M/S Clicbrics Technologies Private ... vs Ansal Housing Limited

Company Appeal (AT)(Insolvency) No. 1268 of 2022

[Arising out of the order dated 22.08.2022 passed by the Adjudicating Authority, National Company Law Tribunal, New Delhi in Company Petition No. (IB)-1498(PB)/2019]

IN THE MATTER OF:

Clicbrics Technologies Pvt. Ltd. (Formerly known as Redbrics Ites India Pvt. Ltd. Unit No.321-322, 3rd Floor, JMD Megapolis, Sector-48, Sohna Road, Gurgaon, HR-122018 ...Appellant

Versus

Ansal Housing Ltd. (Formerly known as Ansal Housing & Construction Limited) 606, 6th Floor, Indra Prakash 1, Barakhamba Road, New Delhi - 110001 ...Respondent

Present:

For Appellant: Mr. Vinod Kr. Chaurasia, Advocate

For Respondent: Mr. Vikas Tiwari, Mr. Kumar Deepraj, Advocates, Mr. Anchit, AR.

JUDGMENT

[Per: Barun Mitra, Member (Technical)]

The present appeal filed under Section 61 of the Insolvency and Bankruptcy

Code, 2016 ('IBC' in short) by the Appellant arises out of the order dated

22.08.2022 (hereinafter referred as 'Impugned Order') passed by the Adjudicating

Authority (National Company Law Tribunal, Special Bench, New Delhi) in CP(IB)

No.1498(PB)/2019. By the impugned order, the Adjudicating Authority dismissed Company Appeal (AT)(Insolvency) No. 1268 of 2022

1 the application filed by Operational Creditor (the present Appellant) under Section

9 of the IBC seeking initiation of Corporate Insolvency Resolution Process ('CIRP'

in short) against Corporate Debtor-M/s. Ansal Housing Limited (the present

Respondent). Aggrieved by the impugned order, the present appeal has been

preferred by the Operational Creditor.

2. The brief facts of the case necessary to notice for deciding the appeal are as

follows: -

 The Respondent/Corporate Debtor was in the business of real estate selling

plots and apartments. For this purpose, it entered into a Memorandum of

Understanding ('MoU' in short), with the Appellant/Operational Creditor

engaging them as the exclusive real estate agent for brokering the

sale/purchase of units of the residential project - Ansal Town, Meerut for

the period 10.07.2018 to 31.12.2018.

 The Operational Creditor raised invoices from time to time for real estate

brokering commission. However, the Corporate Debtor stopped making

payments for invoices raised by the Operational Creditor w.e.f. 10.10.2018.

 The Operational Creditor sent a Demand Notice under Section 8 of IBC on

27.03.2019 claiming an amount of Rs.14,70,943.90 only.

 The Corporate Debtor sent a reply to the Demand Notice on 09.04.2019

stating that the demands/claims made by the Operational Creditor are

illegal and unreasonable since there is no operational debt and that the

demand notice was therefore not maintainable.

 On non-receipt of any further payment from the Corporate Debtor post-

service of the demand notice, a Section 9 IBC application was filed before

the Adjudicating Authority by the Operational Creditor for initiation of CIRP Company Appeal (AT)(Insolvency) No. 1268 of 2022

2 against the Corporate Debtor. The Corporate Debtor filed its reply to the

Section 9 application on 29.08.2019.

 The Adjudicating Authority held in the impugned order that the Operational

Creditor had approached the Adjudicating Authority with a mala-fide

intention and not for genuine resolution having shown unwillingness to

accept the amounts which the Corporate Debtor had endeavoured to pay

towards the outstanding dues. The Adjudicating Authority therefore

dismissed the Section 9 application filed by the Appellant

 Aggrieved by the impugned order, the present appeal has been preferred by

the Operational Creditor.

3. Challenging the impugned order, the Learned Counsel for the Appellant has

vehemently contended that the outstanding brokering commission due from the

Corporate Debtor is Rs. 14,70,943.90 since 10.10.2018 and hence a demand

notice was served for this unpaid amount. It was further stated that in their reply

affidavit filed before the Adjudicating Authority by the Respondent, a liability of

Rs.4,64,852.80 and another amount of Rs.6,35,978.98 aggregating to

Rs.11,00,831.78 as operational debt due and payable had been acknowledged by

them. This amount being above the prescribed minimum threshold limit for

default as laid down under the Section 4 of IBC, it was a fit case for admission of

insolvency petition.

