NATIONAL COMPANY LAW TRIBUNAL

MUMBAI BENCH, COURT- V

C.P. 1366/IB/MB/2020
Under Section 9 of the Insolvency and
Bankruptcy Code, 2016 read with Rule 6
of the Insolvency and Bankruptcy
(Application to Adjudication Authority)
Rule 2016)
In the matter of
Jones Lang LaSalle Building
Operations Private Limited
No. 1110, Level 11, Ashoka Estate, 24
Barakhamba Road, New Delhi 110001
….. Operational Creditor/
Petitioner
Vs
Epitome Residency Private Limited
One BKC, A Wing 1401, Plot No. C-66, G
Block, Bandra Kurla Complex, Bandra
(East), Mumbai Bandra Suburban 400051
….. Corporate Debtor

Order Pronounced On: 12.06.2023

Coram:
Hon’ble Shri. Kuldip Kumar Kareer, Member (Judicial)
Hon’ble Smt. Anuradha Sanjay Bhatia, Member (Technical)

Appearances (via Videoconferencing)

For the Petitioner: Adv. Shashwat Rai i/b Keystone Partners

For the Respondent: Adv. Anmol Bartaria i/b Juris Consillis

 C.P. 1366/IB/MB/2020

Per: Shri. Kuldip Kumar Kareer, Member (Judicial)

ORDER

1. This Company petition is filed by Jones Lang LaSalle Building

Operations Private Limited (hereinafter called “Petitioner” /
“Operational Creditor”) seeking to initiate Corporate Insolvency
Resolution Process (CIRP) against Epitome Residency Private Limited
(hereinafter called “Corporate Debtor”) alleging that the Corporate debtor
committed a default in making payment to the Petitioner. This petition has
been filed by invoking the provisions of Section 9 Insolvency and Bankruptcy
Code (hereinafter called “Code”) read with Rule 4 of Insolvency &
Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. The present petition is filed before this Adjudicating Authority on the ground
that the Corporate Debtor has failed to make payment of a sum of Rs.
1,34,46,109/-.

FACTS OF THE CASE

3. The Operational Creditor is a company engaged in the business of real estate

management and is a solution provider and specialises in real estate
consultancy and property management.

4. An Agreement dated 30.05.2017 was executed between the Operational

Creditor and the Corporate Debtor for the purposes of availing the
Operational Creditor’s services with respect to, Corporate Debtor’s property
called ‘Imperial Heights’ located near BEST Colony, behind Oshiwara Bus
Depot, Opp. Fire Brigade Station, Goregaon (W) Mumbai 400 062 (“said
Property”). The Agreement dated 30.05.2017 was amended vide an
Addendum dated 10.04.2018.

5. Pursuant to this, the Operational Creditor has satisfactorily performed its

services according to the terms and conditions agreed upon in the
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Agreement dated 30.05.2017 and Addendum dated 10.04.2018 and has

started raising monthly invoices for the services rendered. It has been
submitted that no complaints have ever been raised by Corporate Debtor,
with regard to either the services rendered by the Operational Creditor or
invoices raised.

6. In this regard, payments amounting to Rs. 14,98,225/- by way of two

cheques i.e. Ch. No.509380 and Ch. No. 509378 for a sum of Rs.10,00,000/-
and Rs. 4,98,225/- respectively have been received by the Operational
Creditor from the Corporate Debtor under the invoices raised for the months
of June 2018. From July 2018 onwards, the Corporate Debtor began to
default in making payments with respect to invoices raised by the
Operational Creditor.

7. The Operational Creditor was constrained to issue a Demand Notice dated

25.11.2019, under Rule 5 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016, upon Corporate Debtor after extensive
correspondence, negotiations and follow-ups, on account of Corporate
Debtor’s persistent default in making payments. By the said Demand Notice,
the Corporate Debtor was called upon to clear payments amounting to Rs.
1,49,44,337/-.

8. The Operational Creditor has submitted that a settlement agreement dated

29.11.2019 (“Settlement Agreement”) was executed between the
Operational Creditor and Corporate Debtor, in order to settle the dispute
amicably, whereby the Corporate Debtor had admitted its liability to pay an
amount of Rs. 1,49,44,334/- to the Operational Creditor. However, as a
gesture of goodwill, the Operational Creditor agreed to receive an amount
of Rs. 1,46,35,701/- from the Corporate Debtor and post-dated cheques in
this regard were issued to the Operational Creditor.

9. While payments under the first two post-dated cheques were honoured,
however, the remaining cheques when presented for encashment were
returned on account of “insufficient funds”. In this regard, the Operational

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Creditor addressed Notices to the Corporate Debtor under Section 138 of the
Negotiable Instruments Act, 1881.

