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In The Matter of:Living Consumer Products Private Limited Through its duly Authorized Signatory Jaideep Hotha v/s Play Games 24x7 Private Limited Through its duly Authorized Signatory Prabhu Vijayakumar


Company & Directors' Information:- O K PLAY INDIA LIMITED [Active] CIN = L28219HR1988PLC030347

Company & Directors' Information:- S L CONSUMER PRODUCTS LIMITED [Active] CIN = U11200DL1996PLC083850

Company & Directors' Information:- JAIDEEP INDIA PRIVATE LIMITED [Active] CIN = U17200MH1980PTC023388

Company & Directors' Information:- P P PRODUCTS PVT LTD [Active] CIN = U32305WB1991PTC051091

Company & Directors' Information:- K K PRODUCTS LIMITED [Active] CIN = U31300DL1991PLC045521

Company & Directors' Information:- K B PRODUCTS PRIVATE LIMITED [Active] CIN = U51909MH2007PTC169627

Company & Directors' Information:- K G PRODUCTS PRIVATE LIMITED [Active] CIN = U51909PB2007PTC031201

Company & Directors' Information:- S S P PRODUCTS PRIVATE LIMITED [Active] CIN = U22110WB1974PTC210201

Company & Directors' Information:- M L B PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1990PTC040990

Company & Directors' Information:- CONSUMER PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1979PTC009923

Company & Directors' Information:- M M PRODUCTS LIMITED [Strike Off] CIN = U28994DL1992PLC050955

Company & Directors' Information:- M P K PRODUCTS PVT LTD [Active] CIN = U26919AS1994PTC004183

Company & Directors' Information:- G K PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC043260

Company & Directors' Information:- N R PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51109AS1998PTC005561

Company & Directors' Information:- C L PRODUCTS INDIA LIMITED [Active] CIN = U51909DL2002PLC116975

Company & Directors' Information:- K. S. A. PRODUCTS PRIVATE LIMITED [Active] CIN = U51220PB2014PTC039023

Company & Directors' Information:- D. R. PRODUCTS PRIVATE LIMITED [Active] CIN = U52320DL2011PTC213508

Company & Directors' Information:- R S PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1989PTC036603

Company & Directors' Information:- R R PRODUCTS PRIVATE LIMITED [Active] CIN = U24249HR1999PTC034291

Company & Directors' Information:- I G PRODUCTS PRIVATE LIMITED [Active] CIN = U74999WB2012PTC183503

Company & Directors' Information:- J S R PRODUCTS PRIVATE LIMITED [Active] CIN = U31908DL2007PTC170841

Company & Directors' Information:- C F C PRODUCTS PRIVATE LIMITED [Active] CIN = U28129DL1998PTC095531

Company & Directors' Information:- S. S. CONSUMER PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51909DL2011PTC220145

Company & Directors' Information:- M S PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1993PTC055125

Company & Directors' Information:- B R PRODUCTS PRIVATE LIMITED [Active] CIN = U31909DL1999PTC100727

Company & Directors' Information:- S P B PRODUCTS LIMITED [Active] CIN = U51909DL1996PLC082631

Company & Directors' Information:- G K D PRODUCTS PRIVATE LIMITED [Active] CIN = U15431WB1998PTC086840

Company & Directors' Information:- M B R PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U17111WB1993PTC060806

Company & Directors' Information:- P D PRODUCTS PRIVATE LIMITED [Active] CIN = U23201DL2000PTC108462

Company & Directors' Information:- S K M PRODUCTS PRIVATE LIMITED [Active] CIN = U18101DL1998PTC093415

Company & Directors' Information:- H R PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U74899DL1978PTC009183

Company & Directors' Information:- V S PRODUCTS PRIVATE LIMITED [Active] CIN = U36900DL2008PTC185445

Company & Directors' Information:- H K PRODUCTS LIMITED [Active] CIN = U51900GJ2015PLC085457

Company & Directors' Information:- S R K PRODUCTS PRIVATE LIMITED [Active] CIN = U51221KA1989PTC010032

