M/s. Walsons Services Private Limited vs M/s. Zentora Overseas Careers Private Limited

Per: Hon'ble Shri Narender Kumar Bhola, Member (Technical)

The instant Petition is filed by M/s. Walsons Services Private Limited / Operational Creditor alleging that M/s. Zentora Overseas Careers Private Limited /Corporate Debtor had defaulted an amount of Rs.14,16,113/- (Rupees Fourteen Lakhs Sixteen Thousand One Hundred and Thirteen only) which includes principal amount of Rs.10,32,259/- and interest amount of Rs.3,83,854/-, which is due w.e.f. 15.07.2017. 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 of the petition filed by the Petitioner/Operational Creditor in brief are described hereunder:

M/s. Walsons Services Private Limited/Operational Creditor is engaged in the business of providing essential support services which include security solutions, facility management solutions and background verification services. M/s. Zentora Overseas Careers Private Limited / Corporate Debtor is engaged in the business of providing end to end immigration and visa solutions to the individuals.

It is averred a contract for Security Service Arrangement ('Agreement') was made and executed between the Operational Creditor and the Corporate Debtor for providing security services at different premises of the Corporate Debtor as specified in the Agreement for a period of one year i.e. from 01.10.2016 to 30.09.2017.

It is averred the Operational Creditor duly rendered services to the full satisfaction of the Corporate Debtor and raised invoices from time to time for the services rendered in eight different locations of the Corporate Debtor.

It is averred as per Clause 33 of the Agreement, it was agreed that monthly invoices would be raised on or before 10th of every calendar month for the services provided in the previous month and the Corporate Debtor was supposed to make the payment within 45 days from the date of invoice and if it delays payment more than 90 days, the Operational Creditor is entitled to receive interest @ 2% per month.

It is averred initial invoices raised during 2016 were duly honoured by the Corporate Debtor but in the year 2017, the payments became irregular and Corporate Debtor failed to make payments for 35 invoices raised by the Operational Creditor.

It is averred even after the expiry of the Agreement on 30th September, 2017, yet at the request of the Corporate Debtor, rendering services were continued by the Operational Creditor and requested to clear the outstanding amount as on September, 2017. The Corporate Debtor acknowledged the same vide email dated 27.11.2017 and assured that the payment will be made within 12 working days and did not raise any dispute with regard to the services rendered by the Operational Creditor.

It is averred the Corporate Debtor arbitrarily issued a closure notice on 30.11.2017 wherein the services of the Operational Creditor were terminated and stated that the services rendered by the Operational Creditor will be concluded w.e.f. 02.12.2017 and the payment will be cleared within 3 months from the date of the closure notice. But Operational Creditor did not accept the payment terms and informed the same on 04.12.2017.

It is averred neither during the term of the agreement nor post termination of the Agreement, the Corporate Debtor ever disputed the invoices, nor the pending payments owed by the Corporate Debtor to the Operational Creditor for services rendered by the Operational Creditor.

It is averred between December 2017 and May, 2018, the Operational Creditor made several requests to clear the outstanding payments but no payments were received from the Corporate Debtor and the Operational Creditor was constrained to issue demand Notice on 09.06.2018 to the Corporate Debtor under Insolvency and Bankruptcy Code, 2016, which was received by the Corporate Debtor on 18.06.2018.

It is also averred several meetings were held and emails were exchanged between the Operational Creditor and Corporate Debtor during the period from July, 2018 to February, 2019, wherein the Operational Creditor repeatedly requested the Corporate Debtor to clear the outstanding payments, which was duly acknowledged by the Corporate Debtor, vide its email dated 24.01.2019.

It is averred even after the issue of the demand notice, neither received any payment nor any convincing response from the Corporate Debtor and any notice of dispute towards the outstanding payment. Hence the petition.

