IN THE NATIONAL COMPANY LAW TRIBUNAL BENGALURU BENCH C.P.AB)No.114/B8/2019 Uls9 of IBC, 2016 Rw Rule 6 of J&B (AAA) Rules, 2016 In the matter oft Mr. Greg Dryer Rep. by his authorised signatory ‘Mr. Shubhakar 2 Trivoli Road, ion - _ Petitioner/Operational Creditor Versus M/s. Fitkids Education and ‘Training Pvt. Ltd. No.73/1, Miller Road, Bengaluru ~ 560 001 ~ _ Respondent/Corporate Debtor Date of Order: 11° September, 2019 Coram: 1. Hon'ble Shri Rajeswara Rao Vittanala, Member (Judicial) 2. Hon'ble Dr. Ashok Kumar Mishra, Member (Technical) Parties /Counsels Present: For the Petitioner ‘Shri Manjunath Hiral For the Respondent Ms. Hemavathi, A. T “A age of 4eur BeNcALURU BENCH eoppniisye5/2019 ORDER Per: Rajeswara Rao Vittanala, Member (J) 1. C.P(IB)No.114/BB/2019 is fled by Mr. Greg Dryer (Petitioner/ Operational Creditor) U/s. 9 of IBC, 2016, R/w Rule 6 of 1&BIAAA) Rules, 2016, by inter-alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect of M/s. Fitkids Education and Training Pvt. Ltd. (Respondent/Corporate Debtor), on the ground that the Corporate Debtor has committed default for an amount of GBP 14,938/- (Great Britain Pounds Fourteen Thousand Nine Hundred and Thirty Bight only) which included principal amount and interest @18% p.a. 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows: (1) Mr. Greg Dryer (herein after referred as Pet Operational Creditor) (2) M/s, Pitkids Education and Training Pvt. Ltd. (herein after referred as Respondent/Corporate Debtor) is © Private mner/ limited Company incorporated under the Companies Act, 1956, vide Reg. CIN: U80211KA2010PTCO52190 under the Companies Act, 1956 and having its Registered Office in No.73/1, Miller Road, Bengaluru ~ 560 001, has been justly ‘and truly indebted as on the date for sum of GBP 14,938/- (Great Britain Pounds Fourteen Thousand Nine Hundred ‘and Thirty Bight only) including interest @18% p.a., from the respective date of default as denoted above till December 21, 2018 in furtherance the Corporate Debtor is also required to pay the interest on the total outstanding debt from December 22, 2018 till the date of actual vA Fage2of 14‘Nur BENGALURU BENCH cP te14/85/2019 8 @) realization along with the necessary legal charges paid in concern of the said Petition. Its Authorized Share Capital is Rs.8,50,00,000/- (Rupees Eight Crores Fifty Lakhs only) and the Paid-up Share Capital Rs.7,78,14,620/- (Rupees Seven Crore Seventy Eight Lakhs Fourteen Thousand Six Hundred and Twenty only). ‘The Petitioner had entered into Memorandum of, Understanding with the Respondent for rendering of the services for creation of physical education and sports related curriculum. And the Respondent Company was required to pay an amount of GBP 25,000/- consisting of quarterly payment of GBP 6250/- at the end of every three calendar months, Further an amount of GBP 10,000/- consisting of payment of GBP 2,500/- on successful competition of corresponding deliverables. The Respondent terminated the service of the Petitioner on July 21, 2017, as per Clause 4,2{i) of the MOU. ‘There were certain amounts due to the Petitioner as on the day of termination of service. The Petitioner, vide multiple ‘emails and whatsapp message called upon the Respondent Company to make payment of the outstanding due and his other lawful entitlement as per the MOU, The Petitioner vide his email dated August 02, 2017 detailed the breakup of various amount vide due totalling into GBP 14,000/- and called upon the Respondent to make payment of the same ‘at the earliest. The Respondent vide its email dated August 06, 2017, while admitting its liability to make payment for the amount due as claimed by the Petitioner, hes stated that in view of its financial difficulties, the Respondent Ge ages of 146) would not be able to commit a specific date for payment. ‘After repeated follow ups and requests via email, whatsapp ‘and telephonic calls, the Respondent Company made a payment of GBP 7750/- on August 28, 2017. However, payment of GBP 6250/- towards severance pay was not made and the Petitioner was called upon to complete New Deliverables to be proposed by the Respondent. Without prejudice to his lawful entitlement and left with no alternative, the Petitioner was compelled to do the work for New Deliverables even after his service was terminated as fon July 21, 2017. The Petitioner vide his email dated October 09, 2017 proposed to complete the agreed new deliverables subject to the condition that his work towards New Deliverables would attract GBP 2500/- on top of the ‘quarterly rate of GBP 6250/-. The Respondent vide its email dated December 21, 2017 and over telephonic conversation agreed with the New Deliverables and the terms of payment. ‘The Petitioner agreed New Deliverables on March 13, 2018. ‘The Petitioner vide his email dated March 20, 2018 requested the Respondent to make the final payment as agreed. The Respondent Company owing to their financial inability and internal inefficiencies resorted