Company & Directors' Information:- G M PRODUCTS PRIVATE LIMITED [Active] CIN = U74899DL1991PTC044687

Company & Directors' Information:- V T N PRODUCTS PVT LTD [Active] CIN = U51109WB1996PTC080094

Company & Directors' Information:- W S T Q PRODUCTS PRIVATE LIMITED [Active] CIN = U31300DL1999PTC102655

Company & Directors' Information:- J M K PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24246OR2005PTC008446

Company & Directors' Information:- G S T PRODUCTS (INDIA) PRIVATE LIMITED [Strike Off] CIN = U31909TN2006PTC059575

Company & Directors' Information:- S M P PRODUCTS PRIVATE LIMITED [Active] CIN = U25200DL2009PTC190965

Company & Directors' Information:- S AND D CONSUMER PRODUCTS PRIVATE LIMITED [Active] CIN = U51909DL2005PTC135864

Company & Directors' Information:- S N S PRODUCTS PRIVATE LIMITED [Active] CIN = U15490DL2005PTC142749

Company & Directors' Information:- U B PRODUCTS PRIVATE LIMITED [Active] CIN = U51224DL2002PTC116457

Company & Directors' Information:- A AND A PRODUCTS PRIVATE LIMITED [Active] CIN = U21098MP2004PTC017128

Company & Directors' Information:- V J PRODUCTS PRIVATE LIMITED [Active] CIN = U36900GJ2011PTC065252

Company & Directors' Information:- U GAMES PRIVATE LIMITED [Active] CIN = U92419MH2021PTC353619

Company & Directors' Information:- S AND A PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51311DL1991PTC042938

Company & Directors' Information:- S AND G PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51909DL1982PTC014843

Company & Directors' Information:- C & P CONSUMER PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51109WB1997PTC085373

Company & Directors' Information:- B P PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24241WB1999PTC089499

Company & Directors' Information:- D AND P PRODUCTS LIMITED [Amalgamated] CIN = U99999MH1951PTC008422

Company & Directors' Information:- W D CONSUMER PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51900MH1994PTC078793

Company & Directors' Information:- S D H PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U55204KA2006PTC040734

Company & Directors' Information:- N. M. CONSUMER PRODUCTS PRIVATE LIMITED [Active] CIN = U19115UP2015PTC075053

Company & Directors' Information:- V M PRODUCTS PRIVATE LIMITED [Active] CIN = U24100DL2014PTC266679

Company & Directors' Information:- E C A PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U27209TN1987PTC014022

Company & Directors' Information:- LIVING CONSUMER PRODUCTS PRIVATE LIMITED [Active] CIN = U74997MH2014PTC252151

Company & Directors' Information:- 7 H GAMES INDIA PRIVATE LIMITED [Active] CIN = U72200AP2014PTC094791

Company & Directors' Information:- G S PRODUCTS LIMITED [Strike Off] CIN = U25191UP1989PLC010483

Company & Directors' Information:- A R K PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24231UP1978PTC004606

Company & Directors' Information:- S. M. PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U17299DL1966PTC004634

Company & Directors' Information:- R. M. R. PRODUCTS PRIVATE LIMITED [Active] CIN = U74999MH2017PTC298120

Company & Directors' Information:- L V CONSUMER PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U24248TG2013PTC087080

Company & Directors' Information:- P & Q PRODUCTS PRIVATE LIMITED [Strike Off] CIN = U51909DL2014PTC269162

Company & Directors' Information:- H & F GAMES PRIVATE LIMITED [Strike Off] CIN = U74900KA2011PTC061332

Company & Directors' Information:- PRABHU AND CO PVT LTD [Strike Off] CIN = U51909KL1953PTC000955

Company & Directors' Information:- H T PRODUCTS PVT LTD [Strike Off] CIN = U29266WB1981PTC033424

Company & Directors' Information:- PRODUCTS (INDIA) LTD [Strike Off] CIN = U31901WB1961PLC024991