4. In support of their contention that the operational debt had become due

and payable, it is further submitted that the Corporate Debtor in their application

filed before the Adjudicating Authority in CA-2774(PB)/2019 had made a

submission to take on record a cheque of Rs.4,32,668.74 drawn by them in favour

Company Appeal (AT)(Insolvency) No. 1268 of 2022

3 of the Operational Creditor towards outstanding payment. It is further submitted

by the Learned Counsel for Appellant that the Operational Creditor had filed an

IA No.4187/2021 in CP No. (IB)-1498(PB)/2019 on 01.02.2022 and the Corporate

Debtor had submitted during the arguments in the said matter that they had

issued another cheque amounting Rs. 8,40,073/-. The Learned Counsel for the

Appellant strongly contended that since the Corporate Debtor have themselves

admitted that two separate cheques aggregating Rs. 12,72,741.74 was drawn by

them in favour of the Operational Creditor towards settlement of outstanding dues

clearly substantiates admission of debt. Further submitting that the Appellant is

a registered MSME, the Appellant has claimed entitlement of interest @ 13% per

annum and that the total outstanding amount including interest due is

Rs.27,70,574/- only as on 16.09.2022.

5. The Appellant further submitted that they had changed their name from

Redbrics ITES India Pvt. Ltd. to Clicbrics Technologies Pvt. Ltd. w.e.f. 12.10.2021

and that the certificate of incorporation was issue by the Registrar of Companies.

The registered office had also changed from Delhi to Gurgaon, Haryana and the

MCA master data has also been updated accordingly.

6. Learned Counsel for the Appellant also adverted attention to the judgment

of the Hon'ble Supreme Court in Vidarbha Industries Power Limited v. Axis

Bank Limited (2022) 8 SCC 352 wherein it has been held that if dues are

admitted as against the Operational Creditor, the Corporate Debtor must pay the

same and if it does not, CIRP must be commenced. It has therefore been submitted

that the Adjudicating Authority committed an error in dismissing the Section 9

application without even making a preliminary enquiry into the documents filed

Company Appeal (AT)(Insolvency) No. 1268 of 2022

4 before it to establish that services had been offered as a real estate agent by the

Appellant and the Corporate Debtor had not only admitted their debt liability but

also admitted that they actually offered to make payments for the same without

raising any disputes. It was emphatically asserted that there is no evidence of

any dispute raised before the issue of demand notice.

7. The Learned Counsel for the Respondent refuting the submissions made by

the Appellant stated that the Corporate Debtor in the reply to the demand notice

dated 27.03.2019 had categorically informed the Operational Creditor that they

were not entitled to the brokerage as demanded in the bills raised for multiple

reasons. In some cases, the allottees had cancelled their bookings and sought

refunds. Further in some cases, brokerage has been demanded even when the

Operational Creditor was not entitled to any brokerage. It was pointed out that

the Appellant was entitled to 100% brokerage only when the allottee had paid 35%

of the sale value. In many cases, bills were raised prematurely since the requisite

percentage of sale value had not been received from the allottees. It has also been

pointed out that the Operational Creditor had raised a demand of full commission

from the Corporate Debtor though it had given discounts to the allottees which

was adjustable against brokerage commission. Further it was articulated in the

reply notice that the MoU had already expired on 31.12.2018 whereas the invoices

raised were for bookings made subsequent to 31.12.2018. It was submitted that

mere issue of invoices did not make the demand payable to the Operational

Creditor. It was therefore contended that the demand notice under Section 8 of

IBC was not maintainable and the demands raised therein by the Operational

Creditor are illegitimate and had already been disputed.

Company Appeal (AT)(Insolvency) No. 1268 of 2022

5

8. Further submitting that attempts were made to send two cheques to the

Operational Creditor but acceptance of first cheque was refused by the

Operational Creditor while second set of cheques got returned by the Postal

Department with the remarks that the Operational Creditor had left the address.