The Corporate Debtor filed counter. The averments in the counter that Operational Creditor approached the Operational Creditor through a third-party company i.e. M/s. Chevronne Group for providing security services to its four clients, M/s. NBW Morevisas Immigration Services Private Limited, M/s. Zentora Overseas Careers Private Limited, M/s. Career Overseas Outsourcing Private Limited and M/s. Opulentus Overseas Careers Private Limited. It is alleged that invoices were raised in the name of client companies individually. All the invoices were shared with Chevornne Group and accordingly the payments were to be made by the client companies. However, the Petitioner Company violated the terms and conditions of Agreement dated 22.09.2016 for which this Corporate Debtor sustained huge financial loss.

It is also averred a Security Service Agreement was executed between Operational Creditor and Corporate Debtor for providing security services to the Corporate Debtor from 30.09.2016 to 30.09.2017. It is also stated that invoices to be raised on or before 10th of every calendar month for the services provided in the previous month and Corporate Debtor to make payment within 45 days. In case of delay beyond 90 days, interest @ 2% per month to be paid.

Corporate Debtor denied the allegation that Operational Creditor rendered services to the satisfaction of Corporate Debtor. It is alleged Corporate Debtor has paid amount covered by 11 invoices. Details of the amount paid under the invoices are given in the counter. It is alleged Operational Creditor has deliberately suppressed the payment. It is stated Corporate Debtor terminated the Agreement by giving notice dated 30.11.2017. It is alleged Operational Creditor has not furnished proper accounts. It is stated that Corporate Debtor did not arbitrarily issued closure notice. It is alleged a civil suit was filed against employees of the Operational Creditor when they tried to enter into the premises of Corporate Debtor after termination of the Agreement. It is stated an amount of Rs.4,11,463/- was already paid in respect of 11 invoices. A reply was issued to the demand notice.

We have heard the Counsel for Operational Creditor and Counsel for Corporate Debtor. The Operational Creditor has filed various documents in proof of claim and default. The demand notice is shown as Annexure-1 at page nos. 34 to 72 of the paper booklet. The demand notice was served on Corporate Debtor. Information obtained from India Post Website was filed which is shown as Annexure-2 at page nos. 73 to 74 of paper booklet. The demand notice is accompanied by tax invoices. The case of Operational Creditor that it had provided security services for the Corporate Debtor in its different locations. Service Agreement entered with Corporate Debtor is shown as Annexure-4 dated 30.09.2016.

An analysis of the Counter filed by the Corporate Debtor indicates that it has not raised any dispute with regard to availing services and / or the amount of claim involved in this petition. Reminder e-mails issued to the Corporate Debtor from time to time are shown as Annexure-5 (Colly.). Thus, Operational Creditor filed evidence to establish that it had rendered security services to the Corporate Debtor and raised invoices. No dispute was raised on behalf of Corporate Debtor whereas Operational Creditor is able to establish debt and default. There is no pre-existing dispute. Relying on the documents filed by Operational Creditor and in the absence of any material from the side of Corporate Debtor, petition deserves to be admitted.

The Operational Creditor has suggested Mr. Sridhar Venkatraya Sundararaja, IBBI Registration No. IBBI/IPA-002/IP-N00146/2017-2018/10382 as proposed Interim Resolution Professional who filed his consent in Form-2.

Hence, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code, with the following directions: -

The Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority; Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002 (54 of 2002); the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate Debtor;

That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.

That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

That the order of moratorium shall have effect from 02.03.2020 till the completion of the Corporate Insolvency Resolution Process or until this Bench approves the Resolution Plan under Sub-Section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33, whichever is earlier.

That this Bench hereby appoints Mr. Sridhar Venkatraya Sundararaja, IBBI Registration No. IBBI/IPA-002/IP-N00146/2017-2018/10382, as Interim Resolution Professional to carry out the functions as mentioned under the Insolvency & Bankruptcy Code, 2016.

That the Public announcement of Corporate Insolvency Resolution Process shall be made immediately as specified under section 13 of the code.

Registry to send a copy of this order to the Registrar of Companies, Hyderabad for appropriately changing the status of Corporate Debtor herein on the MCA-21 site of Ministry of Corporate Affairs.