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Judgment
O R D E R
Per: [NARESH SALECHA, MEMBER (TECHNICAL)]:
13.10.2023: The present Appeal i.e., Company Appeal (AT) (Insolvency) No. 1400 of 2022 has been filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) r/w Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 against the order dated 14.09.2022 ("Impugned Order") passed by the National Company Law Tribunal, New Delhi Bench – IV, (in short ‘Adjudicating Authority’) in C.P (IB) No. 325/(ND)/2020.
The Appellant is in business of travel technology and facilitates for the subscribers in India to access the Global Distribution System ("GDS") developed by Amadeus IT group SA wherein the GDS acts as an international network providing real time search, pricing, booking and ticketing services for various airlines. The subscribers executes GDS Subscriber Agreement where-under the Subscribers are provided upfront incentive amount to make bookings through 'Amadeus GDS' for the period agreed upon and at the rates committed therein the agreement inter-se.
M/s Travel Planners Ltd., the Corporate Debtor / Respondent, is a travel company and desiring to enhance their business by providing efficient and value added services to their 'clients' in the field of travel and tours shown interest in having Amadeus GDS as the sole and exclusive GDS in order to have access to reservation functionality to all their offices in India and had approached the Appellant to provide software connectivity to access 'Amadeus GDS'.
The Appellant had filed an application U/S 9 of the Code on 20.01.2020 against the Respondents and vide Impugned order dated 14.09.2022 passed in C.P No. (IB)-325/ND/2020, the Adjudicating Authority dismissed the said application on an alleged erroneous finding of a pre-existing dispute between the parties.
The Appellant submits that the E-mail dated 10.05.2019 titled as "Intimation of Breach of Contract" sent by the Respondent has no nexus with the GDS Agreement and has been sent with the sole intention of avoiding the obligations of the Respondent under the GDS Agreement.
The Appellant submitted that Clause 2.2 & 2.3 of the Agreement lays down the obligations of the Parties and the Respondents committed to conduct its total reservation segments subject to minimum of 22,000 Air tickets per annum through Amadeus GDS and the Appellant was to provide the access to the Amadeus GDS to the Respondent. Further, the Clause 6.1 and 6.2 shows the incentives to be paid by the Appellant for various reservation segments to be conducted by the Respondent for "various airlines". Lastly, Segments have been defined under Clause 6.8 of the GDS Agreement.
The Appellant brought out that he gave advance of Rs.75 Lakh to the Respondent to buy air tickets and also deduct the incentives dues, however despite complete failure on part of the respondent, the Respondent did not return advance given by the Appellant to the Respondent.
The Appellant alleged that the Adjudicating Authority erroneously arrived at the conclusion that the Respondent being engaged in the business of travel must have suffered losses due to the termination of use of the GDS system of the Appellant by Air India, whereas GDS agreement entered between the parties does not contain even the name of 'Air India' specifically or otherwise, which could have justified the Adjudicating Authority to pass the said Impugned Order against the Appellant.
The Appellant called upon Respondents to return the amount of Rs. 75 Lakh by way of various discussion and meeting in his office and then by way of various discussion and meeting in his office and then by way of notices such as 04.06.2019, 06.08.2019 and finally the demand notice under Section 8 dated 20.11.2019 was duly served upon the Corporate Debtor.
It is the case of the Appellant that the Respondent sent its reply dated 27.11.2019, whereby the receipt of the amount was admitted but raised issue/ breaching the agreement regarding the non-providing of all the Airlines. It is further case of the Appellant that there was no clause in the subscriber agreement that the Operational Creditor will provide the contents of any particular Airlines to the Corporate Debtor and the defence taken in this regard was not plausible and was no defence in the eyes of law. The Appellant alleged that the Corporate Debtor tried to dispute its liability on frivolous grounds which were against the written subscriber agreement.
The Appellant submitted that, there was no mention of "Air India" in the entire GDS Agreement and the notifications annexed by the Respondent regarding termination of Air India's use of Amadeus GDS of the Appellant did not have any bearing to the present matter as under the GDS Agreement, there was no obligation upon the Appellant to specifically provide for the Amadeus GDS for Air India POS to the Respondent. As per the agreement there was no clause which stipulates that the Appellant had agreed to provide details of any Airlines. The agreement only stipulates that the Respondent was duty bound to use the Amadeus Global Distributors Systems for its total reservations so as to avail the upfront incentives which were to be adjusted against the loyalty incentives payable.
The Appellant alleged that the Appellate Tribunal wrongly has held the E-mail Dated 10.05.2021 to be the "Pre-existing Dispute" between the parties whereas, the E-mail of the Respondent has no bearing with the GDS Agreement and it cannot be considered as a valid notice of dispute in terms of the GDS Agreement or any breach of obligation on part of the Appellant under GDS Agreement.
The Appellant submitted that the scope of the alleged dispute raised by the Respondent neither falls in any category contained hereinabove in (a), (b) or (c) of Section 5(6) of the Code. Therefore, the dispute is not only frivolous but also outside the scope of Section 5(6) of the Code. Hence, there is no dispute between the parties and the finding of the Adjudicating Authority is erroneous, bad in law and liable to be set-aside. The Appellant urged to allow his appeal accordingly.
Per contra, the Respondent denied all the averments of the Appellant as baseless and misleading.
The Respondent alleged that the Appellant violated the agreement and cheated him leading to closure of his business and the present appeal has been filed only to harass him and with fraudulent intentions of illegal gratification from the Respondent.
