M/s. Easy Trip Planners Private Limited vs M/s. Air Costa Aviation Private Limited

Per: Hon'ble Shri Ratakonda Murali, Member (Judicial)

This petition is filed by M/s. Easy Trip Planners Private Limited stating that M/s. Air Costa Aviation Private Limited, the Corporate Debtor had defaulted in repaying a sum of Rs. 3,05,74,995/- inclusive of the principal loan amount of Rs. 2,52,68,591/- and interest of Rs 53,06,404/- and hence this petition is filed under Section 9 of Insolvency and Bankruptcy Code, 2016, R/w Rule 6 of Insolvency & Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, seeking admission of the Petition, initiation of Corporate Insolvency Resolution Process, granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon.

The averments in the Petition are as follows:

a. The Corporate Debtor vide letter e-mail dated 25.06.2013 had entered in to an API Agreement with the Operational Creditor to provide travel flight services to the customers of the Operational Creditor. A copy of Emails annexed as Annexure- A-3.

b. The aforesaid services will be provided by the corporate debtor only after making the advance payments through automatic online payment wallet no: DELLB0143. The Operational Creditor agreed to pay the payment to the wallet as per the agreed terms and conditions.

c. The Operational Creditor after receiving the wallet ID and Password from the Corporate Debtor made a payment of Rs. 11,44,00,089/- on various occasions to avail the services of Corporate Debtor.

d. The Operational Creditor further made a payment of Rs. 75,00,000/- and Rs. 75,00,000/- each on 10.02.2017 and 18.02.2017 for availing the services.

e. The Operational Creditor started receiving the complaints from its customers in regard to the advance flight bookings which was intimated to the Corporate debtor. Thereafter, the corporate debtor suspended the operations of their Airlines without intimating to the Operational Creditor and its customers. The Corporate Debtor continued with suspension of services till date. Therefore, the Corporate Debtor liable to refund the due amount.

f. As on 31.03.2017, a sum of Rs. 2,52,65,536/- was due from the M/s. Air Costa Aviation Private Limited on account of non-supply of aviation services. The Operational Creditor made several requests to the corporate debtor. Despite of requests the corporate debtor failed to pay the legitimate dues of the operational creditor and also the corporate debtor is liable to pay interest at 3% per month from the date of default i.e on 31.03.2017 to 31.10.2017.

The averments in the counter are as follows:

a. The petition filed by the operational creditor on the basis of API agreement. But the API agreement is not filed along with the petition.

b. The operational creditor alleges that API agreement has been entered between the operational creditor and the corporate debtor but the fact is that the operational creditor entered in to the above API agreement with "LEPL Projects Limited" and not with the corporate debtor.

c. The LEPL Projects Limited and the corporate debtor are two separate and distinct companies. Apart from the fact that few of the directors of both the companies are same, but those companies have nothing in common.

d. The corporate debtor has not been carrying out any business activity for the past 4 years and airlines business as alleged by the operational creditor is of LEPL Projects Limited under the brand name of "Air Costa".

e. The parties to the agreement is Easy Trip Planners Private Limited and LEPL Projects Limited. The corporate debtor is neither a party to the agreement nor its beneficiary. In fact "Air Costa" is merely a brand name under which LEPL Projects Limited have been carrying out its airlines business.

f. The corporate debtor not being a party to the agreement, is not obligated to discharge any liability or dues in respect of the same. The corporate debtor never acknowledged due in any form of communication.

g. As per Annexure -V filed along with the petition it clearly shows that the credit account Id is in the name of the "LEPL Projects Limited-Air Costa". Therefore the transactions are between the operational creditor and LEPL Projects Limited.

The Contentions of the Operational Creditor in written submissions are as follows:

a. It is averred that on 09.11.2017 the operational creditor issued a demand notice to the corporate debtor requiring the corporate debtor to pay a sum of Rs. 3,05,74,995/- being the existing debt for which the corporate debtor never replied.

b. It is averred that during the pendency of this petition before the tribunal the Corporate Debtor had initiated the settlement of the matter and finally the operational creditor agreed on the terms and conditions of the settlement deed executed by the corporate debtor with the operational creditor. As per the settlement deed the corporate debtor had paid part payment of Rs. 66,71,217/- (Sixty Six Lakhs Seventy One Thousand Two Hundred Seventeen Only) to the operational creditor in two different dates and balance amount is due Rs. 2,39,06,777/- as on date.

c. It is averred that as per Clause no.8 of the settlement deed which read as follows:

These wordings clearly depict that the corporate debtor shall wholly cooperate with the operational creditor for the closure of the liability which has been duly admitted by the corporate debtor on several occasions which also includes LEPL Projects Limited which has been claimed by the corporate debtor as their promoter.

d.It is averred that the settlement deed executed between the operational creditor and corporate debtor is conclusive and the corporate debtor unconditionally agreed to all the conditions stipulated by the operational creditor.

e.It is averred that the settlement deed clearly says that the agreement entered between Easy Trip Planners Private Limited and LEPL Projects Limited herein after referred to as "Air Costa" which means LEPL Projects Limited and "Air Costa" are under the same management.

