Sumita Purkayastha, Technical Member.
1. The present application is filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity ‘code’) read with Rules 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority), 2016 (for brevity ‘the Rules’) by Mr. Yuraj Agarwal (Director of Adreek Media P Ltd Authorized vide Board Resolution dated 24.10.2019) and Adreek Media P Limited (for brevity ‘Applicants’) through Mr. Yuvraj Agarwal (Directors of Adreek Media P Limited) with a prayer to initiate the Corporate Insolvency Process against M/s Aspek Media Pvt Ltd (for brevity ‘Corporate Debtor’).
2. The Applicant Adreek Media P Limited, claimed to be the Operational Creditor No. 2, is a consultancy service provider, with the identification number being CINU80100MH2010PTC210169 having its registered office at 701/702, Seventh Floor, Ocean Complex Near Sector 18, Metro station Noida 201301.
3. The Respondent M/s Aspek Media Pvt Ltd is a company incorporated on 21.07.2014 under the Companies Act, 2013 having its registered office at 803, 4th Floor Arjun Nagar Kotia Mubarakpur New Delhi and (CIN) U22222DL2014PTC332210 is engaged as a specialist agency promoted by professionals having in-depth knowledge, expertise and experience in planning, design, build and operating advertising media assets as per global best practices which includes managing of activation booths, events, promotions and sponsorships.
4. The Applicant stated that from April 2015, consultancy services were provided by the Applicant to the Corporate Debtor. It is stated that it was agreed that the Corporate Debtor shall pay for the services for a sum of Rs.4,00,000/- plus applicable taxes, as monthly consultation fees. The Corporate Debtor has paid all invoices for a period of April 2016 to May 2018 however, the Corporate Debtor has failed to pay the invoices raised for a period of June 2018 to October 2018. Thereafter, based on the renewed understanding between the parties, it was agreed that the expenses incurred by Operational Creditor in this context shall be reimbursed by the Corporate Debtor, therefore the Operation Debt amounts to a total of Rs.25,70,656/- towards the company of the Operational Creditor and his reimbursement towards conveyance and expenses, remain due and outstanding for the period of May 2017 to March 2018. The said amount is admitted by the Corporate Debtor which is clearly reflected in its stamped ledger account for a period of 01.04.2017 to 22.09.2019.
5. The Operational Creditors issued Demand Notice dated 24.10.2018 in the form of Form-3 under Section 8 of the Insolvency & Bankruptcy Code, 2016 read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 vide Registered Post and e-mail, calling upon the Corporate Debtor to clear the amount of default i.e. Rs.25,70,656/- due to the Operational Creditor and his company within a period of ten days. Instead of making the required payment, the Corporate Debtor caused its advocate to send a Notice of Dispute dated 02.11.2018 in reply to the aforesaid Demand Notice.
6. The Applicant filed the application as Operational Creditors praying for initiation of Corporate Insolvency Resolution Process of the Corporate Debtor for its inability to liquidate their claim of Rs.25,70,656/-. Notice was issued to the Corporate Debtor vide order dated 29.01.2019 of the Adjudicating Authority and the reply was filed by the Corporate Debtor as on 22.04.2019. The Corporate Debtor in its reply states that the Operational Creditor in the present application is the erstwhile Chief Executive Officer of the Corporate Debtor.
7. As per the averments mentioned in the reply, it is stated that the Operational Creditor No. 1 was appointed as the Chief Executive officer by the Board of Directors of the Corporate Debtor vide employment engagement offer letter dated 24.12.2015. The Operational Creditor No. 1 was vested with the responsibility of managing the day to day operations of the Corporate Debtor and was to report the Board of the Corporate Debtor. That as per the terms of the Appointment Letter, it was agreed that the Operational Creditor No.1 will abide by the rules and policies of the Corporate Debtor which included that the Operational Creditor No. 1 will not bring any unpublished documents or property belonging to any former employer or other person onto the office of the Corporate Debtor and will not assist any person or organization which is in competition with the Corporate Debtor.
8. Furthermore, in the year 2018 the Corporate Debtor discovered that the Operational Creditor No. 1 despite being under contractual obligation to maintain confidentiality of sensitive information of the Corporate Debtor, the Operational Creditor No. 1 not only shared confidential information in an unauthorized manner for its own gain, but was simultaneously running a competing business without informing the Corporate Debtor.
On further investigation, it was discovered that during the employment with the Corporate Debtor, the Operational Creditor No. 1, without the knowledge of the Corporate Debtor had initiated profitable business relations with other entities and was competing with the Corporate Debtor in the same line of work. That on 15.12.2016, the Operational Creditors No. 1 had executed an agreement with a Client of the Corporate Debtor and agreed to provide scope of work identical to what was being offered by the Corporate Debtor to the said Client by way a separate agreement dated 14.12.2014. Further, the Operational Creditor No. 1 was using the premises and employees assigned by the Corporate Debtor under the Offer Letter for its personal work.
9. The Corporate Debtor terminated the services of the Operational Creditor No. 1 by way of an email dated 24.10.2018 and informed the Operational Creditor No. 1 that it was being dismissed from the service without notice, and without compensation on grounds of misconduct/conduct inconsistent with the fulfilment of the express or implied conditions of the Offer Letter, including but not limited to its gross failure to perform all of its duties and obligations as required under the Appointment Letter.
