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BEFORE THE HON’BLE NATIONAL COMPANY LAW TRIBUNAL AT NEW DELHI

COMPANY PETITION (IB) NO. 1677 OF 2019

Brief Retained on Behalf of Corporate Debtor

Application by Operational Creditor to Initiate Corporate Insolvency Resolution

Process Under the Insolvency and Bankruptcy Code, 2016

Parties: (Pg. 3)

Operational Creditor: M/S BRAND REALTY SERVICES LTD.

Corporate Debtor: M/S SIR JOHN BAKERIES INDIA PVT. LTD.

Relief Sought:

Operational Creditor: (Page no. 6)

a. To admit the application and pass an order for initiating the corporate
insolvency resolution process under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (“Code”);
b. To appoint an Interim Resolution Professional in terms of Section 16 of the
Code;
c. To cause a public announcement of the initiation of the Corporate insolvency
resolution process and calling for submission of claims under Section 15 of the
Code;
d. To declare a moratorium in terms of Section 14 of the Code in terms of Section
13 of the Code.

DATE PARTICULARS REFERENCE

28.11.2014 The Operational Creditor signed an agreement Annexure D

with the Corporate Debtor to work as a consultant Page no. 65 of
cum investor with the corporate debtor and to the Petition
provide advisory services on various matters of
Business Promotions, Advertising, etc. and
setting up a brand new retail outlet at GF-28,29
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and 30, Eros Market Place Mall, Shakti Khand II,

Indirapuram, U.P.
15.06.2018 Alleged Account Settlement Agreement entered Annexure D
between the parties in regard to the settlement of and E
the dues pursuant to the obligations of the Page no. 69 of
corporate debtor. The alleged account settlement the Petition
agreement enumerated that the Corporate
Debtor will pay a fixed commission of Rs.
56,500/- per month w.e.f. April 2018 for a period
of 66 months and accordingly issued 66 Post
Dated Cheques to the Operational Creditor.
15.04.2019 The alleged date on which the default of the total Page no. 24 of
claim amount of Rs. 54,94,874/- occurred. the Petition
18.04.2019 The 3 cheques of Rs. 56,000 each, allegedly Annexure F
issued in accordance with the Clause 3 of the and G
account settlement agreement, drawn on HDFC Page no. 95 of
Bank, returned unpaid to the Operational Creditor the Petition
due to reason of “Stop Payment” and the
Corporate Debtor has taken no steps to make the
payment.
30.04.2019 The Operational Creditor served a legal demand Annexure H
notice under Section 138 of the Negotiable Page no. 98 of
Instrument Act, asking the Corporate Debtor to the Petition
comply with the terms of the Agreement dated
15.06.2018 and pay the legally enforceable debt
of Rs. 1,69,500 and the expense of the legal
notice.
25.05.2019 The Corporate Debtor replied to the demand Annexure K
notice denying that it is in any way indebted to the Page no. 117
operational creditor. of the Petition
03.06.2019 Application by Operational Creditor to initiate Page no. 14 of
corporate insolvency resolution process under the Petition
the Insolvency and Bankruptcy Code, 2016.
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05.11.2019 Reply by the Corporate Debtor to the Application

filed by the Operational Creditor under Section 9
of the Insolvency and Bankruptcy Code, 2016.
27.11.2019 Rejoinder on behalf of the Operational Creditor

GROUNDS:

Operational Creditor:

A. The Corporate Debtor has defaulted in making the payment of the operational
debt to the Operational Creditor; (Page no. 6)
B. The Demand Notice in Form 4 of the Insolvency and Bankruptcy (Application
to Adjudicating Authority) Rules, 2016 has been delivered by the Operational
Creditor to the Corporate Debtor, demanding the payment of the operational
debt; (Page no. 6)
C. The Corporate Debtor has duly received the demand notice sent by the
Operational Creditor and the Corporate Debtor replied to the same on
25.05.2019, which was outside the stipulated period of ten days to the
Operational Creditor. (Page no. 6)

Corporate Debtor:

GROUNDS REFERENCE

The Corporate Debtor has never admitted as ‘debt’ any amount Page no. 2 of
being due or payable to the Applicant. There are disputed the Reply
questions of facts in the present case that can only be
determined after a full-fledged trial, which cannot be conducted
before the NCLT.
The Director of the Applicant and authorized signatory of this Page no. 3 of
Application, i.e., Mr. Kamal Manchanda, was a Director of the the Reply
Corporate Debtor for a brief period of time, having access to
signed cheques, crucial documents, etc., of the Corporate
Debtor. The cheques of HDFC Bank, placed on record by the
Operational Creditor in its Application, as Annexure-E (Page
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no. 73-94), belong to the bank in which Mr. Manchanda was