The Contentions of the Corporate Debtor in written submissions are as follows:

a. It is averred that the LEPL Projects and Air Costa Aviation Private Limited are separate entities. Both the Companies having separate Certificate of Incorporation, located at a separate registered offices and having separate registration numbers.

b. It is averred that the alleged settlement agreement dated 30.03.2018 is entered between the operational creditor and "LEPL Projects Limited" and not with the corporate debtor.

c. It is averred that a company with name "Flight Raja Travels Private Limited" had filed an application raising similar claims against the corporate debtor in CP(IB) No. 176/9/HDB/2017. When the said matter came up for hearing, the tribunal observed that the airlines business was being undertaken by LEPL Projects Limited and not the corporate debtor and in view of the same, the said application was disposed as withdrawn vide order dated 16.11.2017.

Heard Counsel for Operational Creditor and Counsel for Corporate Debtor and perused the material on record.

The Learned Counsel for Operational Creditor filed written submissions. The Counsel for Corporate Debtor also filed written submissions. The contention of the Learned Counsel for Operational Creditor that Corporate Debtor is an Airline Company which has accepted the Operational Creditor as travel partner and confirmed the same through email dated 10.07.2013 and an agreement was entered into. The Learned Counsel contended, the Operational Creditor on 10.10.2013 registered online Application form in the website of Corporate Debtor who released the User ID and password for commencing the operation. The contention of the Learned Counsel for Operational Creditor that it had made the payment of Rs. 11,44,00,089/- to the Corporate Debtor on various occasions to avail the services of Corporate Debtor. There was ledger balance of Rs. 3,05,74,995/- to be recovered from Corporate Debtor out of which Rs. 66,71,217/- was received from Corporate Debtor and remaining balance of Rs. 1,85,97,374/- together with interest is Rs. 53,06,404/- and total amount due is Rs. 2,39,06,777/-.

The Learned Counsel contended the Corporate Debtor closed the airline services and number of complaints was received from customers with regard to advance flight bookings. The Corporate Debtor suspended the airline services. The contention of the Learned Counsel that a Demand Notice was issued to the corporate Debtor on 09.11.2017 and there was no reply from the Corporate Debtor. Counsel contended during pendency of the proceedings before the Tribunal, a settlement deed was executed by the Corporate Debtor and Petitioner on 30.03.2018 and an amount of Rs. 66,71,217/- was paid to the Operational creditor on two different dates and the present balance is Rs. 2,39,06,777/-.

The counsel has relied on the settlement agreement dated 30.03.2018 and specifically referred to Clause 8 which is as follows:-

The Counsel contended M/s LEPL Projects Limited is a part of “Air Costa” and vice versa. Counsel contended M/s LEPL Projects Limited and Air Costa are the same but may be different entities. The Counsel contended both the entities belong to the same management and Directors are common. Counsel contended after execution of API agreement, the Corporate Debtor cannot evade payment. Further, the Counsel relied on settlement deed dated 30.03.2018 and contended that LEPL Projects Limited herein referred to as Air Costa which presupposes they are owned by the same management. Thus, the Learned Counsel contended, the Corporate Debtor as well LEPL Projects Limited is one and the same though they are different entities but are managed by the same management. Thus, the Learned Counsel for Operational Creditor would contend, the Corporate Debtor committed default and petition is liable to the admitted.

On the other hand, Counsel for Corporate Debtor would contend that the operational creditor has not filed API agreement. The Counsel contended, the API agreement is between LEPL Projects Limited and Operational Creditor. The Corporate Debtor is not a party or privity to API Agreement. The said Agreement binds on the parties to the Agreement but not on the Corporate Debtor. The Counsel contended LEPL Projects Limited and Corporate Debtor are two separate and

distinct Companies. Therefore, if any claim is due under the said agreement, it is only LEPL Projects Limited which is liable to pay. The Counsel contended LEPL Projects Limited and Air Costa Aviation Private Limited are two separate entities having two separate Registered Offices. 13. Counsel contended the transactions are between LEPL Projects Limited and Operational Creditor. LEPL Projects Limited is operating airlines business in the brand name of Air Costa. The Corporate Debtor is not involved in airline operations. The Director General of Civil Aviation granted air operator permit to LEPL Projects Limited.

