M/s. Rationalheads Technologies Pvt. Ltd. vs M/S. India Sports Flashes Pvt. Ltd.

Pradeep R. Sethi, Member (T)

The application is filed under section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as Code) read with Rule 6 of the

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of Corporate Insolvency Resolution Process against M/s.

India Sports Flashes Pvt. Ltd. (Corporate Debtor). The application is filed by M/s. Rationalhead Technologies Pvt. Ltd. (Operational Creditor). The

application is filed in the prescribed Form No.5 and is signed by Shri Vikas Chandra Saxena, Director and authorised representative of the Operational

Creditor. His affidavit verifying the application is at page 38 of the application. The Board Resolution of the Operational Creditor dated 10.08.2018

authorising Shri Vikas Chandra Saxena is at Annexure A-9 of the application.

The Master Data of the Corporate Debtor is at Annexure A-11 and shows that the Corporate Debtor was incorporated on 01.08.2016 and the CIN

is U22219DL2016PTC303793. The registered address is shown as 70-A/23 Third Floor, Rama Road, Industrial Area, Najafgarh Road, New Delhi-

110015. Therefore, the jurisdiction lies with this Bench of the Tribunal.

In Part-IV of Form No. 5, it is stated that the Corporate Debtor approached the Operational Creditor for provision by the Operational Creditor of

Digital Marketing and related services to the Corporate Debtor for increasing the number of users for the Corporate Debtor’s mobile application

and that Internet Advertising Services Agreement was entered into on 06.06.2017. It is stated that the Operational Creditor successfully completed

and delivered all the services as per the terms of the agreement and the said completion of services was acknowledged by the Corporate Debtor. It is

further stated that the Operational Creditor raised invoices dated 19.07.2017 and 08.09.2017 for Rs.2,74,708/- and Rs.2,20,289/-respectively and that

the invoices were duly acknowledged and accepted by the Corporate Debtor by its email dated 23.08.2017 and 14.09.2017 and that the Corporate

Debtor vide email dated 19.12.2017, 21.12.2017 and 09.01.2018 acknowledged the payment liability and promised to pay the amounts due to the

Operational Creditor.

The statutory demand notice under section 8 of the Code is stated to be sent on 01.02.2018 through email as well as registered post. The copy of

the email is stated to be Annexure A-3 of the application. It is stated that no response to the demand notice was received by the Operational Creditor

from the Corporate Debtor within the timeline mentioned in the demand notice. The affidavit of no dispute has been filed at page 36 of the application.

It is stated that payment has not been received, the amount claimed to be in default is Rs.4,94,997/- alongwith interest at 24% per annum and that the

default first occurred on 19.07.2017 and 08.09.2017 and is continuing on day to day basis.

Vide order dated 20.09.2018, notice was directed to be issued to the Corporate Debtor. The Corporate Debtor filed reply by diary No. 9136 dated

20.11.2018. It was stated that the Corporate Debtor wrote a mail dated 26.02.2018 to the Operational Creditor regarding Google discounting some app

installed and for ensuring that the installs initiated by the team of the Operational Creditor do not fall in the same category, some more details about the

project like user ID, IP addresses etc. to certify delivery as appropriate installs be provided. It is stated that the Operational Creditor has not provided

the user ID, IP addresses etc. to certify the appropriate installs and that the application is liable to be rejected by the Tribunal since the entire balance

amount due is in dispute and the only remedy, if any, available with the Operational Creditor is to approach the Civil Court for the relief.

During the course of the hearing, the Ld. Counsel for the Operational Creditor has referred to the contents of the Form No. 5 and has pleaded that

as per email dated 21.12.2017 of the Corporate Debtor to the Operational Creditor (Page 123 of the application), the Corporate Debtor had stated that

the dues would be cleared by 10.01.2018 but no such payment was made. The Ld. Counsel for the Corporate Debtor has referred to the agreement

for internet/mobile advertising services dated 06.06.2017 and has pleaded that the scope of work included providing a post back link to the Corporate

Debtor, which the Corporate Debtor shall integrate on its server for validating the count of product installation/registration and that the same was not

done. It is submitted that the debt is completely disputed.

We have carefully considered the submissions of the Learned Counsel for the Operational Creditor and the Corporate Debtor and have also

perused the record. The Operational Creditor has stated that an amount of Rs. 4,94,997/- alongwith interest at 24% per annum is in default and that

the default first occurred on 19.7.2017 and 8.9.2017 and is continuing on day to day basis. Email correspondence has been filed at Annexure A-10 of

the application to show that the payment liability was acknowledged and promise was made to pay the amount. We find that as per email at page 123

of the application, the Corporate Debtor wrote to the Operational Creditor that the dues would be cleared by 10.01.2018. However, by email dated

09.01.2018 (page 132 of the application), it was informed that there would be further delay of 10-12 days before the payment is released. Even

thereafter, the payment was not made and the Operational Creditor sent the statutory demand notice under section 8 of the Code on 01.02.2018

through email. It has submitted by the ld. Counsel for the Operational Creditor that no response to the demand notice was received within the timeline

mentioned in the demand notice. Affidavit of no dispute was also filed at page 36 of the application.