It has been contended therefore that the Corporate Debtor was ready and willing

to pay the legitimate amount to the Operational Creditor but the Operational

Creditor was not ready to accept the same as it wanted to extort money and

intimidate the Corporate Debtor. The Respondent has therefore claimed that the

Appellant by its conduct and admission has made the entire process of IBC as a

substitute to debt recovery which is against the spirit of IBC. Adding further that

the Appellant has been coercing the Corporate Debtor to succumb to its demand,

even though it is not in default, it has been contended by the Learned Counsel for

the Respondent that the reason for filing the Section 8 application by the

Operational Creditor was for an ulterior motive other than the resolution of

insolvency. Since the provisions of IBC have been fraudulently invoked with

malicious intent, it was stated that the Section 9 application filed by the

Operational Creditor has been correctly dismissed by the Adjudicating Authority.

9. We have duly considered the arguments and submissions advanced by the

Learned Counsel for the parties and perused the records carefully.

10. The only point for our consideration is whether payment of brokerage

commission had been triggered in the present case giving rise to an operational

debt and, if so, whether a default has been committed in respect of payment of

such operational debt and whether the debt was mired in disputes prior to issue

of demand notice. This examination would be in line with the well settled test

Company Appeal (AT)(Insolvency) No. 1268 of 2022

6 that has been laid down in Para 34 of Mobilox Innovations Private Limited vs.

Kirusa Software Private Limited (2018) 1 SCC 353 as to how the Adjudicating

Authority has to examine an Application under Section 9. Para 34 is to the effect:

-

"34. Therefore, the adjudicating authority, when examining an

application under Section 9 of the Act will have to determine:

(i) Whether there is an "operational debt" as defined exceeding Rs

1 lakh? (See Section 4 of the Act)

(ii) Whether the documentary evidence furnished with the

application shows that the aforesaid debt is due and payable

and has not yet been paid? and

(iii) Whether there is existence of a dispute between the parties or

the record of the pendency of a suit or arbitration proceeding

filed before the receipt of the demand notice of the unpaid

operational debt in relation to such dispute?

If any one of the aforesaid conditions is lacking, the application would

have to be rejected. Apart from the above, the adjudicating authority

must follow the mandate of Section 9, as outlined above, and in

particular the mandate of Section 9(5) of the Act, and admit or reject

the application, as the case may be, depending upon the factors

mentioned in Section 9(5) of the Act."

11. Examining the facts of the present case, we find that it is an undisputed fact that an MoU dated 09.07.2018 appointing the Operational Creditor as

exclusive real estate agent for brokering the sale/purchase of units at the Ansal

Town, Meerut residential project from 10.07.2018 till 31.12.2018 was entered into Company Appeal (AT)(Insolvency) No. 1268 of 2022

7 by the Corporate Debtor as placed on record at pages 69-70 of Appeal Paper Book

('APB' in short). We also notice that the Adjudicating Authority in the impugned

order has taken note of the submission made by the Corporate Debtor

acknowledging services having been provided by the Operational Creditor as

exclusive real estate agent for which service the Operational Creditor raised

certain invoices. It has been also noted at para 4 (ix) of the impugned order by the

Adjudicating Authority that the Corporate Debtor had admitted that an amount

of Rs.4,32,668.74 was due and payable to the Operational Creditor as on the date

of filing their reply to the Section 9 application.

12. More significantly, the Corporate Debtor has also admitted in para 4 of their

application under Rule 11 of NCLT Rules, 2016 filed before the Adjudicating

Authority in CA-2774(PB)/2019 that the Operational Creditor was entitled for

receiving payment of Rs.4,32,668.74 only and that for making payment of the said

amount, a cheque dated 14.11.2019 was despatched to the Operational Creditor.