Counsel contended even settlement agreement dated 30.03.2018 is also between Operational Creditor and LEPL Projects Limited and Corporate Debtor is not involved. Thus, Counsel contended, the Corporate Debtor Company is not liable for the alleged default and Operational Creditor to proceed against LEPL Projects Limited. It is also contended notice of demand was not served on the Corporate Debtor and it was served on LEPL Projects Limited. The Corporate Debtor's registered office is in the State of Telangana. The Counsel for Corporate Debtor filed memo dated 01.04.2019 enclosing the Company's master data of Corporate Debtor. The Registered office is at Hyderabad, in the State of Telangana.

The Operational Creditor filed this Petition under Section 9 of IBC, 2016 in Form-5. The Corporate Debtor is shown as M/s Air Costa Aviation Private Limited and Corporate Debtor Registered office is stated to be in Vijayawada, State of Andhra Pradesh. This is not correct. The Corporate Debtor's registered office is situated in the State of Telangana. The details of Corporate Debtor obtained from website of MCA is filed. The case of Operational Creditor that Corporate Debtor entered into API Agreement to provide travel flight services to the customers of Operational Creditor. Operational Creditor filed e-mail dated 25.06.2013 which is shown as Annexure-3 at page Nos. 18-27 of the paper booklet. The email correspondence is filed. The main contention of the Corporate Debtor, the settlement agreement was entered with LEPL Projects Limited during pendency of the petition dated 30.03.2018. The said agreement copy is filed along with written submission. This settlement agreement is between Operational Creditor and M/s LEPL Projects Limited. Of course LEPL Projects Limited is represented by the Vice President of Air Costa. The settlement is between the Operational Creditor and LEPL Projects Limited. So LEPL Projects Limited is referred to as Air Costa which is its brand name in the settlement deed. The settlement deed is not between Operational Creditor and Corporate Debtor. Along with written submissions, the Corporate Debtor filed Air Operator Permit of M/s LEPL Projects Limited for the year 2013-14 at page Nos. 12-17.

The Operational Creditor filed API agreement in running index filed on 15.03.2018. It is at page Nos. 5-17. This agreement is between LEPL Projects Limited and Operational Creditor. So, there is no API agreement between Operational Creditor and Corporate Debtor. Air Costa is a brand name of M/s LEPL Projects Limited. M/s Air Costa Aviation Private Limited is a different entity having its own registered office. The settlement agreement is also between Operational Creditor and M/s LEPL Projects Limited. However, the present petition is filed against Corporate Debtor and not against M/s LEPL Projects Limited. The liability if any to be discharged by M/s LEPL but not by the Corporate Debtor. There is no privity of contract between Operational Creditor and Corporate Debtor. In this case, the Demand Notice was not issued to the registered office of the Corporate Debtor. The Corporate Debtor filed information that its registered office is situated at Hyderabad, in the State of Telangana whereas the demand notice was sent to the address situated in Vijayawada, State of Andhra Pradesh. Demand notice dated 09.11.2017 is shown at page Nos. 11-16. This is issued to M/s Air Costa Aviation Private Limited but address is shown at Vijayawada, State of Andhra Pradesh. Thus, Demand notice is not issued to the Corporate Debtor. Rule 5 of I & B (Application to the Adjudicating Authority) Rules, 2016, provides that notice shall be delivered on the registered office of the Corporate Debtor. Rule 5 (2) (a) of I & B (AAA) Rules, 2016 is reproduced below:-

The provisions of Section 8 (1) of IBC, 2016 R/w Rule 5 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 not complied. There is no proper service of demand notice on Corporate Debtor as registered office of the Corporate Debtor is in Hyderabad, State of Telangana. The petition is therefore, liable to the rejected even on this ground also.

Thus, the present petition cannot be admitted against Corporate Debtor as there is no default by Corporate Debtor and there is no privity of contract between Operational Creditor and Corporate Debtor. The Petition is liable to be rejected.

However, I make it clear that the right of petitioner to approach before any other forum shall not be prejudiced on account of rejection of instant petition.

In the result petition is rejected.