Company & Directors' Information:- M PRODUCTS & CO PVT LTD [Strike Off] CIN = U51909WB1956PTC023215

    Company Appeal (AT) (Insolvency) No. 1436 of 2019

    Decided On, 02 March 2020

    At, National Company Law Appellate Tribunal

    By, THE HONOURABLE MR. A.I.S. CHEEMA
    By, JUDICIAL MEMBER
    By, THE HONOURABLE MR. ANANT BIJAY SINGH
    By, JUDICIAL MEMBER & THE HONOURABLE MR. KANTHI NARAHARI
    By, TECHNICAL MEMBER

    For the Appellant: Abhijeet Sinha, Rohit Ghosh, Saikat Sarkar, Raveena Rai, Prateek Kumar, Advocates. For the Respondent: Dr. U.K. Choudhary, Sr. Advocate along with Rajeev Kumar, Dhruv Gupta, Arnav Behari, Mahesh Agarwal, Advocates.



Judgment Text


A.I.S. Cheema, Judicial Member

The Appellant - 'Operational Creditor' has filed this Appeal against impugned order dated 14th October, 2019 in C.P. (IB) No.1775/NCLT/MB/ 2019 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, whereby the application under section 9of the Insolvency and Bankruptcy Code, 2016 ('IBC' in short) filed against Respondent, Play Games 24x7 Private Limited - 'Corporate Debtor', came to be rejected on the ground of pre-existing dispute.

2. The Appellant claims that it has supplied digital marketing and advertising services to the 'Corporate Debtor' as per contract dated 09.07.2018 (Annexure 2 - Page 72) and that there were operational dues which are in default to the extent of Rs. 6,35,13,977/-. As per the contract, the Appellant was required to generate marketing leads i.e. users for the 'Corporate Debtor's' online gaming portal. The Appellant was required to run various advertising and digital marketing campaigns through Short Message Service (SMS) and other data platform like Facebook, Google etc. The Appellant claims that for the services given by the Appellant, 54 invoices were raised, which were paid by the 'Corporate Debtor', but the present dues, which arose for period dated 1st December, 2018 to 15th December, 2018 are outstanding for which invoice dated 28th December, 2018 (Annexure 8 - Page 155) was raised. The Appellant had issued notice (Annexure 12 - Page 192) under Section 8of IBC on 5th April, 2019 to the 'Corporate Debtor'. The Respondent sent reply dated 15th April, 2019 raising disputes that there was unauthorized use of brand keywords by the Appellant and that higher fees had been charged by reporting incorrect geographical locations of the leads.

3. Before the Adjudicating Authority, the Respondent - 'Corporate Debtor' took defense that before the Demand Notice was sent by the Appellant, the 'Corporate Debtor' had served a Legal Notice dated 23rd March, 2019 with regard to the Agreement dated 9th July, 2019. The Legal Notice pointed out is at Annexure-10 (page 187). In reply before the Adjudicating Authority, the 'Corporate Debtor' claimed that the Appellant had made unauthorised use of brand name of the 'Corporate Debtor' and had over-charged. Allegations were made regarding the Appellant bribing and colluding with employees of the 'Corporate Debtor'. There was overcharging of fees because of fraudulent passing of users from one State (for which area charges were less) as being users from another State (for which charges were higher). The 'Corporate Debtor' also relied on Investigation Report from Deloitte Touche of March 2019 in support of the defense.

