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Judgment
O R D E R
02.03.2022: This Appeal has been filed against the Impugned Order dated 16th December, 2021 passed by the Adjudicating Authority (National Company Law Tribunal, Court-3, Mumbai Bench) by which Order CP No. CP(IB)-3447/2019 filed by the Appellant as Operational Creditor has been rejected. Appellant filed the Application CP(IB)-3447/2019 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC in short) on the basis of an Acquisition Service Agreement with Indus Software Technologies Pvt. Ltd. (Indus) on 17.11.2016 for the purpose of introducing certain Target Entity to Indus.
Learned Counsel for the Appellant submits that he has introduced a Target Entity i.e. Miles Software to Indus and communications took place between the Indus and Miles Software subsequently the Miles was acquired by Indus but the Success Fee was not paid to the Appellant hence he issued Demand Notice dated 3rd April, 2019 under Section 8 of the IBC for an amount of Rs. 4,28,56,764/- which notice was replied by the Corporate Debtor vide his Letter dated 16th April, 2019. After the aforesaid Reply to the Demand Notice, Application under Section 9 of the IBC was filed which was heard by the Adjudicating Authority and came to be dismissed by the Impugned Order.
The Adjudicating Authority has dismissed the Application holding that there were very pertinent and real disputes regarding the claims hence the Application cannot be admitted.
Learned Counsel for the Appellant submits that the Adjudicating Authority committed error in rejecting the Application on the ground of pertinent and real disputes whereas there was no dispute prior to Reply to Demand Notice under Section 8 of the IBC given by the Corporate Debtor. It is submitted that Appellant has introduced the Miles to the Indus which fructified in acquisition hence he was entitled for Success Fee.
We have considered the submissions and perused the record. The notice of dispute which was given by the Corporate Debtor on 16th April, 2019 have been brought on record at Annexure A-10. In the notice of dispute itself the Corporate Debtor in Paragraph 3 to 11 given the details of happenings and events it has been categorically stated that acquisition of Miles which took place was not at the introduction by the Appellant rather there was a third party which had an agreement with Miles which was instrumental in getting the acquisition. Paragraphs 3 to 11 of the Reply is relevant which is following:
“3.In or around June 2018, Ebix Inc. entered into discussions with Miles Software Solutions Pvt. Ltd. (“Miles”) so as to expand and further augment Ebix Inc’s Technological capabilities. The discussions were arranged through a third party agent appointed by Miles (whose Identity is not being disclosed due to confidentiality obligations with such entity) with whom Miles had signed an agreement. In fact, such third party agent had introduced Miles to Ebix Inc. to discuss the potential acquisition of Miles by Ebix Inc. Thereafter, on 20 June 2018, Ebix Inc. signed a Non-Disclosure Agreement with Miles so as to fructify its discussions and the potential acquisition of Miles by Ebix Inc.
4.On 18th July, 2018, Ebix Inc. entered into a Letter of Intent (“LoI”) with Miles expressing its intention to acquire 100% of the shareholding of Miles.
5.Around the same time, Ebix Inc. entered into discussions with Indus Software Technologies Pvt. Ltd. (“Indus”) with the intention of Ebix Inc. acquiring Indus to further expand its operation in India. During the course of these discussions, Ebix Inc. conducted an extensive due diligence of all the agreements, board resolutions assets and liabilities of Indus to ascertain all the existing and potential liabilities of Indus. Pursuance thereto, on 20 July, 2018, Ebix Inc. acquired Indus. Thereafter, on October 23, 2018 the name of Indus was changed to Ebix Technologies Pvt. Ltd. (“Ebix Cash”) and appropriate filings and approvals of the Registrar of Companies have been obtained in this regard.
6.During the course of the extensive due diligence undertaken by Ebix Inc. of the affairs of Indus, it was revealed that certain discussions had taken place between Indus and Miles in 2017 which had not fructified due to various commercial reasons. However, since Ebix Inc. had already signed a letter of intent with Miles, such revelations were immaterial to its acquisition of Miles.
7.Pursuant to the acquisition of Indus by Ebix Inc., Ebix Inc. decided to acquire Miles through Evix Cash (then Indus) for commercial and financial reasons. Accordingly, on 04th September, 2018, Ebix Cash entered into definitive agreement on instructions of Ebix Inc. to acquire Miles.
8.In the circumstances, it is submitted that all negotiations with respect to the acquisition of Miles were undertaken by Ebix Inc. out of its offices in the United States of America. In fact, as stated hereinabove, the negotiations were facilitated by a third party agent appointed by Miles and nor the Atlanta.
9.Furthermore, during the course of the extensive due diligence of the activities and affairs of Indus conducted by Ebix Inc., no information was disclosed pertaining to any purported agreement between Atlanta and Indus. There are no resolutions of the then existing Board of Directors of Indus pertaining to any agreement between the operational creditors and Indus. It is also evident that the operational creditor did not undertake any actions on behalf of Miles or Indus to facilitate any acquisition.
10.In the circumstances, we have to state that no agreement, including the purported agreement dated 17 November, 2016 has been signed between Indus and Atlanta and therefore, the purported agreement dated 17 November, 2016 is non-est in law.
11.In any event, it is evident that any discussions and consequent acquisition of Miles were undertaken not by Indus but independently by Ebix Inc. In fact, during the period of negotiations between Ebix Inc. and Miles, Ebix Inc. had not acquired Indus or had any connection with Indus. It is only after Ebix Inc. acquired Indus that it decided to acquire Miles through Indus. Therefore, the question of Atlanta assisting in any acquisition of Miles does not and cannot arise.”
When the aforesaid facts have been highlighted by the Corporate Debtor in the Reply to Section 8 Demand Notice which is a notice of dispute, there is clear dispute regarding the claim of the payment of success fee. We are of the view that such disputed claims cannot be basis for admitting a Section 9 Application. The Adjudicating Authority thus has not committed any error in rejecting the Application filed by the Appellant under Section 9 of the IBC. We thus do not find any merit in the Appeal, the Appeal is dismissed. We however observe that it shall be open for the Appellant to take such remedies for his claim as permissible in law. With these observations, the Appeal is dismissed.