SITI Networks Limited vs Network18Media & Investments Limited

The Operational Creditor is a Multi-System Operator (MSO) functioning in the State of West Bengal (para 1 at page 4 of the Petition);

In August 2011, the Corporate Debtor approached the Operational Creditor for allotment of band and placement on its cable network TV,The History channel on both analogue and digital modes. Subsequently, the parties entered into an Agreement for Allotment of Band and Placement on 01.09.2011 (the Agreement), which was to run for twelve months from 01.09.2011 to 31.08.2012 (para 3 & 4 at page 4-5 of the Petition);

The consideration was fixed at ₹ 90,00,000/- (Rupees ninety lakh only) plus service tax, divided into ₹ 7,50,000/- per month (para 5 & 6 at page 5-6 of the Petition);

The corporate debtor never raised any issues with regard to the services provided by the Operational Creditor. However, the monthly invoices raised by the Operational Creditor were not cleared on time (para 9 at page 6-7 of the Petition);

After repeated follow-ups, the Corporate Debtor made part payment to the tune of ₹ 12,79,99,875/- (Rupees twelve crore seventy-nine lakh ninety-nine thousand eight hundred and seventy-five only, against the unpaid invoices till 12.01.2016. After appropriating this amount, there still remains a sum of ₹ 1,00,46,506/- (Rupees one crore forty-six thousand five hundred and six only) due and payable by the Corporate Debtor (para 10 & 11 at page 7 of the Petition).

The Demand Notice has not been issued in accordance with Form 3 read with rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, inasmuch as it fails to give details of transactions on account of which the debt fell due and the date from which such debt fell due. The Demand Notice vaguely mentions that "various agreements including agreement dated 01.09.2011 for the periods as mentioned in the said Agreement" have been used. The wordings have been intentionally kept vague to cause confusion. Therefore, the Operational Creditor has failed to give particulars of the alleged operational debt such as total amount of debt, details of transactions on account of which the debt fell due, and the date from which such debt fell due. On this ground alone, the present CP should be dismissed with costs (paras 4.2, 4.3, 4.4 at page 3-5 of the Reply);

The Demand Notice does not contain the Statement of Accounts, though there is a reference to it. However, the same has been annexed to the present Petition at pp.91 to 93 as if it forms part of the Demand Notice. The Corporate Debtor disputes the authenticity of the Statement of Accounts and submits that it is based on non-existent liability having no co-relation to the said Agreement or the invoices raised under the said Agreement (para 4.5 & 4.6 at page 6 of the Reply);

In so far as the Agreement dated 01.09.2011 is concerned, the term thereof was from 01.09.2011 to 31.08.2012. An amount of ₹ 7.50 lakh was payable per month if the Agreement had run its full course. however, the Agreement was terminated on 11.05.2012 with effect from 13.06.2012. Hence, actually only ten invoices were raised under the said Agreement. The Operational Creditor has failed to give any explanation as to how it has raised seventy-five invoices (paras 5.2 & 5.3 at page 7-8 of the Reply);

In para 5 at p.5 of the Petition, it is stated that the Operational Creditor was entitled to receive ₹ 90 lakh. The manner in which this sum was to be received, has been stated in paras 6, 7 and 8. However, at page 7, para 10, it has been stated that the respondent (corporate debtor) has paid ₹ 12,79,99,875/- (Rupees twelve crore seventy-nine lakh ninety-nine thousand eight hundred and seventy-five only). No correlation between the alleged entitled amount and the amount paid has been established (paras 5.4 at page 8-9 of the Reply);

The Agreement for Allotment of Band and Placement was dated 22.11.2011 and not 01.09.2011 as claimed in the Application. This was an agreement to allot bands for and place The History Channel on the cable network of Siti Cable Network Limited (earlier, Wire and Wireless (India) Limited) in Kolkata Territory (paras 8 & 9 at page 10-11 of the Reply);

In accordance with clause 2 of the Agreement, Wire & Wireless (India) Limited raised invoices dated 16.09.2011, 01.10.2011, 01.11.2011, 01.12.2011, 01.01.2012, 01.02.2012, 01.03.2012, 01.04.2012, 01.05.2012 and 01.06.2012 (a total of ten invoices). These invoices have been paid after deduction of necessary TDS vide cheques dated 29.02.2012 for ₹ 40,56,025/-, dated 27.08.2012 for ₹ 24,50,346/- and dated 28.12.2012 for ₹ 11,63,912/-. All three cheques have been duly cleared when presented for payment (paras 11, 12, 13 & 14 at page 12-13 of the Reply);

In so far as the invoices at pp.16-90 are concerned, they pertain to the period from 01.09.2011 to 31.08.2012. The invoices were raised by Wire & Wireless (India) Limited in the name of the Corporate Debtor. These were required to be paid within seven days from the date of each invoice. Most of the invoices do not pertain to the Territory of the said Agreement [paras 25.9 (a) to 25.9 (vvv) at page 17-54 of the Reply];

The invoices attached to the petition do not carry the logo of Wire & Wireless (India) Limited, which was used by the Operational Creditor on its invoices at the relevant point of time. Therefore, they seem to have been generated recently and may be fabricated (para 25.10 at page 54 of the Reply); and

Therefore, there is no amount due and payable to the Operational Creditor. All legitimate invoices have been paid. There is no acknowledgement of liability by making part payment, as alleged. There is also the issue of limitation with respect to the invoices (para 25.16 at page of the Reply).