Net4 India Limited was taken to National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code 2016 (OBC) by its creditors for non-payment of dues, that mainly included Edelweiss, Banks and others. The Insolvency and Bankruptcy Code 2016 has provisions for resolution/revival of the Company before it go into liquidation process or is declared as Insolvent. That is, the Company can be declared Insolvent only on the order of NCLT, if the resolution process is not successful.
NCLT appointed Mr Vikram Bajaj as a resolution professional in terms of IBC. Resolution Professional further appointed Mr Ankur Raheja, as techno-legal consultant in the matter. The details as to Resolution Process and variuous announcements have been included here at: https://net4cirp.wordpress.com.
The Resolution Process is for six months period plus extention. The Resolution Process was successfuly completed and the Resolution Plan was submitted before the NCLT, earlier this year. But due to pandemic of COVID-19, the approval of the Resolution plan has delayed and remains pending before the Tribunal.
In the meanime, the Net4 Customers have faced various issues as to renewal of Domain Names and the same has been bought before the NCLT by the Resolution Professional. But there have been rumours around that Net4 India Limited has been shut down, which is not true. Rather, Net4 committed before NCLT to offer cooperation for resolution of the Complaints. Now in this respect a dedicated email ID has been setup email@example.com. So now all the complaints need to be directed to this ID for early resolution ! In short, the matter is sub judice with NCLT and corona has delayed approval of resolution plan.
While, now the NCLT has passed following order dated 25 Spetember 2020, referring to the main issue behind whole process as referred under Para 3:
… originally this Corporate Debtor was an Accredited Registrar taking accreditations from Domain Name Registries and providing services to the Registrants. Earlier Net 4 Network Services Limited (Net 4 Network) was wholly owned subsidiary of the Corporate Debtor. She submits this Promoter director (Rl) is in the Corporate Debtor and other companies. The RP discovered that the entire business and income of the Corporate Debtor has been diverted to Net 4 Network, thereafter 70% shareholding of the Corporate Debtor in Net4 Network was surreptitiously transferred to a related company called Track Online India Private Limited, which is another company of the same Promoter-Director and thereafter the business of the Corporate Debtor was on 20.10.2016 transferred to Net4 Network (once upon a time wholly owned subsidiary of the Corporate Debtor company) through Master Reseller Agreement (MSA), which has made Net4:Network “Master Reseller”, therefore as on the date the Corporate Debtor has remained for name sake because its shareholding in Net4 Network was transferred leaving no control over Net4 Network and then strategically business as well.
Further, Net4 India has been asked to clear dues of ICM Registry, PIR and ICANN. Hopefully, they may have cleared by now.
IN THE NATIONAL COMPANY LAW TRIBUNAL: NEW DELHI
Interlocutory Application No. 4012/2020
In Company Petition No. (IB)-409(PB)/2017
Order under Section 7 of Insolvency & Bankruptcy Code,
In the matter of:
Mr. Vikram Bajaj … Applicant
(Resolution Professional for Net 4 India Ltd.)
In the matter of:
Edelweiss Asset Reconstruction Co. Ltd.
Net 4 India Ltd. … Respondent
Order delivered on 25.09.2020 Coram:
SHRI B.S.V. PRAKASH KUMAR HON’BLE ACTG. PRESIDENT
SH. HEMANT KUMAR SARANGI HON’BLE MEMBER (TECHNICAL)
For the RP
Ms. Pooja Mahajan, Ms. Mohana Nijwahan, Mr. Gaurav Arora, Advs.
For the applicant
Ms. Pallavi Mishra, Adv. for Resolution Applicant
Ms. Shivangi Verma, Adv. for Edelweiss
For the respondent
Mr. Surnit Gupta, Adv. for R-3
Mr. Prashant Mehta, Mr. Rakesh, Advs. for R-l
1. It is an application filed by the RP seeking urgent orders as well as expedite hearing in other applications. The gist of the grievance is various domain Registrants complaining that they have not been getting services from the corporate debtor, likewise Registries making calls that they would not revive domain registrations and cancel the license of the Corporate Debtor unless dues are paid, since the corporate debtor has remained interface between Registrants and Registries, unless the respondents are immediately directed to clear the dues of the Registries and provide proper services to the Registrants, the Corporate Debtor could not survive and if solution is not provided, many domains providing services to the public at large will come to stand still.
2. At the outset, RP Counsel Ms. Pooja Mahajan has argued that Rl/Promoter-Director Mr. Jasjit Singh Sawhney on 30.07.2020 gave an assurance to this Bench that he would comply with all the grievances and will not let any issue come before this Bench. But subsequent to such assurance, about 200 Registrants complained to the RP that the Corporate Debtor has failed to provide services as agreed in between them.