10. The Corporate Debtor, on 02.11.2018, served a ‘Notice of Dispute on behalf of M/S Aspek Media Pvt. Ltd. in reply of the Demand Notice dated 24.10.2018 sent by the Operational Creditor No. 1. The said Notice clearly stated that the Corporate Debtor had a pre-existing dispute with the Operational Creditor No. 1 as the latter was involved in competing business relationship with companies other than the Corporate Debtor, without the knowledge of the Corporate Debtor and the Operational Creditor No. 1 clearly acted in gross violation of the terms of the Appointment Letter.
11. It has been submitted that the Corporate Debtor has been investigating all the dealings of Operational Creditor No. 1 for the financial year 2015-2018, 2018-2017, 2017-2018, i.e. the time period it was functioning as the CEO of the Corporate Debtor. It has been discovered that the Operational Creditor No. 1, in complete violation of its employment Appointment letter had provided various direct services to the Corporate Debtors Client, i.e., Entertainment City Limited, without informing the Corporate Debtor. That after terminating the services of the Operational Creditor No. 1, the Corporate Debtor had made numerous efforts to discuss with Entertainment City Limited the malafide activities of the Operational Creditor No. 1 and had sent email dated 28.11.2019 regarding the issue of the Operational Creditor’s No. 1 malafide activities.
12. It has been submitted that on 09.01.2019, the Corporate Debtor has registered a criminal complaint with the Station House Officer. Police Station, Kotla Mubarkpur. Sawa Nagar, New Delhi-11003 against the Operational Creditor No. 1 and his company M/S Adreek Media Pvt. Herein the Operational Creditor No. 2 Ltd for criminal breach of trust and cheating and had even requested the Police officials to initiate investigation against the Operational Creditors and register a F.I.R.
13. Rejoinder dated 07.06.2019 has been filed by the Operational Creditor No. 1, which states that the Corporate Debtor is trying to deviate the issue in hand with the help of its own concocted story. It is submitted that the Appointment letter is a forged document and has been signed by the Operational Creditor No. 1 only on the last page and the first two pages of the said letter are totally denied. It is further submitted that the Operational Creditors No. 1 had since day one had made things clear that he shall not be working as the CEO and the post assigned to his name was only to show Entertainment City Limited that Operational Creditor No. 1 was working with the company so that they may not terminate the agreement. The same was done with the mutual understanding between the Operational Creditor No. 1 and Corporate Debtor in order to save the Corporate Debtor from losing its contract with the Entertainment City Limited.
14. Further the Operational Creditor No. 1 submits that the Operational Creditor No. 1 never shared any confidential information of the Corporate Debtor. It has been denied that the Corporate Debtor discovered in 2018 that the Operational Creditor No. 1 was running a competing business. It is submitted that the Corporate Debtor was well aware of the Company of the Operational Creditor No. 1 since his appointment and also the credentials of the Operational Creditors No. 1 were well known to the Corporate Debtor as the Operational Creditor No. 1 was well known to the board of management of the Corporate Debtor both personally and professionally.
15. The Operational Creditor No. 1 states that the scope of services offered to the client of the Corporate Debtor as alleged by the Corporate Debtor is completely different from the scope of services offered to the Corporate Debtor and the same are independent of each other. The Operational Creditor No. 1 was using the premises and employees assigned by the Corporate Debtor under the Appointment Letter for his and his company’s personal work rather the premises of work was given to the Operational Creditor No. 1 by Entertainment City Limited for his functioning and the same was never given to the Corporate Debtor as the premises belonged to Entertainment City Limited and not Corporate Debtor.
16. It is further submitted that all the invoices raised by the Operational Creditors from April, 2016 onwards, which were duly cleared by the Corporate Debtor, clearly proves that the services were being offered by the Adreek Media Pvt. Ltd. i.e. the Operational Creditor No. 2 and the Operational Creditor No. 1 was working only as a consultant.
17. The date of default is 21.10.2018 which is the date of the last invoice issued which was unpaid, and the present application is filed on 18.12.2018. Hence, the application is not time barred and filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application.
18. Having considered the facts and circumstances and the material available on record, it has been observed by the this Adjudicating Authority that Section 8 Demand Notice issued and the application under Section 9 has been filed by both the Operational Creditors jointly. The amount in default is arising out of the claims of a person and a company which is a separate legal entity. In order to deal with the issue in hand we would like to refer to the Judgement of Uttam Galva Steels Limited v. DF Deutsche Forfait AG &Anr. [Company Appeal (AT) (Insolvency) 39 of 2017 Para as reiterated:
“19. From the aforesaid provisions of Section 8 and 9 of I&B Code, it is clear that unlike S
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ection 7, a notice under Section ‘8 is to be issued by an “Operational Creditor” individually and the petition under Section 9 has to be filed by Operational Creditor individually and not jointly. 20. Otherwise also it is not practical for more than one ‘operational creditor’ to file to joint petitioner. Individual ‘Operational Creditors’ will have to issue their individual claim notice under Section 8 of the I&B Code. The claim will vary which will be different. It will have to be issued in format(s). Separate Form-3 or Form-4 will have to be filed. Petition under Section 9 in the format will contain, separate individual data.” 19. As per our view, in the present matter the Demand notice under Section 8 should have been issued by an “Operational Creditors” individually and further the application under Section 9 has to be filed by Operational Creditors individually and not jointly. For the aforesaid reasons, we hold that a joint application under Section 9 by one or more “Operational Creditor” is not maintainable. 20. In view of the above, this Bench is of the view that the prayer for initiating Corporate Insolvency Resolution process against the Corporate Debtor is not sustainable. 21. Application is therefore rejected and disposed off in terms of above order.