Allowed

In the matter of Nysa Communications Private Limited [Company Petition No. (IB)-556(ND)2020]

NCLT18 Sept 2023Company Petition No. (IB)-556(ND)2020

Case brief

AI extract

What is this about?

The Adjudicating Authority admitted an application to initiate CIRP against the Respondent under Section 9 IBC. The Court held that the Respondent's claims of defective service (missing footage) were not substantive disputes barring the process as the Link Agreement indicated respondent responsibility for backups. An undisputed debt in the LEDGER account met the threshold, satisfying the condition

What did the court decide?

The Section 9 application was admitted; CIRP was initiated; moratorium declared under Section 14; IRP Mr. Rajesh Kumar Parakh appointed.

In the matter of Nysa Communications Private Limited… — Insolvency and Bankruptcy | NCLT (2023)

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NATIONAL COMPANY LAW TRIBUNAL NEW DELHI BENCH (COURT-II)

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Company Petition No. (IB)-556(ND)2020

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IN THE MATTER OF:

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M/s. Computer Junction Private Limited.

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C-129, Phase-1, Naraina Industrial Area, New Delhi-110028 … Applicant

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VERSUS

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Nysa Communications Private Limited 1^st Floor, F-18, Preet Vihar, Vikas Marg, New Delh-110092

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… Respondent

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Section: 9 of the IBC, 2016

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Order Delivered on: 18.09.2023

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CORAM

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SH. ASHOK KUMAR BHARDWAJ, HON’BLE MEMBER (J)

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SH. L. N. GUPTA, HON’BLE MEMBER (T)

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PRESENT: For the Applicant : Adv. Tushar Thareja For the Respondent : Adv. Milan Negi and Adv. Shadab Alam

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(IB)-556/(ND)/2020

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M/s. Computer Junction Private Limited Vs. Nysa Communications Private Limited Page 1 of 23

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ORDER

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PER: SH. L. N. GUPTA, MEMBER (T)

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M/s Computer Junction Private Limited (for brevity, the ‘Applicant ’) has filed the present petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity, ‘ IBC, 2016’ ) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency Resolution Process against M/s Nysa Communications Private Limited (for brevity, the ‘ Respondent ’).

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The Respondent namely, M/s Nysa Communications Private Limited is a Company incorporated on 16.04.2008 with CIN U72900DL2008PTC 176819 under the provisions of the Companies Act, 1956 having its registered office on 1^st Floor, F-18, Preet Vihar, Vikas Marg, New Delh-110092, which is within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent is Rs.5,00,000/- and the Paid-up Share Capital is Rs.5,00,000/as per Master Data annexed.

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The brief background of the case is that vide order dated 13.10.2021, this Adjudicating Authority initiated the CIR process against the Respondent under the captioned petition. The said order was challenged by one Mr. Puneet Kumar before the Hon’ble NCLAT, which vide its Judgement dated 09.05.2022 in Company Appeal (AT) (Insolvency) No. 1035 of 2021, set aside the order dated 13.10.2021 for hearing the matter afresh. The Hon’ble NCLAT, however,

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clarified it has not given any opinion on the pre-existing dispute between the parties. The operative part of the abovementioned Judgement reads thus:

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“22. In view of the detailed discussion as above, we hold the view that it would serve the ends of the justice if the Corporate Debtor is provided an opportunity to submit his reply in Section 9 Application. We, therefore, allow the appeal and accordingly set aside the impugned order dated 13.10.2021. We further direct that the Corporate Debtor shall be free from rigours of Corporate Insolvency Resolution Process and other provisions of IBC. The case is remanded to the Adjudicating Authority for giving a notice to the Corporate Debtor and affording him opportunity to submit a reply and thereafter pass appropriate orders after due consideration in the Section 9 application filed by the Operational Creditor. We also make it clear that we are not giving any opinion regarding pre-existing dispute between the parties in the matter.”

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In view of the Judgement (ibid) of Hon’ble NCLAT, the Respondent was afforded an opportunity to file its reply in the matter and was heard de novo.

