Good Morning Fin-Advisory Pvt. Ltd vs P.C. Jain Textiles Pvt. Ltd

[Arising out of Order dated 03rd July 2019 passed by the Adjudicating Authority (National Company Law Tribunal) New Delhi Bench, New Delhi in IB-989(ND)/19]

IN THE MATTER OF: Good Morning Fin-Advisory Private Limited .....Appellant Vs. PC Jain Textile Private Limited ......Respondent

Present :

For Appellants: Mr. Gaurav Bahl, Advocate

For Respondent: Mr. Manu Bakshi, Advocate

J U D G M E N T

V.P. Singh, Member(T)

This appeal has been preferred against the order passed by the

Adjudicating Authority ('National Company Law Tribunal') New Delhi Bench,

whereby the petition filed by the Appellant Under Section 9 of the Insolvency &

Bankruptcy Code, 2016 ('I&B' Code, for short) has been rejected.

2. Learned Counsel for the Appellant submitted that the 'Operational

Creditor' is in the business of raising finances for Companies to meet their Company Appeal (AT)(Insolvency) No. 859 of 2019 1 business exigencies. The 'Corporate Debtor' approached the 'Operational

Creditor' in May 2018 and at the request worked for and on their behalf, when

he successfully arranged loans of Rs. 25 crores under various limits for the

'Corporate Debtor' from the 'State Bank of India'. As per the terms of the

Agreement, 'Operational Creditor' is entitled to 1% of the sanctioned limit

procured from the 'Corporate Debtor', as their service charges. Upon

successfully sanctioning of the loan amount, the same was communicated to the

'Corporate Debtor' on 03/11/2018.

3. Learned Counsel for the Appellant contended that they raised the invoices

for the sum of Rs. 25 lacs which along with the GST of Rs. 4,50,000/- accrued to

Rs. 29.50 lacs. The 'Corporate Debtor', however, failed to make the payment. In

the circumstances, the Appellant / Applicant issued Demand Notice Under

Section 8(1) of the 'I&B' Code. The said notice was duly replied to by the

'Corporate Debtor' stating that no services were availed by the 'Corporate

Debtor', neither any request was made by them to procure the sanction of loans.

4. The Adjudicating Authority has rejected the application on the ground that

there is the existence of dispute regarding the outstanding amount claimed by

the Applicant. There is no letter of engagement agreeing to pay the service

charges of the sanctioned loan plus GST. The Adjudicating Authority has

further held that 'Operational Creditor' has not filed any evidence to substantiate

that the 'Operational Creditor' was engaged for their service.

Company Appeal (AT)(Insolvency) No. 859 of 2019 2

5. The appeal has been filed mainly on the ground that the impugned order

has been passed without appreciating the evidence, that services were rendered

by the 'Operational Creditor' and dispute regarding the invoices was never

raised. The Adjudicating Authority decided the application in undue haste and

without appreciating the documents filed on record.

6. Learned Counsel for the Appellant further contends that the Adjudicating

Authority failed to appreciate the principles of Section 70 of the Contract Act,

whereby no act is stated to be done gratuitously. As per Industry Standards, the

amount of 2% of the sanctioned amount is to be paid to the service provider,

who takes the pain to ensure that the loan is sanctioned by the Bank.

7. Heard the learned Counsel for the parties and perused the records.

Appellant has filed copies of e-mail correspondence with the respondent

corporate debtor. But no document has been filed to show that the 'Corporate

Debtor' had requested for any service from the 'Operational Creditor'. The

'Operational Creditor' relies on the Industries Practice, whereby for any service

minimum 2% of the sanctioned amount is being provided.

8. The Appellant / the operational creditor has not filed any document about

the letter of engagement, assignment to the operational creditor to act for and on

their behalf in liaisoning with Bank for raising loan. There is no document on

record to substantiate the claim of operational creditor /Appellant to pay service

charge, as claimed by the Appellant, i.e. 1% service charge on the total

sanctioned term loan amount.

Company Appeal (AT)(Insolvency) No. 859 of 2019 3

9. The Ld Counsel for the Appellant contends that appellants and

Respondents communicated with each other about the proposal of sanctioning of

loan by way of email, Whatsapp communications etc. Various WhatsApp

communication is on record as Annexure A-5 & A-6 which shows that the

respondent further discussed the term loan amount, which may be required to

be disbursed, which reflects that the corporate debtor took services. The

document submitted by the Appellants requires further investigation to prove its

claim, which can't be done in summary proceedings. The Documents relied on

are not sufficient to show engagement for service charge fixed, and the rate of

service charge.

In the circumstances, there is nothing on record to show that the amount

is due and payable. Thus, the Adjudicating Authority has rightly rejected the

application filed u/s 9 of the 'I&B' Code. We find no merit in this appeal. The

appeal is accordingly dismissed -- no order as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical)

[V.P. Singh] Member (Technical) NEW DELHI

5th DECEMBER, 2019 RN

Company Appeal (AT)(Insolvency) No. 859 of 2019 4