10. It has been submitted that the Corporate Debtor is liable to pay the
Operational Creditor an amount of Rs. 1,34,46,109/- on the basis of the
invoices raised from time to time (after adjustment of amounts received
under the said Settlement Agreement). Since no payments have been
forthcoming from the Corporate Debtor till date, this necessitated the filing
of the present petition under Section 9 of the Code.

REPLY FILED BY THE CORPORATE DEBTOR

11. At the outset, the Corporate Debtor denies all statements, allegations and
submissions made by the Operational Creditor in the petition.

12. It has been submitted that the Demand Notice dated 25.11.2019 has been
amicably settled and resolved by entering into Settlement Agreement dated
29.11.2019. Under the said Settlement Agreement, six post dated cheques
were received under out of which two cheques have been encashed. It has
been submitted that the encashment of two post-dated cheques satisfied
and settled the Demand Notice dated 25.11.2019. Therefore, the default of
payment of settlement amount under the undated Settlement Agreement
cannot be treated as a default under IBC and cannot result in initiating the
proceedings under Section 9 of the Code.

13. The Corporate Debtor has further submitted that Clause 5 of Settlement
Agreement dated 29.11.2019 provides exclusive jurisdiction to the court in
Delhi with regard to any dispute arising from Settlement Agreement.
Therefore, the present Petition cannot be entertained by NCLT, Mumbai.

14. It has been submitted that the present Petition is hit by threshold limit of 1
crore. The Settlement Agreement includes six post-dated cheques
aggregating to a sum of Rs. 1,46,35,701/-. Cheque No.509380 dated
11.12.2019 for Rs. 10,00,000/- and cheque No.509378 11.12.2019 for
Rs.4,98,225/- have been encashed. Further, the Operational Creditor has

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chosen not to proceed against the Corporate Debtor for dishonour of cheque
No.154216 dated 26.3.2020 for Rs.34,32,669/- and cheque No.154217 dated
28.4.2020 for Rs.34,42,263/- and has not issued any notice for dishonour of
the aforesaid cheques. However, the Operational Creditor has issued notice
under Section 138 for dishonour of cheque No. 154214 dated 28.1.2020 for
Rs.31,10,245/- and cheque no. 154215 dated 27.2.2020 for Rs.31,45,326/-.
The mere fact of dishonouring of cheques by itself cannot be construed as
existence of debt and/or default. Without Prejudice to the above, the claim
raised by the Operational Creditor under the dishonoured cheques
aggregates Rs.62,55,571/- which is below the threshold prescribed under
law and, therefore, the Petition is barred under Section 4 of IBC.

15. It has further submitted that dishonour of cheques cannot constitute

existence of a debt and default and therefore, it cannot be the basis for
instituting a petition under Section 9 of the Code.

16. It has further submitted that the Settlement Agreement is undated, and it
cannot become the basis to for initiating CIRP against the Corporate Debtor
under the Code.

17. With the above averments, the Corporate Debtor has prayed for the dismissal
of the present petition.

Findings: -

18. We have heard the Counsel for the parties and have gone through the record.

19. During the course of arguments, it has been contended by the Counsel for the
Petitioner that the factum of existence of Operational Debt has not been
seriously disputed by the Corporate Debtor. In this regard, the Counsel for the
Petitioner has referred to Exhibit (c) wherein the detail of the outstanding
amount in respect of the invoices has been given. The Counsel for the Petitioner
has further referred to an email dated 28.12.2018 whereby the factum of

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liability has been acknowledged and it has been stated that the outstanding
payments would be cleared. The Counsel for the Operational Creditor has
further referred to another email dated 30.06.2019 whereby the Corporate
Debtor has unequivocally admitted its liability to clear the outstanding dues of
the Operational Creditor.

20. The Counsel for the Operational Creditor has further referred to the settlement
terms which were executed after the demand notice dated 25.11.2019 was
issued to the Corporate Debtor and as per the settlement agreement (Exhibit-
N) the liability of Rs. 1,49,44,337/- has been acknowledged in no uncertain
terms. According to the Counsel for the Operational Creditor, it is, therefore,
evident from the record that the Corporate Debtor has committed default in
payment of the dues and the Petition deserves to be admitted.

21. On the other hand, the Counsel for the Corporate Debtor has argued that the
Petition is not maintainable and deserves outright dismissal. In this regard, the
Counsel for the Corporate Debtor has argued that in pursuance of the demand
notice dated 25.11.2019, the matter was settled with the Operational Creditor
vide settlement agreement (Exhibit-N). Therefore, the dispute raised through
the demand notice stands resolved. The Counsel for the Corporate Debtor has
further argued that as per the settlement terms, different cheques for a total
amount of Rs. 1,46,35,701/- were issued, as detailed in Para No. 2 of the
Settlement Agreement. Some of the cheques were dishonoured but the
Petitioner has not availed the remedy of prosecuting the Corporate Debtor
under Section 138 of the Negotiable Instrument Act. The Counsel for the
Corporate Debtor has further contended that since the dispute raised in the
demand notice dated 25.11.2019 was resolved by way of the Settlement
Agreement, the cause of action to file the Petition under Section 9 does not
survive and on this ground alone, the Petition deserves to be dismissed.