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It is stated in the application that the Applicant and Respondent entered into an ‘Agreement’ dated 30.05.2018, whereby the Applicant agreed to provide services for end-to-end infrastructural support, Laptop Services, etc. to the Respondent for a period of three years. It is further stated by the Applicant that even after duly receiving the services as against the duly raised Purchase Orders w.e.f. 10.08.2018, the Respondent failed to make payments.

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The detailed particulars of the Operational Debt claimed by the Applicant including the total amount of default and the date of default are mentioned in Part IV of the application, which is reproduced overleaf -

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As per Part IV of the Application (ibid), the Applicant has claimed an outstanding debt of Rs.3,54,54,483.49 and relied on 10.08.2018 as the date of default.

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It is averred by the Applicant that it sent a Demand Notice dated 23.12.2019 under Section 8 of IBC 2016 through Speed Post at the registered office of the Respondent. In response, the Respondent filed a notice of dispute dated 15.01.2020, as averred by the Applicant in its affidavit filed under section 9(3)(b) of IBC 2016.

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On issuance of the notice, the Respondent filed its reply and written submissions stating that –

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8.1 The Respondent had obtained a contract from the Indian Council of Agricultural Research (‘ICAR’) for conducting the All-India Entrance Online Examinations (hereinafter, “Exams.”) for admission to UG, PG, and Ph.D. Courses in Agricultural Universities. In order to execute those assignments, the Respondent and the Applicant entered into a facilities agreement dated 30.05.2021, whereby the Applicant agreed to provide laptop servers 1 primary, and 1 backup to be provided on average ratio of 160 candidates that is to 1000 +1000 for 1.60 lacs candidates (with a provision for proportionate increase for increase in candidate count) rental server laptops configuration: (HP, Dell Lenovo) core i5 or equivalent, 8 GB Ram, 250 GB or above HDD and laptop among other obligations as envisaged under the said agreement. The Applicant also agreed to arrange the DVR facility for recording, while the

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Respondent was to take a backup from such DVR after completion of the examinations.

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8.2 Under the said Agreement, the Applicant was to make all arrangements along with one of its associate/partners namely, Testpan India Pvt. Ltd.

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8.3 Under the said arrangement, one exam. was conducted on 22.06.2022 (for ICAR), wherein Applicant along with its partner Testpan India Pvt. Ltd was to undertake all activities as envisaged under the said agreement. Issues of mass cheating were reported in the said exam., which were first raised by ICAR on 26.06.2019. This issue was raised by the Respondent with the Applicant and footage of the exam centers was sought on the same day. However, the Applicant failed to provide the same, in fact, the CCTV footage was deleted, and this was admitted fault on the part of the Applicant.

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8.4 As the Respondent could not provide the CCTV footage, the ICAR terminated the contract of the Respondent on 30.07.2018. The Applicant acknowledged this issue of deficiency in its services and accordingly after discussions, the amount of invoice no. DLT1-1819-01149 was reduced from Rs.3,75,83,000/- to Rs.1,13,30,756/- and payment was accordingly made.

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8.5 Despite the above series of events, admitted deficiency of services on the part of the Applicant and payment of an actual agreed amount by the Respondent, the Applicant issued a demand notice upon Respondent under section 8 of IBC 2016 on 23.12.2019. In response, a notice of dispute was raised by the Respondent on 15.01.2020, wherein all the issues and disputes in the case were duly raised.

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8.6 The following is the series of events, wherein the Applicant failed to execute its obligation as per the Agreement -

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8.7 The following are the details of the obligations of parties in respect of CCTV footage/DVR and data backup -

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Further, the two terms “DVR Facility for recording” and “backup” are completely different. DVR Facility for recording pertains to a setup for CCTV recordings, while the backup is merely a copy of such recording done under the DVR Facility. Backup could have been taken only when the recording in DVR was done by the Applicant.

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8.8 Clause 2 of the facility agreement dated 30.05.2018 clearly provides the scope of work of the Applicant and reads as under:

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“Clause 2. Scope of work (Activities including booking and facilities of examination center through over partner (TESTPAN INDIA PVT. LTD.)”