The Respondent stated that there were clear pre-existing disputes with the Appellant and he sent e-mail dated 10.05.2021 much prior to demand notice sent by the Appellant under section 8 of the Code. The Respondent further alleged that as per agreement, the Appellant was duty bound to provide platform of all domestic airlines but Air India and Jet Airways did not allow platform, resulting in breach of agreement.
The Respondent submitted that as per Para 40 of the judgment of the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited[(2018) 1 Supreme Court Cases 353] it was held as follows:
"40... Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." (Emphasis Supplied)
It is the case of the Respondent that based on the above ratio, it is clear that the 'pre-existing dispute' has to be only exist in fact and should not be spurious, hypothetical or illusory and the Adjudicating Authority was obliged to reject Section 9 application in view of clear pre-existing disputes.
The Respondent brought out that the Appellant sent a demand notice under Section 8 of the Code to him on 20.11.2019 claiming an amount of Rs. 75 lakhs. However, in accordance with section 8(2)(a) the Respondent vide reply dated 27.11.2019 brought the notice of the Appellant of the pre-existing disputes between the parties.
The Respondent submitted that he received trade circulars from Air India on 08.11.2018 and 01.12.2018 declaring that Amandeus Software can no longer be used for accessing the Air India Point of Sale content with effect from 04.12.2019, which came as a shock to the Respondent who was under the GDS Agreement dated 09.08.2018 entered into with the Appellant.
The Respondent stated that he intimated the Appellant vide email dated 10.05.2019 titled "Intimation of Breach of Contract" stating that despite several requests of the Respondent over past 9 months, the Appellant has not been able to get its GDS services restored for Air India and Jet Airways. The Respondent further stated that he suffered huge losses due to non-availability of said GDS for which the Appellant is liable to compensate to the Respondent.
After hearing, all averments and cited judgment by both parties, we will refer to Section 5(6) of Code the term 'dispute' is defined and reproduced herein below-
"dispute includes a suit or arbitration proceedings relating to-
(a)the existence of the amount of debt;
(b)the quality of goods or service; or
(c)the breach of a representation or warranty."
We will also like to look into relevant para of the Impugned Order which read as under :-
“5.The Corporate Debtor, in reply to demand notice dated 27.11.2019 issued by the Operational Creditor on 20.11.2019 in compliance of section 8 of IBC, 2016 read with clause (a) of sub-rule (1) of Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, had disputed the alleged Claims of the Operational Creditor and contended that there is (a pre-existing dispute between the parties. The Respondent had pointed out the email dated 10.05.2019 which was sent to the Applicant by the Respondent, wherein the subject was "Intimation of Breach of Contract" in the said email it was mentioned that Air India and Jet Airways have suspendedthe Global Distribution Services (in short ‘GDS Services’) of the Applicant. As per the terms of GDS Subscriber Agreement entered between Applicant and Respondent, the Respondent's Company is bound to use the GDS Services of the Applicant exclusively. Further, in para 5 of the aforesaid email the Respondent had also mentioned that about 9 months have passed and in spite of several requests by the Respondent, the Applicant had not been able to restore the GDS Services for Air India and Jet Airways and that due to this issue the Corporate Debtor is suffering huge losses. The copy of the Air India Commercial Department Circular No- HCD/5R/GDS/328 dated 01.12.2018 has also been placed on record by the Respondent which stated that Air India flight content will no longer be available to Amadeus GDS subscribers in all the markets including India. Since the Respondent was in the business of travel related services, the said issue must have impacted the day-to-day operations of the Corporate Debtor's Business.
6.It is evident from the documents placed on record by the Corporate Debtor and the Operational Creditor that there exists a pre-existing dispute between the parties before issuing the demand notice and it is the mandate of lawthat if there exists a pre-existing dispute between the parties the Adjudicating Authority must reject the application under section 9(5)(ii)(d) of the Insolvency and Bankruptcy Code, 2016. Reliance is placed on the landmark judgement of Hon'ble Supreme Court of India in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Private Limited 2018 1 Supreme Court Cases 353.
….In the light of the above said facts and after giving careful consideration to the entire matter and hearing the arguments of the learned counsel for the Operational Creditor as well as the reply filed by the Corporate Debtor and upon appreciation of the documents placed on record to substantiate their respective claims, as there is a pre-existing dispute between the parties and IBC is not a substitute for a recovery forum. Hence, this Adjudicating Authority dismisses this application filed by the Operational Creditor under Section 9 of Insolvency and Bankruptcy Code, 2016. However, the claim under any other law, if permissible can be pursued by the Petitioner as prescribed under that law.
(Emphasis Supplied)
We note that the fact that Air India being one of the largest airlines operating large number of flights on Domestic routes was one of the significant revenue contributor and Air India not allowing players in the airline business using the Amadeus Software under the GDS might have impacted the business of the Respondent. Our attention has been drawn by the Respondent that the Appellant never replied to the e-mail of the Respondent dated 10.05.2021 and the Appellant never addressed the issue of termination of its software by Air India and Jet Airways.
We therefore feel that the e-mail dated 10.05.2021 sent by the Respondent to the Appellant under title of “Intimation of breach of contract” much prior to issue of demand notice under Section 8 of the Code, is nothing but pre-existing disputes and thus the dispute is squarely covered by the judgement of the Apex Court in Mobilox Innovations (Supra).
We are therefore, satisfied that the Adjudicating Authority after considering all documents and facts correctly held that there was a pre-existing dispute and the appeal raises no valid grounds to controvert the said finding.
In view of above detailed discussion, we do not find any error in the Impugned Order under challenge before us.
In fine, the Appeal fails and stand dismissed. No costs. Interlocutory Application(s), if any, are Closed.