22. We have thoughtfully considered the aforesaid contentions raised by the

Counsel for the Parties and have also gone through the record.

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23. In our considered view, the contention raised on behalf of the Corporate Debtor
is not at all tenable. It is evident from the Settlement Agreement (Exhibit-N)
that the Corporate Debtor clearly acknowledged its liability to pay Rs.
1,46,35,701/- to the Operational Creditor. In order to discharge its liability, the
Corporate Debtor admittedly issued as many as 6 cheques. Out of the said
cheques, only the cheques of Rs. 10,00,000/- and Rs. 4,98,225/- were
honoured while the rest of the cheques were dishonoured and after deducting
the amounting of the cheques which were honoured, the liability of more than
Rs. 1.30 crores still subsisted as the cheques were dishonoured which is clearly
attributable to the Corporate Debtor. In the given circumstances, it does not lie
in the mouth of the Corporate Debtor to say that with the execution of the
Settlement Terms, the dispute raised through the demand notice dated
25.11.2019 stood resolved leaving no right with the Operational Creditor to
pursue any proceedings against the Corporate Debtor except under Section 138
of the Negotiable Instrument Act.

24. Here it is worth mentioning that the Corporate Debtor cannot be allowed to
take advantage of its own grounds nor can it be said by any stretch of
imagination that with the execution of the Settlement Terms, the Petitioner in
any way has lost its rights to seek any remedy under Section 9 of the Insolvency
and Bankruptcy Code. Therefore, the contention raised by the Counsel for the
Respondent/Corporate Debtor is not sustainable and is hereby repelled.

25. No other points have been raised by the Corporate Debtor.

26. As a result of the above discussion, it is evident that the Petitioner has been
able to establish that there has been an Operational Debtor of Rs. 1,34,46,109/-
in respect of which the default has been committed by the Corporate Debtor.

27. Therefore, all the ingredients of Section 9 have been made in this case and in
our considered view, this Petition deserves to be admitted.

28. Accordingly, the above Company Petition is ‘admitted’ by passing the

following:

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ORDER

A. The above Company Petition No. (IB) 1366 of 2020 is hereby allowed
and initiation of Corporate Insolvency Resolution Process (CIRP) is
ordered against Epitome Residency Private Limited.

B. Since the Operational Creditor has not suggested the name of IRP to
perform the duties of the Interim Resolution Professional (IRP) in the
petition, this Bench hereby appoints Mr. Ashok Venkatrao Barbole,
Insolvency Professional, Registration No: IBBI/IPA-001/IP-P02280/2021-
2022/13720, having Email id - [email protected] as the
interim resolution professional to carry out the functions as mentioned
under the Insolvency & Bankruptcy Code, 2016.

C. The Operational Creditor shall deposit an amount of Rs. (2) Lakhs

towards the initial CIRP costs by way of a Demand Draft drawn in favour
of the Interim Resolution Professional appointed herein, immediately
upon communication of this Order. The IRP shall spend the above
amount only towards expenses and not towards his fee till his fee is
decided by COC.

D. That this Bench hereby prohibits 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; transferring, encumbering,
alienating or disposing of by the corporate debtor any of its assets or any
legal right or beneficial interest therein; 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; 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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E. That the supply of essential goods or services to the Corporate Debtor,

if continuing, shall not be terminated or suspended or interrupted during
moratorium period.

F. That the provisions of sub-section (1) of Section 14 shall not apply to

such transactions as may be notified by the Central Government in
consultation with any financial sector regulator.

G. That the order of moratorium shall have effect from the date of
pronouncement of this order till the completion of the corporate
insolvency resolution process or until this Bench approves the resolution
plan under sub-section (1) of section 31 or passes an order for liquidation
of corporate debtor under section 33, as the case may be.

H. That the public announcement of the corporate insolvency resolution

process shall be made immediately as specified under section 13 of the
Code.

I. During the CIRP period, the management of the corporate debtor will
vest in the IRP/RP. The suspended directors and employees of the
corporate debtor shall provide all documents in their possession and
furnish every information in their knowledge to the IRP/RP.

J. Registry shall send a copy of this order to the Registrar of Companies,

Mumbai, for updating the Master Data of the Corporate Debtor.

K. Accordingly, the C.P.(IB) 1366 of 2020 is admitted.

L. The Registry is hereby directed to communicate this order to both the

parties and to IRP immediately.

Sd/- Sd/-
ANURADHA SANJAY BHATIA KULDIP KUMAR KAREER
MEMBER (TECHNICAL) MEMBER (JUDICIAL)

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