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8.9 Also, clause 3(iii)(c) of the Facility Agreement, provides for a penalty on the applicant (CJPL)/Testpan, in case they fail to comply with the terms of the Agreement, which clearly depicts that OC and Testpan were acting as partners for the said assignment. Further, clause F of the said Agreement provided as under:

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“Limitations of liability: - The server provider CJPL along with its partner shall be liable for providing services as per the

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scope of work (“clause 2 of agreement”), in case of any discrepancy, CJPL and its partners would ensure providing infrastructure equivalent to fail infrastructure due to deficiency of services by CJPL or its partner on days of assessment tests notified by NYSA.

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A bare perusal of the aforesaid clauses clearly depicts that the Applicant /CJPL and Testpan were jointly providing services to the Respondent under the said facility agreement.

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8.10 Also, the Hon’ble NCLAT in para 2 of its judgement dated 09.05.2022 in Comp. App. AT (INS) No. 1035 of 2021 has recorded the following fact:

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“2. ….. According to this agreement NCPL obtained end to end infrastructural support and laptop servers for the work relating to booking and facilities at examination centres from CJPL with their partner Testpan India Pvt. Ltd. This agreement was entered into by the partners in connection with a contract obtained by NCPL from the Indian Council of Agriculture Research (in short “ICAR”). T he scope of work of CJPL/ Operational Creditor covered activities which included providing DVR facility for recording the examination proceedings at each centre along with CCTV cameras , with Nysa designated manpower responsible for taking backup of recordings from these locations in server or any other medium provided by Nysa. The Facility Agreement also provided that “in case CJPL/ Testpan does not provide any of the facilities mentioned in the documents at the centre(s), penalty will be imposed on the basis of feedback received from the concerned government body/university representatives deployed at centre.

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The Applicant has also filed its written submission stating the following:

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9.1 The Respondent was taking Computers, Laptops on rent, and other IT-

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related peripherals from the Applicant, which is clearly reflected in the Ledger Account, which depicts an admitted outstanding amount of Rs.3,05,164/-.

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9.2 The Respondent approached the Applicant to provide end-to-end infrastructural support and laptop services etc. for the work as defined in the scope of services in the Agreement dated May 30^th, 2018 w.e.f. May 05^th, 2018 for conducting the examinations for the ICAR. The Agreement dated May 30^th, 2018 entered between the Respondent and the Applicant was not a contingent contract.

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9.3 The Applicant provided the services to the Respondent as per the said Agreement. The Respondent even after duly receiving the services and acknowledging the same, failed to make payments as against the duly raised Purchase Orders, w.e.f. August 10^th, 2018, though the Respondent admitted the other Invoices as mentioned in the Ledger Account.

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9.4 In view of the unpaid principal amount of Rs.2,65,77,028/- including the admitted outstanding amount of Rs.3,05,164/- and interest of Rs.88,77,455.49/- totaling to Rs.3,54,54,483.49/-, the Applicant sent a Demand Notice under Section 8 of the Code, which was delivered to the Respondent on 27.12.2019.

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9.5 The Respondent replied to the said Notice, which was received by the Applicant on 17.01.2020, raising a false and fictitious dispute. It is pertinent to mention that the Invoices were duly acknowledged under the seal and signature of the employee of the Respondent. The Respondent always assured the Applicant that the due amount shall be paid at the earliest and raised no dispute prior to the receipt of the Notice under Section 8 sent by the Applicant.

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9.6 The Respondent raised false and frivolous dispute only in respect to one Invoice dated August 10^th, 2018 by alleging that the said examination was not conducted properly whereas the Respondent admitted the other invoices. Respondent in its own letters dated 19.11.2018 and 08.12.2018 to the Ministry of Agriculture admitted that the said examination was conducted successfully as per the scope of ICAR. Thus, the Respondent cannot be allowed to blow hot and cold in the same breath that on one hand it says that the examination was conducted successfully, whereas on the other it says it was not conducted successfully.

