Beetel Teletech Limited vs Felix Infotech Private Limited

Per: SAMEER KAKAR, MEMBER (TECHNICAL) Under Adjudication is an Application that has been filed by Beetel Teletech Limited (hereinafter referred to as 'Operational Creditor") under Section 9 of the Insolvency & Bankruptcy Code 2016 (in short, 'IBC 2016') r/w Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against Felix Infotech Private Limited (hereinafter referred to as 'Corporate Debtor'), to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, declare a moratorium and appoint Interim Resolution Professional.

Part-I of the Application sets out the details of the Applicant from which, it is evident that the Operational Creditor is a Company incorporated under the provisions of the Companies Act, 1956. From Part-II of the Application it is seen that the Corporate Debtor is a Private Limited Company incorporated under the provisions of the Companies Act, 1956 and the registered office of the Corporate Debtor as per the Application is stated to be situated at 67/7, Kalaimagal Nagar, Third Main Road, Ekkaduthangal, Chennai - 600032. From Part III of the Application, it is seen that the Operational Creditor has not proposed the name of the IRP and left it to the discretion of this Tribunal to appoint the IRP.

Part IV of the Application states that the Operational Creditor has claimed a principal sum of Rs.2,53,34,992/- and interest of Rs.43,85,004/- and in all aggregating to a sum of Rs.2,97,19,996/-.

The Learned Counsel for the Applicant submitted that the Corporate Debtor and the Operational Creditor had executed a Proposal Form for the supply of goods by the Operational Creditor to the Corporate Debtor and in pursuance of the same the Corporate Debtor have raised Purchase Orders vide purchase order no. 42 dated 08.11.2019 and Purchase Order no. 41 dated 15.11.2019 upon the Operational Creditor for the procurement of various goods.

It was submitted that as per the agreed payment terms the payment for the aforesaid supplies were to be made with 90 days from the date of each invoice. However, the Corporate Debtor has failed to make the payment within the agreed timelines against each invoice. It was submitted that the parties have agreed that in case the Corporate Debtor failed to remit the amounts towards the invoices within 90 days, interest at 18% P.A. would be payable to the Operational Creditor.

It was submitted that the Operational Creditor has raised the Tax invoices against the supply of the goods in the name of the Corporate Debtor and the Corporate Debtor defaulted the payment against the following invoices:

It was submitted that on 18th May 2020, the Corporate Debtor admitted the outstanding and has also issued a balance confirmation certificate verifying the principal outstanding as per their books of accounts as Rs.4,30,17,827/- on 31.03.2020 due and payable to the Operational Creditor.

It was submitted that in discharge of the Corporate Debtor's liability, certain cheques were issued to the Operational Creditor and all the said cheques were returned dishonoured upon presentation by the Operational Creditor for various reasons on 20.05.2020. It was submitted that a complaint under Section 138 of the Negotiable Instruments Act, 1881 has been filed and the same is also pending adjudication before the Learned Judicial Magistrate 1st Class, Gurugram.

It was submitted that the Corporate Debtor has made the following payments to the Operational Creditor after 31.03.2020 i.e. after the balance confirmation and after the dishonour of the cheque;

It was submitted that the Corporate Debtor has time and again assured to the Operational Creditor that the outstanding amount would be cleared vide various emails including emails dated 13.07.2020, 17.07.2020 and 12.08.2020, however the Corporate Debtor has failed to make the payment of the outstanding liability to the Operational Creditor.

It was submitted that on 18.08.2020 a demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 was issued upon the Corporate Debtor by the Operational Creditor and that it was submitted that 6-part payments were made (and a credit note was issued) after the issuance and service of the aforementioned Demand notice.

It was submitted that the Corporate Debtor upon multiple failures to pay despite opportunities has belatedly i.e. after passage of 57 days (excluding statutory period of 10 days) choose to respond to the Demand notice on 28.10.2020 vaguely refuting the claims and raising false and frivolous grounds. In reply to the same, it was submitted that the Operational Creditor has sent a rejoinder notice on 10.12.2020.

It was submitted that as on 15.04.2021 the outstanding liability is Rs.2,97,19,996/- and that the Corporate Debtor has failed to repay the said operational debt and under the said circumstances the learned Counsel for the Operational Creditor prayed for initiation of Corporate Insolvency Resolution Process in respect of the Corporate Debtor.

The Respondent has filed counter and submitted that the Operational Creditor has delayed the delivery of the materials for more than 3 months and the Corporate Debtor chased up the application for the delivery even after the delay. It was submitted that the delay aggravated and created a huge dent in the relationship and also the finance of the Corporate Debtor where the client of the Corporate Debtor cancelled the order due to no-fault of the Corporate Debtor which is purely attributable to the delay in the deliveries.

