Pearson India Education Services Private Limited vs M/s. U.B.S. Publishers Distributors Private Limited

PER SHRI L. N. GUPTA, MEMBER (T)

M/s Pearson India Education Services Pvt. Ltd. (hereinafter, the 'Applicant/Operational Creditor') has filed the present Petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (the 'IBC', 2016') read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s. U.B.S. Publishers Distributors Pvt. Ltd. (hereinafter, the 'Respondent').

The Respondent namely, M/s. U.B.S. Publishers Distributors Pvt. Ltd. is a Company incorporated on 17.05.1969 with CIN U74899DL1969PTC005042 under the provisions of the erstwhile Companies Act, 1956, having its registered Office at 4384/4A, Fourth Floor, Ansari Road, Darya Ganj, New Delhi-110002, which is within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent is Rs.10,00,000/- and Paid-up Share Capital is Rs. 9,50,300/- as per the Master Data of the Respondent.

It is submitted that the Applicant is engaged in the activity of providing "Education Support Services" including academic and non-academic services to schools along with support services pertaining to the operation of schools. The Respondent raised various purchase orders upon the applicant for delivery of books and accordingly, the applicant raised invoices against the said delivery of books. On 06.04.2018, the Applicant and the Respondent executed two agreements, namely, the sale and purchase Agreement for Offline purchases, and sale and Purchase Agreement for online purchases (hereinafter, 'Sale and Purchase Agreements').

The detailed particulars of the Operational Debt claimed by the applicant in Part IV of its application are reproduced below:

From the part IV of the Application, it is seen that the Applicant has claimed the principal amount of Rs.16,54,52,216/- and interest amount of Rs.2,12,58,005/- as the operational debt due and payable by the Respondent.

It is stated by the Applicant that it had issued a Demand Notice under Section 8 of the I&B Code, 2016 to the Respondent on 22 July 2020 by way of post and email, which was received via post by the Respondent on 27 July 2020. Despite receipt of the Demand Notice, the Respondent neither paid the outstanding dues nor raised any dispute within 10 days and the invoices remain unpaid. Hence, this Application. However, after lapse of more than 10 days, the Respondent through its counsel issued a response wherein, the Respondent tried to weave a story as an afterthought with a motive to raise a dispute, which never existed and was never raised upon receipt of the Demand Notice.

On issuance of notice, the Respondent has filed the reply on 27.10.2021 and submitted that -

The Applicant has also filed its Written Submissions and provided the details of the transactions in a tabular form, as follows:

The matter came up for final hearing on 03.10.2022, during the course of which Mr. Shravan Niranjan, Ld. Counsel appearing for the Respondent admitted the debt, though he added that the exact amount of debt has not been crystallized.

We have heard the Ld. Counsels for both the parties and perused the documents and written submissions placed on record. The Respondent has contended that the Application is barred by Section 10A of IBC, 2016, therefore, we would like to examine whether the present Application is barred by Section 10A of IBC, 2016 ?

On perusal of the application, it is observed that the Applicant and Respondent had entered into two agreements dated 06.04.2018 namely, the sale and purchase Agreement for offline purchases & sales and Purchase Agreement for online purchases. Accordingly, the Applicant has submitted that it supplied books and raised the invoices between June, 2017 and December, 2019 as depicted in the table reproduced in the paragraph 8 above.

At this stage, first we would like to visit the terms and conditions of the Purchase Agreement for online purchases (for brevity, the 'Online Agreement'), in order to examine whether the due dates of payments are falling within the period of suspension stipulated under Section 10A ? The relevant clause relating to payments in the 'Online Agreement' is reproduced below:

Thus, it is seen from the condition at serial 6(a) of the Online Agreement read with Credit Terms given in the Annexure-I thereto (reproduced above), the Respondent was liable to pay the Applicant Company at Delhi within 120 days from the date of each invoice. Hence, at this stage, we refer to the Work Sheet (containing summary details of invoices raised) for the online purchases (i.e., Code No. 203126 of the Respondent) as provided by the Applicant in annexure II-z of the application and which are reproduced overleaf :

From the aforesaid Worksheet, it is noticed that the invoices for the online purchases were raised from 11.09.2018 to 28.12.2018, for which the due dates for payment were falling between 30.01.2019 and 30.04.2019, which are clearly prior to the commencement of the suspension period (as stipulated under Section 10A of IBC, 2016) on 25.03.2020. Further, since the total amount of default by the Respondent against these invoices raised for the online purchases as per the branch-wise summary given above comes to Rs.1,26,96,778/-, which is more than the minimum threshold amount prescribed under Section 4 of IBC, 2016, we do not consider it necessary to visit the offline invoices.

It is pertinent to mention here that the proceedings before this Adjudicating Authority being of summary in nature, it is not possible to go into the details of each and every invoice and calculate the exact quantum of debt. The only things that this Adjudicating Authority has to examine is to whether the Respondent has committed the default in payment of the operational debt and the said Operational Debt is more than the minimum threshold amount. Here, the Applicant has been able to demonstrate the debt of more than Rs. one crore outstanding against the Corporate Debtor. Moreover, during the course of final hearing dated 03.10.2022, Ld. counsel appearing on behalf of the Respondent has clearly admitted the default, hence, this Adjudicating Authority is inclined to initiate the Corporate Insolvency Resolution Process against the Respondent.

In the given facts and circumstances, the Operational Creditor having established the default of the Corporate Debtor in payment of operational debt of the amount being above the minimum threshold and the Petition filed under Section 9 being complete and fulfilling all the requirements of law, the petition is admitted in terms of Section 9(5) of the IBC. Accordingly, the CIRP is initiated and moratorium is declared in terms of Section 14 of the Code. As a necessary consequence of the moratorium in terms of Section 14(1) (a), (b), (c) & (d), the following prohibitions are imposed, which must be followed by all and sundry:

Since, there is no IRP proposed by the Operational Creditor, this Bench appoints Mr. Ajay Gupta (Email id: [email protected]) having IBBI Registration No. IBBI/IPA-001/IP-P00140/2017-18/10304, Mobile No.9871277445 from the panel of IPs recommended by the IBBI. This Adjudicating Authority further orders that -

The Operational Creditor is directed to deposit Rs. 2,00,000/- (Two Lakh) only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor.

A copy of this Order shall immediately be communicated to the Operational Creditor, the Respondent and the IRP mentioned above by the Court Officer/Registry of this Tribunal.

In addition, a copy of the Order shall also be forwarded by the Court Officer/Registry to the IBBI for their records.