# In the matter of Liberty Shoes Limited IA 548-2021
and CP(IB) No. 197-Chd-Hry-2020

> NCLT judgment dated 2023-06-15. Citation: TCN-2023-NCLT-02929. Liberty Footwear Co. filed a petition under Section 9 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 15 Jun 2023
- **Citation:** TCN-2023-NCLT-02929
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/liberty-shoes-limited-ia-548-2021-and-cpib-no-197-chd-hry-2020-ee6a6be0

## Summary

### Background

Liberty Footwear Co. filed a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Liberty Shoes Limited, claiming default in payment of license fees under a Trade Mark Licence Agreement. The operational creditor alleged that Liberty Shoes Limited failed to pay the license fee as per the agreement, resulting in an outstanding amount along with interest. The corporate debtor contested the petition, arguing that there was a pre-existing dispute between the parties due to internal disputes among the partners of Liberty Footwear Co., and that the invoices were forged/fabricated. The corporate debtor also argued that the person who filed the petition on behalf of the operational creditor was

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## Facts

Liberty Footwear Co. (operational creditor) filed a petition against Liberty Shoes Limited (corporate debtor) under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate CIRP due to unpaid license fees under a Trade Mark Licence Agreement dated 03.04.2013. The agreement stipulated that the corporate debtor would pay a license fee based on a percentage of turnover. Liberty Footwear Co. claimed that Rs. 9,51,15,334/- was in default, including principal and interest. A demand notice was issued on 19.02.2020. The corporate debtor replied on 07.03.2020, disputing the debt and claiming that the invoices were forged/fabricated. The corporate debtor also argued that the person who filed the petition on behalf of the operational creditor was not duly

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## Issues and analysis

### Issue 1: Whether the demand notice dated …

**Ratio:** A demand notice must be duly served upon the

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**Reasoning:** The court found that the demand notice was served upon the corporate debtor, but the

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**Interpretation:** The service of demand notice is a mandatory requirement for initiating CIRP.

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**Application:** In this case, the demand notice was served, but the corporate debtor replied to

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## Parties

- **Judges:** Harnam Singh…; SUBRATA KUM…
- **Appellants:** Liberty Footwear…
- **Respondents:** Liberty Shoes…
- **Advocates:** V.K Sac…; Pulkit Sa…

## Timeline

- **1958-01-01 — Partnershi…**: Liberty Footwear Co., a partnership…
- **2003-09-08 — Partnership Reconstituti…**: Last reconstitution of the partnership took place on 08.09.2003 after the demise of Sh.…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 60(5) — Adjudicating Authority for corporate persons](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-60)

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