In response to the email dated 01.02.2018 of the Operational Creditor forwarding the statutory demand notice, the Corporate Debtor sent reply by

email dated 26.02.2018. In this email, reference was made to Google discounting some app installed. It was further stated that to ensure that the install

initiated by the team of the Operational Creditor do not fall in the same category, User ID, IP addresses be provided to certify the delivery as

appropriate installs. As discussed above, the Operational Creditor provided services under agreement for internet advertising services dated

06.06.2017 and raised invoices on 19.07.2017 and 08.09.2017. The demand for user ID, IP addresses etc. was made by the Corporate Debtor at a

much later date after the statutory demand notice was already served upon it. The Corporate Debtor has referred to the scope of work of the

agreement dated 06.06.2017 for internet/mobile advertising services for providing a post back link to the Corporate Debtor which the Corporate

Debtor shall integrate on its server for validating the count of product installation/registration. It is stated in the reply filed during the present

proceedings that the Operational Creditor did not provide the User ID, IP addresses etc. to certify the appropriate install. However, the email

correspondence filed as Annexure A-10 relating to the period 23.08.2017 to 09.01.2018 does not show that any objection or dispute on the above

grounds was taken up by the Corporate Debtor. The emails show that further time was being sought by the Corporate Debtor for making the payment

of the amount of Rs.4,94,997/- and that on 09.01.2018, the Operational Creditor was again informed that there would be a further delay of 10-12 days

before the payment is released. In view of the above discussion the contention raised by the Corporate Debtor that there was a dispute regarding the

complete of the debt cannot be accepted.

Section 9(5)(i) of the Code reads as under:

“(5) The Adjudicating Authority shall within fourteen days of the receipt of the application under sub-section (2), by an order-

(i) admit the application and communicate such decision to the operational creditor and the corporate debtor if,-

(a) The application made under sub-section (2) is complete;

(b) There is no [payment] of the unpaid operational debt;

(c) The invoice or notice for payment to the corporate debtor has been delivered by the operational creditor;

(d) No notice of dispute has been received by the operational creditor or there is not record of dispute in the information utility; and

(e) There is no disciplinary proceeding pending against any resolution professional proposed under sub-section (4), if any.

We find that the application made in Form No. 5 is complete and that the unpaid operational debt is still to be paid by the Corporate Debtor. As

discussed above, the receipt of the invoices was acknowledged by the Corporate Debtor through email. The statutory notice under section 8 of the

Code was served on the Corporate Debtor as discussed above and no reply was received within the time period of 10 days of the receipt of the

demand notice as given in Section 8(2) of the Code. However, after the expiry of the 10 days period, the Corporate Debtor sent an email dated

26.02.2018. It has been discussed above that there is no pre-existing dispute and the dispute sought to be raised by the email dated 26.02.2018 cannot

be accepted. Finally, we note that the Operational Creditor exercised his option under section 9(4) of the Code and did not propose a Resolution

Professional to act as an Interim Resolution Professional.

Since the conditions provided for under Section 9(5)(i) of the Code are satisfied in the present case, we admit the application and direct the

initiation of the Corporate Insolvency Resolution Process in the case of M/s. India Sports Flashes Pvt. Ltd.

Since the Applicant has not named the Insolvency Resolution Professional, this Tribunal based on the list furnished by Insolvency and Bankruptcy

Board of India appoints Mr. Gaurav Katiyar, with registration number IBBI/IPA-001/IP-P00209/2017-18/10409 (email â€

cagauravkatiyar@gmail.com) as the Interim Resolution Professional subject to the condition that no disciplinary proceedings are pending against such

an IRP named who may act as an IRP in relation to the CIRP of the Respondent and specific consent is filed in Form 2 of Insolvency and Bankruptcy

Board of India (Application to Adjudicating Authority) Rule, 2016 in relation to specifically the corporate debtor and the applicant herein and make

disclosures as required under IBBI (insolvency Resolution Process for Corporate Persons) Regulations, 2016 within a period of one week from the

date of this order.

The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by Sections 15,17,18,19,20 & 21 of the Code and

transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the ‘Code’, Rules and Regulations. It is

further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of

the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution

Professional as may be required by him in managing the day to day affairs of the ‘Corporate Debtor’. In case there is any violation, the Interim

Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim

Resolution Professional shall be under duty to protect and preserve the value of the property of the ‘Corporate Debtor’ as a part of its obligation

imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules and Regulations.

We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the

provisions of Section 14(1)(a)(b)(c)&(d). Thus, the following prohibitions are imposed:

“(a) 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;

(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

(c) any action to foreclose, recover, or enforce any security interest created by the corporate debtor in respect of its property including any action

under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.â€​

It is further directed that:

(a) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during

moratorium period;

(b) The provision of sub-section 14 of the Code shall not apply to such transactions as may be notified by the Central Government in consultation with

any financial sector regulator and the surety in a contract of guarantee to a Corporate Debtor.

(c) The order of moratorium shall have effect from the date of this order till the complete of the corporate insolvency process as per Sub-section (4)

of section 14 of the Code.

A copy of the order shall be communicated to the Applicant as well as to the Corporate Debtor above named by the Registry. In addition, a copy

of the order shall also be forwarded to IBBI for its records. Further the IRP above named be also furnished with copy of this order forthwith by the

Registry.