The same is placed on record at page 213 of APB and the relevant excerpts are as

extracted below:-

"That as per the terms, against all the bookings for which the Applicant

raised the invoices and are annexed with the petition, the Applicant was

entitled for payment of an amount of Rs.4,32,668.74/- (Rupees Four Lacs

Thirty Two Thousand Six Hundred Sixty Eight and Seventy Four paisa

only) which was duly paid by the Respondent to the Applicant vide cheque

bearing number 065006 dated 14.11.2019 drawn on Punjab National

Bank, New Rajinder Nagar, New delhi - 110 060 in favour of the Applicant

i.e. 'Redbrics ITeS India Pvt. Ltd."

(Emphasis supplied)

Company Appeal (AT)(Insolvency) No. 1268 of 2022

8

13. We also note that the Adjudicating Authority has taken on record in the

impugned order at para 4(xi) that the Corporate Debtor has further admitted that

on receiving further sale proceeds from the real estate allotees, the Operational

Creditor had become entitled for payment of Rs.8,40,073/-. The Corporate Debtor

has admitted before the Adjudicating Authority that he had attempted to send

both the cheque amounts to both the registered office as well as the Corporate

Office of the Operational Creditor but both the cheques were returned undelivered

with the postal remarks 'Left'. This acknowledgement of liability of Rs 4,32,668.74

and Rs.8,40,073/- is further corroborated by the written submissions filed by the

Corporate Debtor on 09.05.2022 before the Adjudicating Authority as appearing

at page 246 of the APB which is to the effect:-

"7. As on date of filing of the Reply, when allottees made certain payment

to the Respondent, which made the Applicant also entitled for its

commission, the Respondent immediately handed over a cheque of

Rs.4,32,668.74, which was due & payable on the said date, however the

applicant, whose intention is only to coerce the Respondent, denied taking

the same. The same is also recorded in the Order dated 11.12.2019.

8. In Sept. 2021, when the Applicant became entitled for Rs.8,40,073, after

the Respondent getting received sale proceeds from the allottees, the

Respondent again attempted to send the cheque of Rs.8,40,073 to the

Applicant's registered office as well as corporate office, but both the

cheques were returned with postal remarks 'Left'. It was then, when the

Respondent inquired from the MCA website, it was found that there is no

company in existence in the name of the Applicant."

(Emphasis supplied) Company Appeal (AT)(Insolvency) No. 1268 of 2022

9

14. We therefore come to the inescapable conclusion that there is a clear

admittance of operational debt which was due and payable on the part of the

Corporate Debtor and that the operational debt was beyond the threshold limit of

Rs.1 lakh. Further, it is pertinent to add here that the Corporate Debtor has

admitted that not only was the Operational Creditor entitled to receive payment,

but the payment claimed was made in terms of the MoU and invoices were

annexed with the claim. It is also unequivocally clear that even on the date of filing

of reply to the Section 9 application by the Corporate Debtor, by their own

admission, the operational debt which had become due and payable remained

unpaid. Therefore the logical corollary is that default had been committed qua

the operational debt owed to the Operational Creditor.

15. The Learned Counsel for the Respondent stoutly contended that in the reply

to the demand notice, it was pointed out that brokerage has been demanded even

when the Operational Creditor was not entitled to any brokerage. It was asserted

that getting payment from allottees was a necessary pre-requisite for becoming

entitled to brokerage commission. In several cases, bills were raised prematurely

though the requisite percentage of sale value had not been received from the

allottees. Hence, it was argued that this is a case of pre-mature initiation of IBC

proceedings and reliance has been placed on the judgment of Hon'ble Supreme

Court in the matter of K. Kishan vs. Vijay Nirman Company Pvt. Ltd. (2018)

17 SCC 662 wherein the use of IBC either prematurely or for extraneous

considerations or as a substitute for debt enforcement procedures was

deprecated.

Company Appeal (AT)(Insolvency) No. 1268 of 2022

10

16. It is, however, the case of the Operational Creditor that the brokerage

calculations were made on the basis of information received from the Corporate

Debtor about the proportion of payments having been received by them from the

homebuyers and that the same were attached with all invoices. It was also pointed

out that no papers evidencing refunds to home-buyers pursuant to the

cancellation were attached to the reply to the demand notice except two home

booking cancellation letters. It has also been contended by the Appellant that the

Corporate Debtor had not shared any information of the cancellation of bookings

with them. The Respondent without substantiating whether any such information

was shared with the Operational Creditor, has however, contended that the

Operational Creditor always had the liberty to seek this information either by

visiting the office of the Corporate Debtor or by seeking the information through

written communication.

