) 1 SCC 353 has held:
“40.It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the “existence” of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application.
43.………….We have seen that a “dispute” is said to exist, so long as there is a real dispute as to payment between the parties that would fall within the inclusive definition contained in Section 5(6).
45.Going by the aforesaid test of “existence of a dispute”, it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability”. (Emphasis Supplied)
It is noted that there is no formal agreement between the parties to define the terms and conditions and the transaction has been through the exchange of emails. Therefore, it is necessary to go through the emails exchanged between the parties. It is noted from the pleading of the parties, the emails dated 25.07.2018, 13.08.2018, 14.08.2018, 26.10.2018, 29.10.2018, 24.11.2018, 27.11.2018, 13.12.2018, 29.05.2019, 03.06.2019, 18.06.2019, 29.05.2019 are on the record of this Adjudicating Authority.
The emails dated 25.07.2018 and 13.08.2018 are offer from the Operational Creditor to Corporate Debtor, the email dated 14.08.2018 of Corporate Debtor is acceptance of the offer of Operational Creditor with regard to rent and offer from Corporate Debtor for rent on additional occupancy, which was accepted by the Operational Creditor vide email dated 14.08.20181. It is noted that in either of the emails, it is not clear that the payment is on monthly basis. The aforesaid emails are quoted below:
25.07.2018 19:41 (Email from Operational Creditor to Corporate Debtor)
“From -Mamta Pratap To- Aditya Rao ………………. As per our discussion we are pleased to offer you Inr@65,000+ taxes for single occupancy/Inr@75,000+taxes for double occupancy/deluxe room) ………… Inr @85,000+ taxes for single occupancy / Inr@95,000+taxes for double occupancy Studio Room ………………. Mamta Pratap Associate Director- Sales & Marketing Ahuja Residency Pvt. Ltd.”
13.08.2018 17:12 (Email from Operational Creditor to Corporate Debtor)
“From-Mamta Pratap To- Aditya Rao …………………. As per our discussion we are pleased to offer you below mentioned price for an yearly period of stay Inr@89,000+taxes for double occupancy studio room dlf phase 1, Gurugram ………………. ………………., Mamta Pratap| Associate Director- Sales & Marketing Ahuja Residency Pvt. Ltd.”
14.08.2018 16:46 (Email from Corporate Debtor to Operational Creditor)
“From- Aditya Rao To- Mamta Pratap ………………….. We are pleased to confirm single studio apartment room with double occupancy with Ahuja Residency for a period of 1 year. Prices discussed are as mentioned in your email. Addition to your mail: In case of additional occupancy (third member) in the room, it will be chargeable at Rs 500/- per night with mineral water and buffet breakfast. Our team will arrive on 16th late night or 17th early morning. You can confirm our arrival on the above mentioned dates.”
14.08.2018 16:52 (Email from Operational Creditor to Corporate Debtor)
“From- Mamta Pratap (Ahuja Residency) To – Aditya Rao (Primus Services) ……………. We are pleased to confirm below booking at our property Parklane and extra occupancy will be charged inr@500+taxes per day. Kindly advise us on mode of payment.”
The emails dated 26.10.2018 and 29.10.2018 are offer, counter offer and its acceptance with regard to revision of rent. The email dated 26.101.2018 at 17.15 hrs. is an offer from Operational Creditor to Corporate Debtor and email dated 26.10.2018 at 18.00 hrs. is the counter offer from Corporate Debtor to Operational Creditor, while email dated 29.10.2018 at 10.47 hrs. is again the counter offer from Operational Creditor to Corporate Debtor, which was accepted by the Corporate Debtor vide its email dated 29.10.2018 20.25 hrs. It is noted that in either of these emails (quoted below), it is still not clear that the payment is on monthly basis. The aforesaid emails are quoted below:
26.10.2018 17:15 (Email from Operational Creditor to Corporate Debtor)
“From- Mamta Pratap To- Lalit ballani …………….. As per our discussion we are pleased to offer you Inr@63,000+taxes for Single/Inr@73,000+ taxes for double occupancy; ………………...”
26.10.2018 18:00 (Email from Corporate Debtor to Operational Creditor)
“From-Lalit Ballani To- Mamta Pratap Dear Ms Mamta Pratap, Can you make 63000+GST for double occupancy? Ballani Lalit”
29.10.2018 10:47 (Email from Operational Creditor to Corporate Debtor)
“From- Mamta Pratap To- Lalit ballani ……………… We are pleased to offer you Inr@70,000+taxes for double occupancy for deluxe room with an inclusion mentioned below; ……………….. Mamta Pratap Associate Director- Sales & Marketing Ahuja Residency Pvt. Ltd.”
29.10.2018 20:25 (Email from Corporate Debtor to Operational Creditor)
“From-Lalit Ballani To- Mamta Pratap ……….. It is ok with 70000+GST wef 25.10.2018. Lets complete the formalities. We had transferred 50000 and let us know our account statement as on 01.11.2018. Ballani Lalit”
It is noted from the email that the dispute first arose on 24.11.2018, when Operational Creditor vide its email dated 24.11.2018 14.52 hrs. raised the issue that the package was on monthly basis, which was disputed by Corporate Debtor vide its email dated 24.11.2018 14.52 hrs. The aforesaid emails are quoted below:
24.11.2018 14:52 (Email from Corporate Debtor to Operational Creditor)
“From- Mamta Pratap To- Aditya Rao …………………….. As per my initial discussion with Mr. Aditya for long stay room booking for an year its was communicated that it will be monthly rental and the room will be booked for an year, so the below package is on monthly basis not on yearly; Short term room were charged on Inr@2500 +taxes for single occupancy and Inr@3000+taxes. Regards, Mamta”
24.11.2018 15:51 (Email from Corporate Debtor to Operational Creditor)
“From- Aditya Rao To- Mamta Pratap …………………………. As we discussed this morning also, our initial discussion and conversation over the phone was that the tariff mentioned would be charged for a period of 1 year. There was no discussion whatsoever on the tariff per month. The tariff was always discussed was for a period of one year. As per your discussion and conversation with Mr Lalit Ballani, you are most welcome to come over to our office for a meeting. Aditya Rao Primus Energy Solutions Pvt. Ltd.”
It is also noted that immediately on raising the dispute with regard to rent, the Corporate Debtor has discontinued with the premises with effect from 26.11. 2018 and communicated to Operational Creditor vide its email dated 27.11.2018 as shown below:
27.11.2018 09:02 (Email from Corporate Debtor to Operational Creditor)
“From -Aditya Rao To- Mamta Pratap ………………… As per our discussion in our office yesterday, we are discontinuing with room 101 with immediate effect from 26-11-2018 till there further clarification on our terms and conditions of stay. You can rent/lease out room 101 for your guest till further notice. Regards Aditya Rao| Primus Energy Solutions Pvt. Ltd.”
The further exchange of emails between the parties on 13.12.2018, 29.05.2019, 03.06.2019, 18.06.2019, and 29.05.2019 are also with regard to the dispute between them.
It is a settled proposition that the Adjudicating Authority is not a recovery forum. If at all, there is any dispute between the parties regarding the said claim, then the parties are at liberty to approach the appropriate Forum.
Since there is a pre-existing dispute between the parties regarding the period for which the amount is due, that is whether monthly or annually, the petitioner has failed to establish a case for CIRP, hence the present section 9 application is dismissed without costs.
Footnotes
- 1.When the offer is given by one party and counter offer is given by another party, it does not form contract. But when offer/ counter offer is accepted by the other party, it becomes a valid contract.