to find faults in the additional services rendered by the Petitioner. The Petitioner's office followed up with multiple emails seeking payment of the amount due to the Petitioner. The Respondent Company vide its email dated August 10, 2018 ‘admitted that they are facing certain financial challenges ‘and it is not possible for them to give a confirmed date on which they would be making the payment. rage of 14Neu BENGALURU BENCH ‘ce.gope14/09/2019 3 (© The Respondent has received the Demand Notice on December 05, 2018 as per the Consignment Status generated from the Indian Post website ‘www.indiapost.gov.in’ including that the item is delivered ‘on December 05, 2018. However, the Respondent has not raised any issue within a period of ten days of the receipt of Demand Notice. However, on December 24, 2018, the Petitioner's legal counsels are in receipt of the reply of the Respondent dated December 22, 2018, The repy of the Respondent has been sent beyond the prescribed period of ten days and consequently fails to stand the scrutiny of law. No Suit or Arbitration proceedings have ever been initiated ‘or pending in any Court or Tribunal on the date of Demand Notice ie., December 03, 2018 or till even today between Operational Creditor and Corporate Debtor regarding the above said outstanding payments. ‘The Respondent has filed Statement of Objections dated 03.07.2019, by inter alia contending as follows: (1) It is submitted that as per the MOU entered between the parties, the Petitioner had agreed to provide quality of services to the Respondent, However, the Respondent Company was not satisfied with the services provided by the Petitioner same was informed to the Petitioner. In one of the whatsapp conversation with the representative of Respondent Company clearly informed the Petitiener that the Respondent Company is not satisfied with the ‘work/service provided by the Petitioner, inspite of that the Respondent had already paid GBP 50K to the Petitioner. Even though, the quality of the work given by the Petitioner ua tages of 4NeUTBENGALURU BENCH ‘crate: 14/86/2019, is substandard, the Respondent Company has paid the entire amount for the service rendered. It is alleged that the Petitioner has not only given the low quality service/material to the Petitioner but also not dene below ‘mentioned work as agreed to provide as mentioned in the Clause 1.2 of the MOU, i. Review and innovation of the ongoing physical education programs offered by Pitkids ii, Training the identified staff of Fikids in understanding, effectively teaching and implementing the Physical Education Curriculum, Getting feedback from such stall and other management staff at Fitkide end revising the Physical Education Curriculum as required, iv, Undertaking any other acts that are crucial for implementing the Paysical Education Curriculums efficiently by Fitkids. vy, Finalizing Physical Education Curriculum. ‘The Petitioner has not given any services with regard to the Physical Education Curriculum to the Respondent which is described in the Schedule A of the MOU. That being the case, the Respondent is not liable to pay any amount to the Petitioner. The Petitioner has approached the Tribunal with unclean hands by not providing the services to the Respondent Company; hence the Respondent is not liable to ‘pay any amount to the Petitioner. The sole intention of the Petitioner is to harass the Respondent Company and abuse the process of law, based on this ground alone the Petition up age Gof 14 liable to be dismissed.[NCLTBENOALURU BENCH Pe14/25/2019 (2) It is contended that the Sports Training lesson chapter shared by the Petitioner through online was, copied/plagiarized from the internet and the same was sought to be passed off as his own creations. Therefore, the Respondent Company is not able to use the chapter shared. by the Petitioner, which has caused immense damage/loss to the Respondent. The contention of the Petitione: that the after termination of the MOU, the Respondent had requested the Petitioner to do the additional work is completely false, as it is stated earlier the Petitioner had not completed the work/services to be done under the MOU, hhence requesting the additional work to be done by the Petitioner does not arise at all, Moreover the Petitioner has ‘not submitted any documents to show that he has done additional work to the Respondent. 5) It is stated that as per the Clause 6.1 of the MOU entered Uy rage 70f38nour mevoaLente nance Pop. 14/85/2019 (4) It is contended that the Respondent is liable to pay GBP 6250 from the Respondent for terminating the MOU. The Respondent its email dated 23.10.2017 clearly stated that Respondent Company is not liable to pay thi Respondent will make payment only for the work done. The Petitioner should have invoked the arbitration Clause and should have approached the Arbitral Tribunal to solve the amount, the issues arisen amongst the parties. Instead, with the malafide intention filed the above mentioned petition, The email conversation filed by the Petitioner cannot be acceptable as it is not printed and filed it in proper format ‘and the Petitioner has not filed 65(B) affidavit under Indian Byidence Act as well. Hence, the email conversation cannot be acceptable. 