17. Be that as it may, we notice that no material has been placed on record to

establish that these invoices were disputed by the Corporate Debtor prior to

demand notice. Further, we notice that the Corporate Debtor has not controverted

the outstanding liability. Instead they have admitted the outstanding liability

before the Adjudicating Authority in their written submissions on the Section 9

application which is already noted at para 13 supra. The contents of the written

submission also makes it unambiguously clear that since the Respondent had

already received the payment from the allottees, the Operational Creditor was

entitled for its commission. That the Corporate Debtor having already admitted

their liability is also adequately substantiated from the factum of two cheques

drawn in favour of the Operational Creditor. This is sufficient proof in itself that

an operational debt was actually in existence and that such debt was not disputed Company Appeal (AT)(Insolvency) No. 1268 of 2022

11 prior to demand notice and that a default had been committed by the Corporate

Debtor. At this stage we must add that the judgment of the Hon'ble Supreme

Court in the Vidarbha case supra which has been relied upon by the Appellant

is squarely applicable in the present case wherein it has been observed:

"79. As observed above, the financial strength and nature of business of

Financial Creditors and Operational Creditors being different, as also the

tenor and terms of agreements/contracts with financial creditors and

operational creditors, the provisions in the IBC relating to commencement

of CIRP at the behest of an Operational Creditor, whose dues are

undisputed, are rigid and inflexible. If dues are admitted as against the

Operational Creditor, the Corporate Debtor must pay the same. If it does

not, CIRP must be commenced."

18. We, therefore, find force in the contention of the Appellant that the

Adjudicating Authority has committed gross error in ignoring the fact that the

Corporate Debtor has admitted its liability to pay the Appellant for services

rendered as a real estate agent. There is also substance in the argument that the

Corporate Debtor have themselves admitted that the invoices were in terms of the

MoU and issued after the Corporate Debtor had confirmed that consideration

amount from the allottees had been received. That being so, we are of the

considered view, that the claims of operational debt cannot be viewed to be pre-

mature and hence the ratio of K. Kishan supra is inapplicable given the present

set of facts.

Company Appeal (AT)(Insolvency) No. 1268 of 2022

12

19. This now brings us to examine the tenability of the findings as recorded by

the Adjudicating Authority wherein the Section 9 petition has been dismissed on

the following grounds: -

"It is seen that the Corporate Debtor has already issued two cheques of

Rs. 4,32,668.74/ -- (Rupees Four Lacs Thirty--Two Thousand Six

Hundred Sixty-Eight and Seventy-Four Paise only) and Rs. 8,40,073/-

(Rupees Eight Lacs Forty Thousand Seventy-Three only) summing up to an

amount of Rs. 12,72,741.74/- (Rupees Twelve Lacs Seventy-Two

Thousand Seven Hundred Forty-One and Seventy-Four paise only) in favor

of the Operational Creditor. However, the Operational Creditor denied

acceptance of the first cheque whereas the second cheque could not be

delivered.

Even during the arguments, the Operational Creditor did not indicate any

willingness to accept this amount.

It appears that the Operational Creditor has approached this Adjudicating

Authority with a malafide intention and not for genuine resolution."

20. It appears that the Adjudicating Authority has been utterly convinced on

the one hand by the purportedly bonafide intention of the Corporate Debtor to

make payments to the Operational Creditor and equally convinced of the mala-

fide intention of the Operational Creditor, which by refusing to accept the cheque

payment, was being inimical to the cause of genuine resolution.

