Chandra Agencies vs Supertech Limited

Dr. P.S.N. Prasad, J

M/S. Chandra Agencies, claiming as the operational creditor has filed the instant application under section 9 of the Insolvency and Bankruptcy Code, 2016 (For brevity' the code') read with rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (Forbrevity 'the Rules') with a prayer to trigger Corporate Insolvency Resolution Process in respect of respondent Company M/S. Supertech Limited referred to as the corporate debtor.

It is the case of the applicant that it is a registered partnership firm and deals in the business of outdoor advertising in the name and style of "M/S. Chandra Agencies", in accordance with the law.

It is also the case of the applicant that the corporate-debtor approached the operational-creditor for advertisement of its products/business by way of various modes of outdoor advertisement. Thereafter, the Corporate-debtor made various purchase orders from time to time for the advertisement and the operational-creditor complying the said orders displayed the advertisements and raised the invoices.

It is stated that the corporate-debtor made the last payment towards the outstanding amount on 07.02.2017 whereby it issued three cheques bearing nos. 22527, 02261 and 01225 for an amount of Rs. 4,10,509/-(INR four lakh ten thousand five hundred nine only), Rs. 44,100/- (INR forty-four thousand one hundred only) and Rs. 28,224/- (INR twenty eight thousand two hundred twenty four only) respectively to the operational-creditor and the same were secured by the operational-creditor by presenting the said cheques to its Bank.

It is asserted that since the corporate debtor had failed to pay outstanding demand the Operational-creditor invoked Section 8 of the IB Code, 2016 and issued a legal demand notice upon the corporate-debtor on 06.04.2018 and the same was received by the corporate-debtor on 11.04.2018 for payment of the outstanding amount along with interest at the rate of 12% since the date of last payment made towards the outstanding amount till the time full and final payment is made to the operational-creditor.

In part IV of the application it is submitted that the total debt including interest at the rate of 12% p.a. amounts to Rs. 23,18,049/- (INR twenty-three lakh eighteen thousand forty-nine only) and the debt fell due on 19.07.2014.

The respondent corporate debtor has filed its reply dated 20.04.2018 to Section 8(1) notice and raised objection against the admission dated 17.07.2018 of the present application on the basis of deficiency in the services and breach of obligations by the applicant.

It is submitted by the respondent that the breach of obligations are explicit from the email dated 11.01.2016, wherein in furtherance to and despite of the deficiencies already pointed out to the Operational-creditor, the same continued and the Corporate-debtor asked the Operational-creditor to change all the flexes as being as being defective and not as per the requirements of the service order. The said e mail has been reproduced below:

"From: Bappi Barman

[mail to: bappi.barman@supertechlimited.com]

Sent: Monday, January 11, 2016 6:10 PM

To: sps.chandra2013@gmail.com

Cc: Sanjay Arora STC\

Subject: 8x4 Boards

Dear Rashmi,

It is been long time and the 8x4 Boards are not maintained properly. 1 am getting complaints from the site people, clients as well as other vendors.

Yesterday, the top management had a visit at site and I have been instructed to discontinue the media if not able to manage.

As per our last discussion, we have confirmed for 20 Boards, 7 (5 Hues, 2 Hilltown) Boards at Golf Course extn. Road, 3 Hues from Rajeev Chowk to Badhshahpur. And 10 Hilltown at Sohna Road from Badhshpur to Hilltown. Apart from this we have finalized 4 6x3 Boards on Tikil Road to Hues. You were supposed to mail us regarding the same but have not got any from you side.

Kindly update on all.

Also update on the 5 Unipoles Installed as well as the IREO Unipole Availability.

Meanwhile we are considering zero display of 8x4 Boards being all media torn till date.

Awaiting prompt response.

Regards,

Balli Barman

Suptertech Limited"

It is also stated in the reply that despite of such deficiencies and non-maintenance of the advertisement services under the Service Orders, the defective flexes and boards along with deficient maintenance and services continued by the Operational-creditor and the same lead and constrained the Corporate-debtor to send the email dated 17.02.2016 which reads as under:

"Dear Rashmi,

This is to inform you that your media is discontinued with immediate effect. The reason being you are not able to manage the media properly. Since day 1 there has been some problem or the other. Media remained damaged almost all the time.

Therefore, management has taken decision to discontinue with immediate effect because the whole campaign proved to be a negative branding than positive branding.

Having said this, we would want to restart this business association later sometimes in the future with other sorts of options useful to us. Keep in touch for updates.

Thanks and Regards,

Vikrant Chauhan

(Media)

Super tech "

It is also alleged that the Operational-creditor was not competent to carry on the work and services assigned to it. The media remained torn and damaged from day one. The print was defective and the same is on record and the same amounted to negative branding leading to loss and damages to the Corporate-debtor.

It is further submitted that the respondent Corporate-debtor has specifically pointed out the material disputes among the parties in the Notice of Dispute issued under Section 8(2) of the Insolvency and Bankruptcy Code, 2016.

Heard the Ld. Counsels for both the parties and perused the case records.

There is no dispute that the emails were sent by the respondent and issues were raised regarding services provided by applicant to respondent. It is seen that the claim of the applicant has not been admitted by the respondent but has been disputed with sufficient particulars. This fact is not disputed by the applicant that issues/ complaints were raised by respondent about deficiencies in services.

It is pertinent to state here that this is not the forum to examine and adjudicate as to which portion of the claims are admissible. Tribunal will also not examine the relative merits of dispute. It is beyond the scope of this forum to decide as to which party and to what extent is responsible to pay amounts when there is a serious allegation of fabrication and misrepresentation. There is material to believe that disputes certainly exist in the facts of the present case and it is right to have the matter tried out before the axe, in the form of Corporate Insolvency Resolution Process, falls.

In respect of definition of "dispute" in the Code Hon'ble Supreme Court has held in the case of Mobilox Innovative Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. in civil appeal No. 9405 of 2017 vide order dt. 21.09.2017 inter-alia that:

"Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible, contention which required 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 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 given).

In the factual background as discussed above, there has been no admission of operational debt by the respondent. In fact, there has been a pre-existence of dispute regarding bills raised and services provided by the applicant. Dispute existed much prior to the issuance of notice under Section 8 of the Code as there are various issued were raised in respect of services provided by applicant to the respondent. The claim of pre-existing dispute suggests the need of elaborate investigation. It is reiterated that existence of dispute in the present case cannot be ruled out.

As discussed above the respondent has raised dispute with sufficient particulars. Hence, the amount of claim raised by the applicant clearly falls within the ambit of disputed claim. Section 9(5)(ii)(d) of the Code provides that adjudicating authority shall reject the application if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility.

For the reasons stated above this petition fails and the same is rejected.

We make it clear that any observations made in this order shall not be construed as an expression of opinion on the merit of the controversy and the right of the Applicants before any other forum shall not be prejudiced on account of dismissal of instant application.

Serve copy of the order to the parties and consign the case records to the record room.