The Board of Control for Cricket in India Vs. Think & Learn Private Limited - (NATIONAL COMPANY LAW APPELLATE TRIBUNAL) (16 Jul 2024)

As the Corporate Debtor acknowledged the debt and planned a repayment schedule, condition of there being a ‘Debt’ and ‘Default’ for the purposes of Section 9 of IBC satisfied

MANU/NC/3739/2024

Insolvency

The Operational Creditor (BCCI) and the Corporate Debtor entered a ‘Team Sponsor Agreement’ from 25th July 2019 till 31st March 2022. As per the agreement Corporate Debtor was provided with an exclusive right to be the team sponsor of the Indian cricket team and advertise its brand name on the kit worn by the Indian cricket team. As consideration, the Corporate Debtor was required to pay a fee to the Operational Creditor.

The term of the Agreement dated 25th July 2019 was till 31st March 2022; however, even after 31st March 2022, without the execution of formal document, the Corporate Debtor and Operational Creditor agreed to continue the arrangement in relation to Services. This team sponsor agreement was extended until 31st March 2023.

After 31st March 2022, Corporate Debtor has made payment in full only against one invoice for the year 2022-2023. However, the Corporate Debtor failed to make payments against the remaining invoices raised by the Operational Creditor for the financial year 2022-23.

Corporate Debtor had never disputed the fact that it was required to pay the agreed Fee as per the arrangement between the parties, as it kept requesting the Operational Creditor for extension of time for payment through emails.

Demand notice was sent by the Operational Creditor on 19thJuly 2023 under Rule 5 of the Insolvency & Bankruptcy (Application to Adjudicating Authority Rules), 2016 to the Corporate Debtor. In the reply, Corporate Debtor contented that no contract is in force and the claim did not constitute an ‘Operational Debt’.

One of the primary issues raised in the present case was whether the Corporate Debtor has defaulted as per Section 3(12) of the Insolvency Bankruptcy Code (IBC) 2006?

It was observed since the Corporate Debtor time and again acknowledged and duly planned a repayment schedule for the outstanding dues by sending several emails, the condition of there being a ‘Debt’ and a ‘Default’ for the purposes of Section 9 of the IBC is held to be satisfied.

Another issue that was raised in the present case was whether there was any contractual arrangement/ agreement between the parties, evidencing the existence of Operational Debt?

On this issue, the respondents contented that the agreement ended on 31st March 2022 and since there was no functioning agreement/contract between the parties, the said petition is void of maintainability.

It was observed that, even after the original agreement came to an end on 31st March 2022; BCCI and the Corporate Debtor exchanged correspondences to the effect that the arrangement was to continue pending the execution of the formal document. Therefore, the Corporate Debtor cannot contend the issue of lack of proper agreement, when the same was not raised during the time when such services were duly availed by the Respondent, and the benefits arising there from duly accrued to it.

Therefore, the petition to initiate CIRP against the Corporate Debtor is allowed since the existence of a debt and a default in the payment of debt is clearly established.

Tags : NCLT DEBT DEFAULT