The NCLT, in its detailed analysis, emphasized the importance of distinguishing between a debtor-creditor relationship and other types of business arrangements when considering petitions under the Insolvency and Bankruptcy Code, 2016. As noted, "the Adjudicating Authority must evaluate whether there is an Operational Debt, whether the debt is due and payable, and whether a dispute exists."
The case involved a petition filed by M/s Transline Technologies Limited (Operational Creditor) for initiating the Corporate Insolvency Resolution Process (CIRP) against M/s Experio Tech Private Limited (Corporate Debtor). The dispute arose over unpaid dues following a series of transactions and an agreement that led the Corporate Debtor to argue the existence of a joint venture rather than a typical creditor-debtor arrangement. The Tribunal, after reviewing the nature of the agreement and the facts presented, deliberated on whether the relationship qualified under the Code.
Brief Facts:
The Company Petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by Mr. Munish Kumar Goyal, the Authorized Representative of M/s Transline Technologies Limited (Operational Creditor), against M/s Experio Tech Private Limited (Corporate Debtor) for initiating the Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”). M/s Transline Technologies Limited, registered under the Companies Act, 1956, had its registered office in New Delhi, while M/s Experio Tech Private Limited, also registered under the same Act, was located in Dwarka, South West Delhi. The Corporate Debtor had authorized and paid-up share capital of Rs. 1,00,000 each.
The petition was filed on 08.03.2023, claiming an outstanding amount of Rs. 3,87,90,800/- (Three Crore Eighty-Seven Lakhs Ninety Thousand Eight Hundred). The Operational Creditor asserted that the default had occurred 30 days after the respective invoices were issued, with the latest date of default being 11.01.2022.
Contentions of the Petitioner:
The Operational Creditor, M/s Transline Technologies Limited, supplied electronic equipment to M/s Experio Tech Private Limited as per agreed terms and raised five invoices totaling Rs. 5,34,92,510/-, with payment due within 30 days. The Corporate Debtor also took financial assistance of Rs. 20,98,290/-. After part-payment of Rs. 1,68,00,000/-, an outstanding amount of Rs. 3,87,90,800/- remained due. Despite reminders, the Corporate Debtor failed to make full payment. A Demand Notice was issued on 12.01.2023, and the Corporate Debtor replied on 23.01.2023. Consequently, the petition was filed.
Contentions of the Respondent:
The Corporate Debtor, M/s Experio Tech, argued that one of its directors, Sh. Niraj Kumar Gupta, without proper authorization, entered into an agreement with the Operational Creditor, Transline, on 03.09.2021. The agreement granted Transline a monopoly on supplies, which the Respondent claimed was unfair. They further stated that Transline failed to deliver key items, leading to the cancellation of a tender by Gujarat Police and a loss of Rs. 16,47,475/-. Additionally, Debit Notes worth Rs. 2,27,98,393/- for returned goods were not adjusted by the Petitioner.
Observation of the Tribunal:
The Tribunal noted that it had territorial jurisdiction as the Adjudicating Authority for the Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016, since the Corporate Debtor's registered office is in Delhi. The petition was filed within the prescribed limitation period, and the Operational Creditor's claim met the threshold limit of Rs. 1 crore.
In assessing the admissibility of the petition, the Tribunal referred to the Supreme Court's decision in Mobilox Innovations and determined that the Adjudicating Authority must evaluate whether there is an Operational Debt, whether the debt is due and payable, and whether a dispute exists. The Tribunal observed that while the Corporate Debtor did not dispute the receipt of goods or invoices, it challenged the relationship between the parties.
The agreement between the parties was found to be an exclusive arrangement where both parties undertook joint efforts to supply goods and agreed to share profits equally, suggesting a joint venture rather than a debtor-creditor relationship. Citing the NCLAT’s decision in Prashanth Shekara Shetty, the Tribunal emphasized that such profit-sharing agreements do not fit the definition of an Operational Debt under the Code.
The Tribunal concluded that the Applicant did not qualify as an Operational Creditor under Section 5(20) of the Code and dismissed the application.
The decision of the Tribunal:
The Tribunal dismissed the application filed by M/s Transline Technologies Limited (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, for initiating CIRP against M/s Experio Tech Private Limited (Corporate Debtor). A certified copy of the order was to be issued, if applied for, upon compliance with all requisite formalities.
Case Title: M/S Transline Technologies Limited v. Experio Tech Private Limited
Case no: CP IB NO. 236/(ND)/2023
Coram: Dr. Sanjeev Ranjan [Member (Technical)] and Shri Mahendra Khandelwal [Member (Judicial)]
Advocate for Petitioner: Adv. Mr. Amit Kr. Singh
Advocate for Respondent: Adv. Mr. Anurag Ojha, Adv. Mr. Deepak Somani, Adv. Mr. Vipul Kumar