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9.7 It has been alleged that the Applicant failed to provide CCTV footage to the Respondent On the bare perusal of the Agreement, it is clear that the responsibility to provide the DVR facility for recording the examination proceedings in each lab along with cameras was of the Applicant’s, whereas the manpower of the Respondent was responsible to take the backup of these locations in server or any other medium provided by the Respondent. It is further pertinent to mention here that as per Clause 3 (vi) of the Agreement, the CCTV Surveillance recording was to be arranged solely by the Respondent. The partner of the Respondent vide email dated 25.06.2018 categorically asked the Respondent to provide a Hard Disk and Pen Drive and further stated that if the same is not provided, it shall not be their responsibility.

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9.8 The Respondent also raised another fictitious dispute that the amount of Invoice No. 1149 was reduced to Rs.1,13,30,735/- from Rs.3,75,83,000/The Respondent has tried to justify the same by making unilateral marking on Invoice No. 1152. It is stated that Invoice No. 1149 for an amount of

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Rs.3,75,83,000/- relates to the examination conducted by the Applicant as per the Facilities Agreement dated 30.05.2018. The Invoice No. 1149 under the Applicant's possession bears the Respondent's seal and signature and no reduction of the amount is mentioned. The question of reducing the amount of Invoice No. 1149 to Rs.1,13,30,756/- from Rs.3,75,83,000/- owing to rate difference and quality does not arise as the said Invoice was raised after conducting the examination and the Respondent admitted for the successful conduct of the examination.

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9.9 The Hon’ble NCLAT in “Rajendra Bhai Panchal vs. Jay Manak Steels”, (2020 SCC Online NCLAT 730) held that:

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“An ‘Adjudicating Authority’ is not to decide how much due is. Further, an ‘Adjudicating Authority’ is required to examine before admitting or rejecting an application u/s 9 of the Code as to whether the ‘dispute’ raised by the ‘Corporate Debtor’ qualify as a ‘dispute’ as defined under sub-section (6) of Section 5 and whether notice of ‘dispute’ given by the ‘Corporate Debtor’ satisfies the conditions prescribed in sub-section (2) of Section 8 of the Code. Further, the existence of an ‘undisputed sum’ is a condition precedent for initiating ‘Corporate Insolvency Resolution Process’.

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We heard the submissions of both parties and perused the pleadings placed on the record. The main objection raised by the Respondent is that there was a pre-existing dispute between the parties, prior to the issuance of the Demand Notice dated 23.12.2019.

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The Respondent has stated that the Applicant did not provide the CCTV footage for the examinations conducted. To buttress the plea, the Respondent relies upon the e-mail dated 26.06.2018, whereby the Applicant was asked to

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provide CCTV surveillance data. The contents of the e-mail dated 26.06.2018 reads thus:

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It is noticed from the record that the partner of Applicant, namely, Testpan India Pvt. Ltd. replied to the aforesaid e-mail on 26.06.2018 and assured the Respondent that no CCTV footage would be deleted and stated that the manpower (of the Respondent) should collect the same in servers taken to conduct the examination. The said e-mail reply reads thus:

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Subsequently, what transpires from the record is that on receiving complaints from the Indian Council for Agricultural Research (“ ICAR ”) regarding cheating in the examinations, an e-mail was sent by the Respondent to the Applicant on 29.06.2018 seeking CCTV footage, which reads thus:

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We further notice that the Respondent vide its email dated 30.06.2018 informed the partner of the Applicant namely, Testpan India Private Limited that HD online Work Station Delhi center code 1427 has informed that CCTV footage has been deleted. The said e-mail reads thus:

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Per contra, the Applicant has contended that in terms of Clause 2 subclause (v) of the Facilities Agreement dated 30.05.2018, the Respondent was responsible for taking backup of the DVR from these locations. The relevant extracts of the Facilities Agreement are reproduced below, for immediate reference -

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xxxx xxxx xxxx xxxx xxxx

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The Applicant has further contended that as per Clause 3 (Other conditions) sub-clause vi of the Facilities Agreement dated 30.05.2018 (as placed on page 24 of the reply), the storage device of CCTV Surveillance recording was to be arranged by the Respondent. The relevant clause in this regard reads thus:

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“vi. The storage device of CCTV Surveillance recording to be arrange by you ONLY. ”

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To buttress its plea, the Applicant has also relied upon the email dated 25.06.2018, which reads thus -

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Moreover, during the course of the hearing, the Applicant had contended that the Respondent itself vide its letter dated 19.11.2018 addressed to the Hon’ble Minister of Agriculture, Government of India has specifically stated in para 10 (page 38 of the rejoinder) “ That the aforesaid online examination was so conducted successfully to the satisfaction of the observers so appointed by ICAR at the aforesaid centers and to the satisfaction of the candidates.”