3. When this Bench has asked this Counsel as to why these Registrants were asking the RP to resolve their issues when services are provided by some other company namely Track Online India Private Limited, the RP has expressed her predicament that originally this Corporate Debtor was an Accredited Registrar taking accreditations from Domain Name Registries and providing services to the Registrants. Earlier Net 4 Network Services Limited (Net 4 Network) was wholly owned subsidiary of the Corporate Debtor. She submits this Promoter director (Rl) is in the Corporate Debtor and other companies. The RP discovered that the entire business and income of the Corporate Debtor has been diverted to Net 4 Network, thereafter 70% shareholding of the Corporate Debtor in Net4 Network was surreptitiously transferred to a related company called Track Online India Private Limited, which is another company of the same Promoter-Director and thereafter the business of the Corporate
Debtor was on 20.10.2016 transferred to Net4 Network (once upon a time wholly owned subsidiary of the Corporate Debtor company) through Master Reseller Agreement (MSA), which has made Net4: Network “Master Reseller”, therefore as on the date the Corporate Debtor has remained for name sake because its shareholding in Net4 Network was transferred leaving no control over Net4 Network and then strategically business as well.
4. The net result is, the contracts with Registries and Registrants remained in the name of the Corporate Debtor but the business of the Corporate Debtor has slipped into the hands of the other companies of the Promoter-Director/Jasjit Singh Sawhney.
5. In this situation, the domain name Registries asking for their fees as per the terms of the contract of the Corporate Debtor entered with them. On the other hand, whenever work has not been done to the Registrants, they have been either sending complaints to the Corporate Debtor or directly to the domain name Registries. Though the corporate Debtor has contracts in its name, not even single pie has come to this Corporate Debtor after admission of the company under IBC, despite there is so called agreement in between the Corporate Debtor and Net4 Network indicating 25% of the revenue from the business shall be paid to the Corporate Debtor.
6. The RP Counsel has also mentioned that this business is not limited to providing services to some private agencies, it is in effect providing services to the public directly, if any delays happened in providing services, it is not about some company losing or gaining, it is directly affecting the daily life of public of India, therefore the RP has filed this application hoping for a solution before hearing on Avoidance Application primarily assailing the transfer of shareholding of the Corporate Debtor to another Promoter Company namely Track Online India Private Limited and also about wholesale transfer of the business of the Corporate Debtor. She says unless that application is decided, real value of the Company will not come out. Net4 India Limited (CD), in the words of the RP, is made a dummy company after its shareholding in Net4 Network is taken out and its business was
transferred to Net4 Network sometime before initiation of CIRP.
7. On elaborately hearing over the application from the Petitioner side, when the same is put to the Promoter-Director counsel Mr. Prashant Merita and Mr. Rakesh Kumar, they categorically stated, as to the issues of the Registrants, the Respondents have been complying all along and they would comply with the pending issues as well and report to this Bench by 01.10.2020.
8. But as to the dues payable to Domain Name Registries such as Public Information Registry, ICM Registry, ICANN, and etc., they will report within five minutes after taking instructions from the Promoter-Director of all these companies namely Net4 India Limited, Net 4 Network, Net 4 India-Domain Registrar Company and Trak Online India Private Limited.
9. Accordingly, we have passed over the matter hoping, this promoter director would realize the urgency involved in the issues and raise to the occasion. In view thereof, this matter was passed over to get instructions from the Promoter-Director with regard to the second issue.
10. To the second issue, the Promoter-Director counsel has come back after pass over with a statement that the Promoter-Director Mr. Jasjit Singh Sawhney is not in a position to clear the following dues: USD 14082 to ICM Registry Fee USD 8185 to Public Information Registry USD 18,823.54 to ICANN.
11. But the Promoter Director Counsel has simultaneously made another statement, in case three weeks’ time is given, he would
be in a position to reconcile after verifying the same with the said organisations mentioned above.
12. On hearing the submissions of the Promoter counsel over the second issue, we understand now the burning issue is, the services have not been being properly provided to various registrants. From other side, if dues are not paid, Domain Registries will not revive agreements with the Corporate Debtor.
13. In this tricky situation, if this Promoter-Director takes three weeks, then various registrants providing services to the public including Government Agencies will suffer immensely.
14. In view thereof, if at all, any reconciliation that the Promoter-Director requires, he has to get it done within two days hereof and report to this Bench by 01.10.2020.
15. Tomorrow this Promoter-Director cannot come before this Bench saying that he could not get the statements-from the said Registries such as Public Information Registiy, ICANN, ICM, etc., therefore he could not pay. It is the look out of the Promoter-Director, who has taken everything upon himself and running the show single headedly without paying money to the Corporate Debtor as well as Registries. It is the bounden duty of him to clear the dues, therefore he shall pay the entire dues charged with a rider, in case any excess payment is made, that shall be refunded to him.
16. In view of the gravity in this case, we direct him to resolve this issue by 01.10.2020.
17. Accordingly, IA-4012/2020 is hereby disposed of.
(B.S.V PRAKASH KUMAR)
(HEMANT KUMAR SARANGI)
Original Order by NCLT: https://www.blog.guru/wp-content/uploads/2020/10/25.09.2020.pdf