4. The Adjudicating Authority after hearing the parties and considering the records, referred to judgment in the matter of "Mobilox Innovations Private Limited v. Kirusa Software Private limited (AIR 2017 SC 4532)" with regard to definition of "dispute" and found: -

"12. Therefore, on perusal of the documents submitted by the parties, this Bench has observed that the Corporate Debtor has on 23.03.2019, which was before the receipt of demand notice, raised disputes by sending legal notice to the Applicant in relation to Advertising Agreement dated 09.07.2018. The Corporate Debtor vide the said notice also suspended the services and outstanding payments to the Applicant under the Advertising Agreement. Further, the Corporate Debtor also replied to the Demand Notice within the statutory period of 10 days and disputed the unauthorised use of brand keywords and reporting of incorrect geographical locations of leads by the Applicant. The Disputes raised by the Corporate Debtor and collusion of Applicant with employees of Corporate Debtor is also evident from the forensic investigation report annexed by the Corporate Debtor is also evident from the forensic investigation report annexed by the Corporate Debtor. Thus, the contention of the Corporate Debtor that Applicant breached the representations and warranties under clause 4(a) of the Contract dates 09.07.2018 amounts to pre-existing dispute."

5. The Adjudicating Authority accordingly rejected the Application.

6. Before us, it is argued by the Appellant that the Application was wrongly rejected. It is claimed that the defense taken by the Respondent was frivolous, spurious and unsubstantiated with regard to alleged pre-existing dispute. It is claimed that there had been no misuse of the brand keywords of the Respondent by the Appellant. According to the Appellant, brand keywords was part of job assignment and was always required to be changed, which the Respondent was communicating contemporaneously and Appellant was duly changing within the course of 24 hours. According to the Appellant, this could not be claimed to be pre-existing dispute. Reference is made by the learned Counsel for the Appellant to e-mail (Annexure 6 - Page 139) dated 13th December, 2018 sent by the 'Corporate Debtor' to the 'Operational Creditor' asking the Appellant to slowly start scaling up the campaigns. According to the learned Counsel this suggested that there was satisfaction with the services.

Against this, the learned Counsel for the Respondent has argued that in view of the information received by the Respondent, on 15th December, 2018, the Respondent had sent an e-mail to 'pause all campaigns' in all geos immediately and sought discussion. Reference is made to Annexure-5 (Page 138).

7. The learned Counsel for the Appellant has then referred to the Report of Deloitte dated March 2019 to submit that in that Report, e-mails were found on 'Laptop' of Mr. Uppal (An employee of the 'Corporate Debtor'), where under it was recorded that the Appellant "appeared" to have used brand keywords. It is also claimed that there was no manipulation of geo-location data of users from non-core States to core States to inflate the invoices. According to the Appellant, the earlier invoices had been paid without protest. Leads were generated by the Appellant and provided to the Respondent on regular basis, in the form of 'Return on Investment'. It is also argued that Report of Deloittee is relying only on oral assertions made by representatives of Respondent regarding occurrence of geo-location captured by the Respondent. It is argued that the Appellant cannot manipulate the UTM parameters. It is further argued that gift hampers were distributed in the form of 'Diwali sweets' to the employees of the Respondent including Mr. Uppal and that alleged bribing of Mr. Uppal has no connection to the payment of the invoice dated 28th December, 2018. The Appellant claims that the Appellant had sufficiently explained the allegations made by the Respondent and, thus, the grievance made by the Respondent should not be treated as pre-existing dispute.

8. Against this, the Counsel for the Respondent is relying on the Investigation got done and Report of Deloittee as well as Notice dated 23rd March, 2019 (Annexure 10 - Page 187), which admittedly was sent by the Respondent on 5th April, 2019.

9. Having heard learned Counsel for both sides and having gone through the correspondence between the parties, it would be appropriate to reproduce portion of relevant para of Notice, Annexure-10 dated 23rd March, 2019 sent by the 'Corporate Debtor' to the Appellant - 'Operational Creditor'. The Notice was sent in the context of the same contract dated 9th July, 2018 (Annexure 2). The Notice states: -

"23rd March, 2019

To,

Living Consumer Products Private limited (LCPPL)

3602 Wing A

Rustomjee Elanza Off Link Road

Near Inorbit Mall, Malad (West)

Mumbai 400064

Email: amit.vora@icrushiflush.com

Kind Attn: Amit Vora

Subject: Notice in relation to the Advertising Agreement dated 9th July 2018

Sir,

1. We have been instructed by our client, Play Games 24x7 Private Limited (Play Games), to write a notice to you in relation to the agreements between Play Games and LCPPL for advertising services (Services) rendered by LCPPL to Play Games, including the Advertising Agreement (Agreement) dated 9th July, 2018.