21. Present is a case where the Adjudicating Authority could not have denied

CIRP initiation as the outstanding liability to make payment of Rs.12,72,741.74 Company Appeal (AT)(Insolvency) No. 1268 of 2022

13 has been clearly admitted by the Corporate Debtor. That there has been a default

in making the said payment is also evident from the fact that both the cheques

were drawn by the Corporate Debtor on a date which was undisputedly

subsequent to both the demand notice and reply to the demand notice. In other

words, on the date of demand notice there was a clear case of default in payment

of operational debt by the Corporate Debtor qua the Operational Creditor. We

also reiterate the fact that we do not find any material on record which shows even

a whisper of dispute or sliver of protestation having been raised with respect to

the operational debt prior to the issue of demand notice. We also do not find any

serious endeavor having been made by the Adjudicating Authority either in CA

No. 2774(PB)/2019 or in the impugned order to understand the reasons as to why

the Operational Creditor had returned the first cheque amounting to

Rs.4,32,668.74/- except for taking on record this fact. In any case, the second

cheque had admittedly not reached the Operational Creditor as was noted by the

Postal Department. The Adjudicating Authority has also not recorded in the

impugned order that the Respondent had presented any Demand Draft for the

debt due and payable to the Appellant in their presence before the Adjudicating

Authority. In such circumstances, putting a question mark by the Adjudicating

Authority on the intentions of the Operational Creditor has been largely

conjectural and lacks foundation.

22. The Learned Counsel for the Respondent has stated that the instant matter

is covered by an order passed by this Tribunal in Praveen Kumar Mundra v. CIL

Securities Ltd. in Company Appeal (AT) (Insolvency) No.89 of 2019. In that

case, the Respondent was ready with a Demand Draft before this Tribunal of the

total claimed amount to offer to the Operational Creditor for acceptance. No such Company Appeal (AT)(Insolvency) No. 1268 of 2022

14 ready offer of the full claimed amount was made in the present case either before

the Adjudicating Authority or this Tribunal thereby making the facts of the case

clearly distinguishable. In subscribing to the line of reasoning as propounded by

the Corporate Debtor that the Operational Creditor by refusing to receive payment

was using the IBC as a tool to coerce and intimidate the Corporate Debtor to

succumb to his illegitimate demands, the Adjudicating Authority seems to have

dropped the guard of exercise of circumspection. We strongly feel that allowing

such facile grounds, based on unfounded surmise, to be used to knock down the

admission of Section 9 is impermissible.

23. We also notice that Adjudicating Authority has relied on the judgment of the Hon'ble Apex Court in M/s S.S. Engineers v. Hindustan Petroleum

Corporation Ltd., 2022 SCC OnLine SC 1385, Civil Appeal No. 4583 of

2022, in that it is not the object of the IBC that CIRP should be initiated to

penalize solvent companies for non-payment of disputed dues claimed by an

Operational Creditor. We are constrained to note that the Adjudicating Authority

has hopelessly failed to appreciate the overall tenor and spirit of the principles of

law as settled down in the judgment of S.S. Engineers supra wherein it has been

clearly held that if the claim of an Operational Creditor is undisputed and the

operational debt remains unpaid, CIRP must commence for IBC does not

countenance dishonesty or deliberate failure to repay the dues of an Operational

Creditor.

24. To sum up, the operational debt which had admittedly become due and payable having not been disputed prior to issue of demand notice and not been

discharged by the Corporate Debtor, this is a fit case for admission of CIRP.

Company Appeal (AT)(Insolvency) No. 1268 of 2022

15 Further seen upon the touchstone of law as laid down in Mobilox and S.S.

Engineers supra, the dismissal of the Section 9 petition by the Adjudicating

Authority is perverse and illegal and liable to be set aside.

25. With the aforesaid discussion, we are of the considered view that the

Adjudicating Authority has erroneously rejected the application under Section 9

of IBC. We therefore set aside the impugned order with the following directions:-

(i) The Corporate Debtor will release payment of Rs.12,72,741.74 by

way of Demand Draft in favour of the Operational Creditor being

the admitted and undisputed operational debt.

(ii) The above payment shall be released within 30 days from the date

of uploading of this order failing which the Corporate Debtor would

come under the rigours of CIRP on the expiry of said 30 days period.

(iii) In case, the Operational Creditor refuses to accept the above sum

as payment towards operational debt, the Section 9 petition shall

become infructuous and deemed to have been dismissed.

(iv) No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Place: New Delhi Date: 05.04.2023

PKM

Company Appeal (AT)(Insolvency) No. 1268 of 2022

16