4, Heard Shri Manjunath Hiral, learned Counsel for Petitioner and ‘Ms, Hemavathi A 7, learned Counsel for Respondent. We have carefully perused the pleadings of both the parties and extant provisions of the Code and rules made there under. 5. Shri Manjunath Hiral, learned Counsel for the Petitioner, while pointing out various averments made in the Company Petition and also Synopsis, as briefly stated supra, has further submitted that even though the claim arises in the year 2017, they are in ‘continuous correspondence with the Respondent. Finally, when Respondent failed to pay the outstanding amount, he issued Demand notice dated 03.12.2018, under the Code, by inter alia demanding to pay an outstanding amount of GBP 12,500/- as on 21.07.2017 and 20.03.2018 along with interest @ 18%. He submits that instant Petition is filed in accordance with law, land the debt and default is proved beyond doubt and there is no Ww age Bot 14eur BeNoALURU BENE crates 34/n8/2019 dispute raised by the Respondent and thus, he is urged to admit the Petition by initiating CIRP against the Corporate Debtor. 6, Ms, Hemavathi, A. 7, learned Counsel for the Respondent, on ‘the other hand, while reiterating various averments made in the statement of objections, as briefly stated supra, has further ‘submitted that in spite of several follow ups, through e-mail, ‘WhatsApp, the Petitioner Operational Creditor failed to complete its obligations rectifying all the defects which is pointed out to them specifically and acknowledged by it. While the issue is under negotiation for settlement, the impugned demand notice dated 03.12.2018 was issued by the Petitioner/Operational Creditor and the Respondent has already responded to the legal notice by way of reply dated 22.12.2018, (ESSE Ge es) | Creditor has also consented to refer the matter for the ‘ntited for disputed debt and defaulted under the Code. he Respondent Company provides services to 163 Schools across India, as on today 520 employees are working and it making Company with sufficient strength and is actively doing profit business. Shri Ramesh $ Setty, Manager Administration in Respondent Company has also filed an Affidavit dated 02.07.2019, by inter alia stating as follows: i, It is stated that in order to support the averments and contentions made in the Statement of Objections, they have placed reliance on various documents including print outs from the accounting software Tally, print out of the WhatsApp messages which have been maintained online Ua gorseNcurBeNoALURD BENCH ‘cyto 4/80/2019 in soft copies on my computer system. ‘The aforesaid documents, list of which is annexed herewith and marked fas Annexure-A were maintained in the computer system during the period over which the computer vas used regularly to store oF; process information for the purpose of any activities regularly carried on over that period by the person having lawful control over the use of computer; It is stated that throughout the material part of the period during which the information was retrieved, the computer was operating properly and the documents re‘erred in paragraph 3 of this Affidavit are true and accurate of the records as displayed on the screens of the computer. ‘The points for consideration are whether the Petitioner rendered services to the Respondent as per Memorandum of Understanding dated 07% March, 2016; whether any subsequent agreement executed between the parties in pursuant to termination of the said Agreement to claim further amount; whether any pre-existing dispute between the parties and whether the present Petition is filed to recover the alleged outstanding amount or to initiate CIRP against the Corporate Debtor for its insolvency. 9. As stated supra, the default amount consisting of the following: = Paras car Dis From On sccount of temination f] 1 |Siptgmnen fee Opaatins!| ope ease. | aroraoir Gretoe Interest on the principal sum ‘of GBP 6250 at the rate of | 16% pa, ffom the date of| GBP 1594/- | 21.12.2018, default Le, July 21, 2017 a December 31,2018 Page 10 0f 14[NCLTMENOALURU BENS! cP gsy.14/80/2019 ‘Towards The —adaional ferices rendered post 2 |{exmination of employment 8 qareaso/- | 2c0a.2018 between December 2017 March 2018. Tnterest on the principal sum of GBP 6250" at the rate of ev pa. ffom the dete of| Gppess/- | 2c.12.2018 defauit Le, March 20, 2018 {il December 20m 2018 ‘GBP 14,938/, TNR 13,63,696/- ‘Total ‘The Respondent has denied the alleged outstan the Petitioner by its reply dated 22.12.2018 in pursuant to the demand notice issued under the provisions of the Code by furnishing the following chronological sequence of transactions between them: of of —Tmvoice — aller [Details of payment made for such] De completion