authorised signatory of the Corporate Debtor, having access to
such cheques and stole them, to use them later for his own
benefit. He illegally filled fictitious figures and payee names,
and presented those forged and stolen cheques in accounts of
his relatives and associates, in order to unjustly enrich himself
at the cost of the Corporate Debtor. Page No. 4 of
In this connection of theft, forgery and fraud, the Corporate the Reply and
Debtor reported the matter to the Police vide Diary no. 1271/19, Annexure-1 at
dated 12.07.2019, in Madhu Vihar, Delhi. Page no. 17 of
the Reply
The alleged Settlement Agreement dated 15.06.2018, was Page No. 4-5
executed by Mr. Abhishek Kumar, who was never authorised of the Reply
by the Corporate Debtor to execute or enter into an agreement and Annexure-
including the alleged settlement agreement. Further, the 2 at Page no.
alleged settlement agreement, did not bear the common seal of 21 of the Reply
the Corporate Debtor, and as such, could not be enforced
against the Corporate Debtor.
A bare perusal of the alleged Settle Agreement demonstrates
that the details of the stolen cheques, witnesses, etc., have
been filled subsequently, showing the ill and criminal intent of
the Operational Creditor. The alleged Settle Agreement is a
forged, fabricated and bogus documents and therefore, cannot
be relied upon.
The account of the Corporate Debtor stood settled with the Page no. 6 of
Operational Creditor in terms of the Settlement Letter dated the Reply and
19.12.2017, signed by Mr. Kamal Manchanda on behalf of the Annexure-3 at
Operational Creditor and a cheque was given through which the Page no. 25 of
final outstanding amount of Rs. 21,66,511/- was paid towards the Reply
the full and final settlement of all claims by the Corporate Debtor
to the Operational Creditor. Accordingly, the Agreement dated
28.11.2014, was also mutually ended by the parties by
executing the Settlement Letter.
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The bills raised by the Operational Creditor, forming the basis Page no. 7
of the Application, suffer from major inconsistencies. One such and 8 of the
Bill, on page no. 59, charged a sum of Rs. 20,06,000/- for Reply and
consultancy services in a State where the Corporate Debtor has Page no. 59 of
no presence or scope of establishment/expanding. None of the the Petition
purported bills bears any acknowledgement of receipt from the
Corporate Debtor, because of the fact that they were never
served on the Corporate Debtor but were merely recently
created and placed on record to play fraud on the Hon’ble
NCLT.
There was a deficiency in services provided by the Operational Page no. 10 of
Creditor, the foremost being that the Operational Creditor the Reply
caused the Corporate Debtor to take on lease a premises
situated in Ghaziabad, Uttar Pradesh, of which the title was in
dispute, due to which the Corporate Debtor’s store was
suddenly closed, leading to not only loss in revenues, but also
brand value.
The Corporate Debtor is a solvent company, whose assets are Page no. 11 of
more than its liabilities in the Balance Sheet, and has an the Reply
adequate cash flow. Insolvency proceedings are initiated
against those companies where there is an apprehension that
the insolvency is the only recourse to recover its dues.
Insolvency proceedings should not be used as a substitute for
debt enforcement procedures.

Rejoinder on behalf of the Operational Creditor:

GROUNDS REFERENCE

The Corporate Debtor has admitted in Clause 14 of their Reply Page no. 2 of
that the Account Settlement Agreement dated 15.06.2018, was the Rejoinder
executed by Mr. Abhishek Kumar, the main Director of the
Corporate Debtor. The Agreement shows that the stamp papers
for the agreement were purchased by the Corporate Debtor, the
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agreement is made by the Corporate Debtor through its main

Director, all the account figures are pertaining to the Corporate
Debtor, and the 67 cheques are of the Corporate Debtor.
The police complaint, vide Diary no. 1271/19, dated Page no. 4-5
12.07.2019, was filed as an after-thought, intended to create of the
false records. Mere filing of a police complaint by the Corporate Rejoinder and
Debtor does not absolve the Corporate Debtor from its financial Annexure-A at
obligations. On the contrary, Mr. Kamal Manchanda, filed a Page no. 12 of
police complaint dated 16.02.2018, against Mr. Abhishek the Rejoinder
Kumar.
Mr. Kamal Manchanda had submitted his resignation as a Page no. 5-6
Director of the Corporate Debtor vide a letter dated 15.06.2018, of the
which was accepted by the Corporate Debtor vide letter dated Rejoinder and
16.06.2018, specifically stating that Mr. Kamal Manchanda Annexure-B at
would not be liable/responsible for any past, present or future Page no. 21 of
liabilities of any nature in relation to the company. the Rejoinder
The Operational Creditor denied the letter submitted by the Page no. 7-8
Corporate Debtor to show full settlement of the account as it of the
was not even signed by the Operational Creditor. The Rejoinder
Operational Creditor has confirmed and acknowledged the
receipt of payments as per the letter of the Corporate Debtor
wherein the deposit amount of the Operational Creditor and the
commissions up to that date were paid for by the Corporate
Debtor and all the necessary entries were passed in the ledger
accounts submitted by the Operational Creditor.
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Judgements

1. Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd.

(2018) 1 SCC 353
Paragraph 34 and 51 of the judgement talks about the conditions that the
adjudicating authority has to consider while examining an application under
Section 9 of IBC. It talks about the existence of dispute. The Corporate Debtor
has to 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 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 also states about how ‘and’ in
Section 8 has to be read as ‘or’ while considering the existence of a dispute.

2. Transmission Corporation of Andhra Pradesh Limited v. Equipment

Conductors and Cables Limited

2018 SCC OnLine SC 2113

Paragraph 9 and 10 of the judgement states that the existence of an undisputed

debt is sine qua non of initiating CIRP.

3. Innoventive Industries Ltd. v. ICICI Bank

(2018) 1 SCC 407

Paragraph 29 of the judgement states that the moment there is existence of

such a dispute, the operational creditor gets out of the clutches of the Code

4. Atul Roy v. M/s. Technofac Contracts Pvt. Ltd. and Another

2018 SCC OnLine NCLAT 218

Paragraph 13 and 14 of the judgement states that once there is a dispute as to

the amount of claim, Application under Section 9 of IBC is not maintainable.