The Learned Counsel for the Corporate Debtor submitted that the Operational Creditor was very particular in getting their payment irrespective of the facts that they have delayed the delivery and thereby arm-twisting the Corporate Debtor to accomplish their objective. It was submitted that the Corporate Debtor wrote an email dated 19.12.2019 with regard to the delayed deliveries and due to that the order got cancelled and the materials which are received late were lying in their yard. It was submitted that the Corporate Debtor reminded the Applicant in their email dated 28.01.2020 and 07.02.2020 and that finally vide their email dated 25.02.2020, the Corporate Debtor requested the Operational Creditor to take back the materials worth Rs.87 Lakh due to delayed delivery.

The Learned Counsel for the Corporate Debtor submitted that the Operational Creditor issued the confirmation of balance which included the disputed amount of Rs.87 Lakh as well and that the Operational Creditor informed the Corporate Debtor that they were discussing about this at a higher level and they would come up with a favourable outcome and in the meanwhile the Operational Creditor asked the Corporate Debtor to send the confirmation of balance for records and the Corporate Debtor believing the statement of the Operational Creditor has sent the confirmation of balance on 18.05.2020.

The Learned Counsel for the Corporate Debtor submitted that EG8141A4 batch ONT's were reported with lot of issues and weak Wifi performance. It was submitted that the Corporate Debtor took up with the Operational Creditor and as per their advice with the principal manufacturer. It was submitted that the issues were reported in bulk and from that time, it became a regular practice to report fault and defective pieces and the Corporate Debtor wrote another email dated 25.05.2020. It was submitted that as it continued in high volumes and the Operational Creditor completely neglected this issue, the Corporate Debtor raised the same with the Applicant vide their email dated 12.08.2020 asking for replacement. However, it was submitted that the Operational Creditor again neglected the issue and made the Corporate Debtor to suffer at the hands of their client. It was submitted that the Operational Creditor has supplied completely faulty products which remained unusable for any client and that the products which were faulty and are not usable are worth Rs.72,55,584/-.

Thus, it was submitted that as per the Corporate Debtor, if the disputes are put together and after adjusting all the payments made so far, the total outstanding would fall below the threshold limit which is required to file the Application under Section 9 of IBC, 2016.

Thus, it was submitted by the Learned Counsel for the Respondent that there exists dispute between the parties and hence sought dismissal of the present Petition.

Heard both sides and perused the records including the documents placed on record. From the submissions made by the Learned Counsel for both the parties, the only point which fell for consideration and adjudication before this Authority is;

Before venturing into the merits of the present case, it is significant to point out here that the Operational Creditor has undergone a name change and was originally known as Brightstar Telecommunications India Limited. A perusal of the typed set of documents filed by the Corporate Debtor would reveal the fact that there are series of e-mails which have been exchanged between the parties even before issuance of the Demand Notice.

In relation to the delay of supply of materials, it could be seen that the Corporate Debtor as early as on 26.11.2019 and the same is extracted hereunder;

Thereafter, on 19.12.2019, it could be seen that the Corporate Debtor has again sent an email to the Operational Creditor stating that due to delay in delivery the materials are still lying with the Corporate Debtor. The said email is captured hereunder;

It could be seen that again on 28.01.2020, the Corporate Debtor has sent an email to the Operational Creditor reiterating the same stand and the said email is again captured hereunder;

The Corporate Debtor again on 07.02.2020 has sent an email to the Operational Creditor as follows;

A conjoint reading of the above e-mails as exchanged between the parties clearly posits the fact that there exists a 'dispute' between the parties even before the issuance of the Demand notice. Also, the issue as to whether there was delay in supply of materials and that the Operational Creditor is required to take back the defective or faulty products are all issues which is required to be adjudicated before the Civil Court after letting in evidence and it cannot be a subject matter of the proceedings under Section 7, 9 and 10 of IBC, 2016 before this Tribunal which is summary in nature. Further, the Corporate Debtor has clearly pointed out the dispute which existed between the parties, much prior to the issuance of the Demand Notice, which is explicit from the exchange of emails.

Further, the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited; 2017 1 SCC Online SC 353 held that the 'existence of dispute' and/or the suit or arbitration proceeding must be pre-existing i.e. it must exist before the receipt of the Demand Notice or Invoice as the case may be and observed as follows;

Thus, from the above, the decision of the Supreme Court in Mobilox (supra), it could be seen that this Tribunal need not be satisfied as to whether the defence raised by the Corporate Debtor is likely to succeed or not and also need not examine the merits of the dispute. The fact that dispute truly exists between the parties in fact is sufficient for this Tribunal to reject the Application, so long as the said defence is not spurious, hypothetical or illusory.

As to the facts of the present case, it is seen that there exists dispute between the parties before the issuance of the Demand Notice itself and the contentions raised by Corporate Debtor is a plausible contention which requires further investigation and in the said circumstances, we are constrained to dismiss the Application. As a result, CP(IB)/67(CHE)/2021 stands dismissed. No order as to costs.