B.S.V. Prakash Kumar, Judicial Member -

1. It is a Company Petition filed u/s. 9 of the Insolvency & Bankruptcy Code, 2016 ("the Code") by the Petitioner on the ground that the Corporate Debtor defaulted in paying Rs. 10,45,922.80, therefore, sought for initiation of Corporate Insolvency Resolution Process (In Short "CIRP") against the Corporate Debtor.

2. It is a case where the corporate debtor wanted to set up its business in India, and in this context, having this petitioner by saying that it is a leading business consultant in business advisory and consultancy services, appeared to have entered into Master Services Agreement on 14th October 2017 with the corporate debtor, thereafter owing to deficit of services in obtaining licenses and other permissions from various authorities agreed to have come from the operational creditor, the corporate debtor in fact recalled the agreement and demanded for return of the originals provided to the operational creditor, all this happened long before the operational creditor served section 8 notice upon the corporate debtor. It is a comprehensive understanding between the parties with timelines that the operational creditor should obtain all licenses and permissions from governmental authorities within a specified time for starting business by the Corporate Debtor.

3. It is not a case of supply of services or goods on invoice to invoice basis. The operational creditor, though relied upon Master Services Agreement dated 14th October 2017 setting out jural relationship of service provider and client, has not produced the agreement copy. It is the Corporate Debtor who filed it to justify its case saying that the Operational Creditor failed to adhere to the timelines mentioned in the agreement in providing services as mentioned in the agreement, therefore delay happened, owing to which the corporate debtor was constrained to engage somebody else to get the services for which this Operational Creditor was earlier engaged.

4. From the application filed by the creditor, it appears that this Petitioner raised invoices dated 05.03.2018 and 19.03.2018 for Rs. 10,45,922.80 against the Corporate Debtor, basing on which, the Petitioner issued Section 8 Notice dated 11.07.2018 against the debtor company demanding payment of Rs. 10,45,922.80 for the services said to have been rendered by the Petitioner.

5. As against this submission, the Corporate Debtor side has drawn the attention of this Bench to the first notice dated 5.4.2018 sent by the creditor saying that earlier invoices were paid, as to the invoices impugned, demanded for payment of the claim amount under the impugned invoices, and fire license, to which the debtor replied on 17.4.2018 summing up denial to the claim made by the creditor and expressing their position that they already provided all documents that they had in their custody, by saying so it has also been said that the creditor should return all documents given by the debtor and that the Operational Creditor either should submit the factory approval or return the same. Again when the creditor shot back another notice on 10th May 2018 demanding clearance of the impugned invoices, the debtor replied on 10.5.2018 and rejoinder reply on 15.05.2018 i.e. before issue of section 8 notice by the petitioner, stating that payments would be made based on the real progress, and they could not keep paying blindly without any physical progress being shown to them and that they already remitted Rs. 24,91,224, therefore called upon the petitioner to return their original documents and settle their claim failing which the corporate debtor would initiate appropriate proceedings against the corporate debtor. It has been further said in those two reply notices that the debtor understood that fire license is not requirement for the list of licenses and registrations entrusted with the creditor, more over this fire license requirement was not put to the debtor earlier in point of time. As against the demand of return of documents by the debtor, the creditor issued another notice on 25th June 2018 stating that they were willing to settle the matter and return the documents listed in the notice mentioned provided an amount of Rs. 9,92,380 paid to the creditor. Again the debtor on 25.06.2018 replied to the creditor that the creditor had not completed the work entrusted with the creditor and failed to carry out the work entrusted to it, therefore the debtor was terminating the order of entrustment to carry out the creditor assistance for establishing business in India by reserving their right to proceed against the creditor. In continuation of it, the debtor side sent termination notice on 6.7.2018 to the creditor's advocate.

6. By seeing all this, it is evident that back to back correspondence transpired between them, the operational creditor saying the corporate debtor not provided requisite information for obtaining licenses, whereas the corporate debtor saying that the operational failed in providing timely services and therefore recalled the agreement and demanded return of their originals. As said above, it is an admitted fact that the delay occurred from the side of the operational creditor, against which, the operational creditor of course says it has happened because requisite documents were not supplied. Today the ground position is, it is a fact that there is pre-existing dispute between the operational creditor and the corporate debtor before section 8 notice was issued about the operational creditor providing services to the corporate debtor, notwithstanding the merit of the contentions of either side.

7. That apart, the corporate debtor on 20.07.2018 has replied to the section 8 notice within 10 days from the date of receipt the notice stating that operational creditor failed to provide services as agreed between them by saying that this was informed to the creditor long before section 8 notice was issued.

8. As against this factual aspect, we hereby relied upon the ratio decided by the Honourable Supreme Court of India in between Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 Para 51, which is followed to say that the debtor herein raised the dispute not only in the reply notice given on 20.07.2018 (within 10 days) to the section 8 notice dated 11.07.2018, but also raised in the correspondence between the parties prior to the issual of section 8 notice.—

'51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the 86 adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defense which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defense is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application.'

9. Therefore for the reasons aforementioned, we hereby hold that this claim is hit by pre-existing dispute, accordingly this Company Petition is hereby dismissed as misconceived with liberty to the Petitioner to proceed in accordance with law.