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2024 Supreme(Online)(NCLT) 1663
NATIONAL COMPANY LAW TRIBUNAL
SH. ASHOK KUMAR BHARDWAJ, SH. SUBRATA KUMAR DASH, JJ
Multiplier Brand Solutions Private Limited – Appellant
Versus
Amazon Wholesale (India) Private Limited – Respondent
Operational Creditor vs Corporate Debtor | IB-757/ND/2023
For the Applicant: Mr. Neeraj Malhotra, Sr. Adv., Adv. Lakshmeesh S. Kamath, Adv. Rajesh Khandelwal, Adv. Samriti Ahuja, Adv. Rohit Patil, Adv. Nimish Gupta
For the Respondent: Mr. Krishnendu Datta, Sr. Adv., Adv. V.P. Singh, Adv. Raghav Seth, Adv. Arnab Ray, Adv. Ankitesh Ojha, Adv. Varsha
A pre-existing dispute regarding invoices obstructs the admission of a CIRP petition under the Insolvency and Bankruptcy Code.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 9 - Operational Debt - The Petitioner claimed dues from the Corporate Debtor for services provided as per a master services agreement and invoices raised. Though the Petitioner provided substantial evidence of claims and order approvals, the Corporate Debtor disputed the authenticity, alleging fraudulent conduct and invoice discrepancies, thus raising a pre-existing dispute. As established by prior Supreme Court rulings, this pre-existing dispute precludes admission of operational debt claims under IBC, leading to the rejection of the petition. (Paras 13, 16, 17)
(B) Dispute Resolution - The analysis highlights that even if complaints about invoice authenticity arise post novation of agreements between companies, it does not negate the obligation for all related transactions or their examination as per applicable laws. (Paras 15, 16)
Facts of the case:
The petition for initiating CIRP under Section 9 of the IBC by the operational creditor was rejected based on substantial evidence of a dispute regarding the debt arising before the demand notice, showcasing interactions and complaints regarding invoice integrity.
Findings of Court:
The Tribunal found no grounds to support the admission of the petition, citing substantial disputes and applying precedent case law that emphasizes the examination nature regarding disputes rather than the merits of those disputes.
Issues: The critical issue was whether the corporate debtor raised valid disputes about the quality of service and authenticity of invoices prior to the demand notice, which barred the initiation of CIRP under the IBC.
Ratio Decidendi: The court's reasoning was established on the mentions of existing disputes in compliance with IBC norms, advocating against premature insolvency proceedings without resolution of foundational disputes.
Result: The petition is rejected. No cost.
| Table of Content |
|---|
| 1. service agreement established obligations. (Para 1 , 2 , 3) |
| 2. evidence of service provision and delivery disputes. (Para 4 , 5 , 6) |
| 3. pre-existing disputes hinder ibc petition acceptance. (Para 12 , 13 , 15) |
ORDER
Indubitably, an agreement was entered into between the Petitioner viz., Multiplier Brand Solutions Private Limited and Amazon Wholesale (India) Private Limited on 01.05.2019 regarding service provision etc. Clause 1.1 to 1.3 of the agreement reads thus:-
“1.1. Services. Service Provider will provide services to Amazon on non-exclusive basis, in accordance with the terms and conditions of this Agreement (“Services”) as the Parties may, from time to time, agree and specify in work orders (“Work Orders”) issued or signed by Amazon. The agreed form of Work Order is attached as Exhibit A to this Agreement. Any Affiliate of Amazon will have the right to enter into Work Orders with Service Provider under this Agreement, and with respect to such Work Orders, such Affiliate becomes a Party to this Agreement and references to Amazon in this Agreement are deemed to be references to such Affiliate. With respect to Amazon, each Work Order is a separate obligation of the Amazon entities or entity that execute(s) such Work Order and no other Amazon Affiliate entity has any obligation under such Work Order Amazon makes no promises or representations whatsoever as to the amount of business Service Provider can expect at any time under this Agreement. It is further clarified that nothing in this Agreement prevents Amazon or any of its Affiliates from procuring same or similar Services from any other third party.
1.2. Work Orders. This Agreement governs each Work Order, except that any conflict between the terms of this Agreement and a Work Order will be resolved in favor of the Work Order, if the Work Order explicitly states that it is intended to modify the conflicting terms of this Agreement. This Agreement does not obligate Amazon to engage Service Provider to perform any Services, or Service Provider to perform any Services, until both Parties have signed a Work Order. Both Parties must sign a Work Order for it to be effective.
Notwithstanding the aforesaid, a Work Order will be binding on both Parties if Service Provider: (a) signs and returns it to Amazon; (b) begins performance; or (c) acknowledges it by email, facsimile or any other commercially reasonable means. If Service Provider commences Services for Amazon in the absence of a Work Order and Amazon accepts such Services, this Agreement will nevertheless apply, unless the Parties otherwise mutually agree in writing Service Provider will, at no cost to Amazon, promptly and satisfactorily correct any Services or Work Product found to be defective or not in conformity with the requirements of this Agreement and the applicable Work Order.
1.3. On-Site Services. If Service Provider provides Services on Amazon premises, Service Provider will, and ensure that its Personnel will: (a) abide by all Amazon’s rules, policies, and procedures regarding such matters as safety, security, health, environmental and hazardous material management, misconduct, physical aggression harassment and theft (collectively, “Rules”), and (b) at Amazon’s request, remove and promptly replace any Personnel (defined in Section 6 below) performing Services who behaves in a manner that is unlawful or inconsistent with any Rules.”
2. It is also not in question that on 01.04.2021 a Novation and Substitution Agreement was entered into at Bangalore between Amazon Seller Services Private Limited and Amazon Wholesale (India) Private Limited. The agreement was endorsed by the Petitioner before us viz., Multiplier Brand Solutions Private Limited. The relevant excerpt of the agreement reads thus:-
“NOW THIS AGREEMENT WITNESSETH THAT:
1. From and after the Effective Date:
1.1. The Parties hereby agree that Transferee will replace Transferor in relation to and under the Principal Agreement. All references to T
