INDIA MEDTRONIC PRIVATE LIMITED VS.

HEALTHCARE
ASSOCIATES PRIVATE LIMITED
This is a Company petition has been filed under Section 9 of the Insolvency and
Bankruptcy Code, 2016 read with Rule 6 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 on behalf of India
Medtronic Private limited (Operational Creditor), by Mr. Sanjay Mitra for
initiation of Corporate Insolvency Resolution Process (CIRP) against
Healthcare Associates Private Limited (Corporate Debtor).
The petition included a claim of Rs. 4,43,14,123.50/- which comprises of Rs.
3,15,41,747.25/- and an interest of Rs. 1,27,72,376.25/-.
Brief facts and submissions by the Operational Creditor –
The Operational Creditor is a private limited company and the Corporate Debtor
is a public limited company. The parties entered into a Non-exclusive
distribution agreement, whereby the Corporate Debtor was appointed as Non-
exclusive distributor for sale of the Operational Creditor’s products in various
parts on India.
The Operational Creditor stated that the Corporate Debtor neither disputed the
fact regarding receiving of the goods nor questioned any of the unpaid invoices
that were raised, and also the demand notice issued by the Operational Creditor
under section 8 of IBC have been replied. Three cheques issued by the
Corporate Debtor for the aggregate amount of Rs.3,21,20,236/- were
dishonoured on presentation. The Corporate Debtor has not denied issuing the
said cheques.
The main contentions of the Corporate Debtor was that the Operational
Creditors had ‘poached’ his employees and officers due to which he was unable
to recover the debts from the market. Later on, an agreement was entered into
whereunder the Operational Creditor had agreed to assist the Corporate Debtor
in recovering its dues in exchange of the right to adjust 50% of the amount
recovered from the market. Regardless that, the Corporate Debtor has contended
that the Operational Creditor is not entitled to any claim in view of the claim of
Rs. 68,48,76,427/- made by the Corporate Debtor against it in the said Money
Suit.
The Operational Creditor also stated that the Corporate Debtor in many
circumstances had acknowledged and promised to repay back the debt amount.
The Operational Creditor had showed some light on the case of Bir Singh vs.
Mukesh Kumar1, where it was stated that, unless there is compelling evidence to
the contrary, even blank cheque leaves that are voluntarily signed and delivered
would trigger the presumption under Section 139 of the Negotiable Instruments
Act.
Brief facts and submission by the Corporate Debtor –
The Corporate Debtor claims the said petition to be dismissed on the grounds
that the Operational Creditor had materially and deliberately supressed the facts
which evidences the existence of pre-existing disputes, breach of obligation and
that the Operational Creditor had wrongfully made/invented the alleged
admission of dues by Corporate Debtor, resulting in offence covered by section
340 of Cr.P.C and consequences under Section 65 of the IBC.
That the Corporate Debtor claims that, after the extension of the agreement, the
Operational Creditor took mala-fide advantage of it and ‘poached’ the
employees and key-managerial officers of the Corporate Debtor. The
Operational Creditor even unilaterally avoided doing business with Corporate
Debtor and approached other distributors, telling dealers and customers not to
do business with Corporate Debtor. As a result, the Corporate Debtor's efforts to
recoup its sizeable debts from the market were severely hindered.
That the Operational Creditor had entered into an agreement with the Corporate
Debtor and agreed that the Operational Creditor receives 50% of the proceeds
thereof against the dues of the Corporate Debtor and that the Corporate Debtor
executes an undertaking, it would assist or cooperate with the Corporate Debtor
in recovering the debts. Although the Operational Creditor provided reciprocal
obligations and promises in the undertaking, there has been no cooperation or
assistance from the Operational Creditor in helping the Corporate Debtor
recover its market-based debts. Its obligations have been broken by the
operational creditor.
In fact, the Operational Creditor has fabricated false evidence and made false
statements on oath which is dealt with in detail by the Corporate Debtor in I.A
No. 430/KB/2021, which is an application for perjury.
The Corporate Debtor states that the Operational Creditor had manipulated the
blank cheques and there has been no acknowledgement/admission by him
regarding any liability towards the Operational Creditor.
1
(2019) 4 SCC 197
Several e-mails had been made by the Corporate Debtor which have been
supressed in the petition and none of them are denied or disputed. It was
submitted by the Corporate Debtor that these emails were issued more than 1½
(one and a half) years before the section 8 demand notice.
Additionally, the corporate debtor made it clear that it had lost more than Rs. 69
crores due to loss of business, reputation, goodwill, and other factors.
On the basis of the three filled-in cheques, Operational Creditor has falsely
claimed admission of liability by Corporate Debtor. From the records it is
conclusively established that the allegations regarding three cheques given by
Corporate Debtor are false and that the blank security cheques were not given
by Corporate Debtor in 2018 or 2019 as alleged but much earlier in 2015 and
2017. They last conducted their business operations in 2018.
Analysis and Findings –
A stand taken by the corporate debtor that these blank cheques bearing number
002039 and 002033 were furnished to the Operational Creditor in July 2015 and
3rd blank cheque bearing 003285 was furnished in May 2017, and not in the
year 2018 and 2019.
It is the specific stand taken by Corporate Debtor that Operational Creditor has
wrongfully sought to misuse and convert old blank cheques and that a return
memo had been presented before Bank of America.
A different person than the one who filled in the payee's name when handing
over the document later filled in the amounts and dates therein. When
contrasting the writing of the payee's name with the writing for the amounts and
dates, there were obvious and pronounced differences in handwriting and the
issued three cheques in partial discharge of his debt which were returned with
memos “Drawer's signature differ,” and no such notice had been issued by the
Operational Creditor under the NI Act.
The Corporate Debtor showed some light on the case of M/s Gian Chand &
Brothers & Another vs. Rattan Lal @ Rattan Singh 2, and concluded that the
three cheques issued relied on by the operational creditor were issued at a time
when alleged debt was not due or payable by corporate debtor and that the
Operational Creditor failed to establish a debt or default on such basis.

2
(2013) 2 SCC 606
Few numbers of case laws were mentioned by the Corporate Debtor showing
the term ‘poaching’ as a pre-existing cause and blamed that the Operational
Creditor caused business losses to it particularly due to the reason that its own
trained manpower had been poached by the Operational Creditor with a mala-
fide intentions and has claimed damages for an amount of Rs. 69.56 crores.
The Hon’ble NCLT has refused to term poaching of employees by the
Operational Creditor as a pre-existing dispute. Even though the Corporate
Debtor had blamed the Operational Creditor for business losses caused due to
poaching of its employees, this action cannot be called a pre-existing dispute as
it did not fit the definition of genuine dispute given by the Hon’ble Supreme
Court in the judgement of Mobilox Innovations Private Limited v. Kirusa
Software Private Limited3, the Tribunal held.

3
(2018) 1 SCC 353