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From the conjoint reading of the documents (ibid) relied upon by the Applicant, it is observed that in terms of the Facility Agreement dated 30.05.2018, the Respondent was responsible for taking the backup of the CCTV Footage through its manpower. Further, we find that as per its own statement made by the Respondent in its letter dated 19.11.2018 addressed to the Hon’ble Minister of Agriculture, the examination was conducted successfully. In view of the abovementioned, we see no plausible contention raised by the Respondent which requires any further investigation with respect to the deletion of CCTV Footage.

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Furthermore, during the course of the hearing, the Applicant argued that the “Ledger Account of the Applicant maintained in the books of the Corporate Debtor” itself contains an admitted balance of Rs.4,04,260/payable to the Applicant. The Applicant added that the said Ledger Account has been annexed by the Respondent at Annexure A-12 on page 109 of its own Reply, which reads thus:

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Thus, we find that when the Ledger Account of the Applicant maintained by the Respondent itself contains an admitted balance of Rs.4,04,260/- payable to the Applicant. The present Application was filed on 11.02.2020, therefore the minimum threshold limit of Rs,1,00,000/- is applicable to the present case. Since, there is an unpaid amount of more than Rs.1,00,000/- admitted in its Ledger account in respect of the Applicant, for which no pre-existing dispute exists, in the given facts and circumstances, the Operational Creditor has succeeded in establishing the default on the part

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of the Corporate Debtor in payment of the said operational debt. The present petition filed under Section 9 is complete and fulfills all the requirements of the law. Therefore, the Application is admitted in terms of Section 9(5) of the IBC 2016. Accordingly, the CIRP is initiated and a moratorium is declared in terms of Section 14 of the Code. As a necessary consequence of the moratorium in terms of Section 14(1) (a), (b), (c) & (d), the following prohibitions are imposed, which must be followed:

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“(a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

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(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;

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(c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

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(d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the corporate debtor.”

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Since there is no IRP proposed by the Operational Creditor, therefore, this Bench appoints Mr. Rajesh Kumar Parakh (Mob. No. 9811350848) having IBBI Registration No. IBBI/IPA-001/IP-P00272/2017-2018/10516 and Email ID: [email protected] from the panel of IPs recommended by IBBI to this Adjudicating Authority subject to the condition that there is no

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disciplinary proceeding pending against the said IRP. The Adjudicating Authority further orders that:

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“ Mr. Rajesh Kumar Parakh, IRP (Email ID: parakh.rajesh @gmail.com) having registration no IBBI/IPA-001/IPP00272/2017-2018/10516 i s directed to take charge of the CIRP of the Respondent with immediate effect. Further, the IRP is directed to take steps under Sections 15, 17, 18, 20, and 21 of the IBC, 2016.”

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The Operational Creditor is directed to deposit Rs.2,00,000/- (Two Lakh) only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted by the Interim Resolution Professional and shall be paid back to the Operational Creditor.

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A copy of this Order shall immediately be communicated to the Operational Creditor, the Respondent, and the IRP mentioned above, by the Court/Registry of this Tribunal. In addition, a copy of the Order shall also be forwarded by the Court Officer/Registry to IBBI for their records.

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Sd/Sd/- (L. N. GUPTA) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J)

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In the matter of Nysa Communications Private Limited [Company Petition No. (IB)-556(ND)2020]

Case brief

What is this about?

What did the court decide?

In the matter of Nysa Communications Private Limited [Company Petition No. (IB)-556(ND)2020]

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

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