2. Play Games has, as a part of an internal investigation gathered some credible evidence which indicates that either the Chief Marketing Officer of Play Games, Mr. Sachin Uppal, or his immediate kin has received a payment of INR 6,04,346 from LCPPL in October 2017. It has also come to the attention of Play Games that in October 2016, Amit Vora, CEO of LCPPL, has given Sachin a gift hamper as consideration for assisting Amit in his business with Play Games. Prima facie, this appears to be a violation of standard business practices, ethics and Play Games' anti-corruption policies.

3. Please note that Play Games is undertaking a comprehensive internal review and investigation into the relationship between Sachin Uppal, Amit Vora and LCPPL and the Services provided to Play Games, including regarding any improper business practices, misrepresentations, misreporting and overstatement of fees that may have taken place on the part of LCPPL and Sachin.

4. We direct your attention to Clause 4(a) of the Agreement, under which LCPPL has represented and warranted that it will work diligently to protect and promote Play Games' interests at all times. Given this, we hereby request LCPPL's cooperation with Play Games in understanding the circumstances in relation to these transactions and providing information regarding any other commercial transaction between LCPPL and Sachin Uppal, including the purpose and intent behind such transactions. Please note that Sachin Uppal's relationship with LCPPL and Amit Vora is also being looked into as part of the internal review and investigation mentioned above. To aid Play Games in his process, we hereby request you to provide Play Games (at the address given below) with a clear statement explaining:

(a) the reason for the payment of INR 6,04,346 from LCPPL to Sachin Uppal/ his kin in October 2017;

(b) the reason for Amit Vora providing the gift hamper to Sachin Uppal in October 2016; and

(c) information regarding all other commercial transactions and understandings of LCPPL and Amit Vora with Sachin Uppal, including the considerations for the same and an explanation as to how such commercial arrangements are not in conflict with the interest of Play Games.

5. We have been instructed to inform you that pending the investigation and review, Play Games has currently suspended the Agreement, Services and all outstanding payments to LCPPL under the Agreement.

6. This is without prejudice to the remedies available to Play Games under law, contract and otherwise, and Play Games reserves all its rights and remedies in relation to the subject matter of the letter.

Yours sincerely

Sd/-

Nikhil Narendran

Partner

Trilegal

CC: Play Games 24x7 Private Limited 401, 4th FLOOR, Building No.16 Wing-B Interface Complex, Off Link road Malad (West), Mumbai Maharashtra - 400067."

10. The learned Counsel for the Appellant claims that such Notice was sent so as to avoid proceedings like the present one and the Appellant has sufficiently explained and thus the Notice should have been ignored. Having gone through the Notice as mentioned above and considering the fact that the 'Corporat

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e Debtor' had not rushed into issuing such Notice and had obtained Report from Deloittee in March 2019 (Page 33 of Diary No.17291), we find that the Notice does disclose pre-existing dispute between the parties with regard to the services rendered by the Appellant. Notice shows loss of confidence & thus holding on to outstanding payments. It is not possible in a summary proceeding like the present one for the Adjudicating Authority or this Tribunal to analyze the e-mails exchanged earlier in depth to ignore Notice like the present one, which was not simply rushed through. In proceedings of Section 9of IBC, such Notice which is prior in time to the Notice sent under Section 8of IBC, does show that there was pre-existing dispute regarding services rendered. In fact, before Notice under Section 8 was sent on 5th April, 2019, the Appellant had also sent a reply to this Notice (Annexure 10 - page 187) by reply (Annexure 11 - Page 189) raising denials & explanation. Thus, considering the record, it cannot be stated to be a dispute raised merely for the purpose of dispute. We agree with the Adjudicating Authority, which rightly rejected the Application under Section 9of IBC. We find no reason to interfere. 11. The Appeal is dismissed. No orders as to costs.
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