of Assignment | Assignment 10 June 2016 Payment made on 25% June 2016 86,21,428.25 through Blecronictrarsfer_ to guivalent to GBP Mr. Greg's bank eccount witt National (6250 before TDS. Weet Minister Bank, UK-GBP_ 3606-25 equivalent to ReS,59,056-25 after TDS deductions 20m August 2016 Payment made on 17% October 2016 Ra5,13,316-19 through lecwonictrarsfer_ to Equivalent to GBP Mr. Greg bank account with National 16250 before TDS, West Minister Bank, UK-GBP 5606-25 feqivalent to. Ra4,57/698-19 after TDS deductions, 19m Devember 2016 Payment made on 4 Jamvary 2017 521,563.00 through Elecwonle“trarsfer_— to Equivalent to GBP Mr. Greg Bank account with National 16250 before TDS, West Minister Bank, UK-GBP 5605-25 fsuivalent to R&4,70,140-13 after TDS deductions BF Apa ZOIT Payment made on 11 may 20:7 through Rea5,21,152-50 equivalent to | Blectronic wansler "0 GBP 6250 before TDS Mr, Greg Bank account with national up Page tof 14DNL BENGALURU BENCH ‘c.ep14/88/2019, West Minister Bank, UKGBF 3606-25 ] equivalent to Re.4,67,785-50 after TDS deductions, Tae july 2007 Payment made on 27 July 20:7 trough s.5,05,504-06 Blectronie transfer to Mr. Greg Bank Equivalent to GBP account with National West Minister {6000 before TDS Bank, UK-GBP 5606-25 equivalent’ to Re.6,56,462-54 after TDS dedutions, 2B hagust 2017 Payment made on G© Sepienber 2017 Rs.6,50,189-68 which is | through ectronictrarsfer_ to Inclusive of Rs.125890.48 as| Mr. Greg Bank account with National onus payment which is | Weet Minister Bank, UK-GBP 6951-7 ‘equivalent’ to GBP 7750 and | equivalent to R55,84,593.68 after TDS {GBP 1500 ae Bonus ~ this is | deductions. before TOS: ‘Therefore, they clearly ment joned that they have paid the outstanding amount promptly aggregating to Rs.99,93,413.68/-. ‘Therefore, the contention of the Petitioner that the outstanding amount is due and committed default and it is not supported by evidence. 10, As stated supra, the Respondent raised the point of defective service and also stated to make the Petitioner to render service even after the termination of Service as on July, 21, 2017. The Petitioner has not raised any grievance with the Respondent by invoking Arbitration clause available in MOU in question. The Petitioner is relying uncorroborated emails, which the Respondents denied, in support of his case. The facts and circumstances, as narrated supra, clearly show that the instant Petition is filed with an objective to recover alleged outstanding disputed dues. As stated supra, the Respondent Company was incorporated on 15.01.2010 and it was engaged in providing complete solutions in Sports and Physical Education, Creative Movement, S.7.E.M and Career Counselling for children from Lp Pege a2 0f 14NeureewoaLane Benet ‘cPamye.14/86/2019 Kindergarten to Grade 12 and it provides services to 168 Schools across India, having employee strength more than 500. ‘Therefore, admittedly the Corporate Debtor is a solvent ‘Company and the alleged outstanding amount was not paid as it is not liable to pay and the eligible amounts are already paid as stated supra, LL, Itis settled position of law that the provisions of Code cannot be invoked for recovery of outstanding alleged amount, The Hon'ble ‘Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum, In another latest judgment rendered in Transmission Corporation Of AP. Lid. Vs. Equipment Conductors and Cables Lid.,? Supreme Court of India, it is inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 3¢ of judgment, it is stated that Adjudicating Authority, while examining an application filed under Section 9 of the Code, will have to determine: a) Whether there is an ‘operational debt’ as defined exceeding Rs. Lakh? ) Whether documentary evidence furnished with the application shows that the aforesaid debt is due and. payable and has not yet been paid? c) Whether there is existence of dispute between the parties or the record of the pendency of a suit or arbitration proceeding filed before receipt of demand. Faoseyssceass "ea a.997 of 2018 dated 29¢ Otter, 2018, 2018,2018) 147 CxA 112,80) yo Page 13 0114eursewoavone mene ‘cP: 14/89/2019 notice of the unpaid operational debt in relation to such dispute? If any one of aforesaid conditions is lacking, the application would have to be rejected, 12, For the aforesaid reasons and circumstances, we are of the considered opinion that the Petitioner failed to make out any ‘case 50 as to initiate CIRP as prayed for and thus the instant ‘Company Petition is liable to be dismissed by granting liberty to the Petitioner to pursue other remedies available to then, under any other law to recover the alleged claims made in the Company Petition 13, In the result, C.P.(IB)No.114/BB/2019 is hereby dismissed by granting liberty to the Petitioner to pursue any other remedies, ‘as available to them, under any other law to recovery the alleged outstanding amounts as claimed in the Company Petition, No order as to costs, a faint premio eran ee Page 140f14