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2019 (4) TMI 942 - AT - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Operational Creditor - section 8 of Insolvency Bankruptcy Code - HELD THAT - Initiation of Corporate Insolvency Resolution Process at the instance of an Operational Creditor is provided for under the provision engrafted in Section 9 of the I B Code, whereunder an Operational Creditor may file an application before the Adjudicating Authority for initiating a Corporate Insolvency Resolution Process after complying with the statutory requirements of Section 8. The status of parties respectively as Operational Creditor and Corporate Debtor was neither in issue before the Adjudicating Authority nor has the same been disputed before this Appellate Tribunal. It is also not disputed that the relations inter-se the parties in regard to the licensed premises are governed by the Leave and License Agreement which stipulates in unambiguous terms that the license fee @ ₹ 88 per sq. ft. per month shall be calculated on the basis of super built up area . Since the debt and default is established, the Adjudicating Authority will admit the application under Section 9 of I B Code after providing an opportunity to the Respondent Corporate Debtor to settle the claim of Appellant, if it so chooses - appeal allowed.
Issues:
1. Dispute regarding payment of rent and initiation of Corporate Insolvency Resolution Process. Analysis: The judgment involves a dispute between an Appellant, claiming to be an 'Operational Creditor,' and a Respondent-Corporate Debtor regarding the payment of rent and the initiation of the Corporate Insolvency Resolution Process. The Appellant provided a portion of premises on a leave and license basis to the Respondent for operating a restaurant. The dispute arose when the Respondent defaulted in paying the rent, leading the Appellant to issue a demand notice under the Insolvency and Bankruptcy Code, 2016 (I&B Code). The key issue raised by the Respondent was the existence of a pre-existing dispute regarding the rate of rent based on the carpet area, which the Appellant disputed. The Appellant argued that the agreed license fee was based on the super built-up area, as specified in the Leave and License Agreement. The Respondent's contention was supported by evidence such as letters and inspection reports indicating a prior dispute over rent calculation. The judgment referred to relevant legal provisions under the I&B Code, emphasizing the requirement for an operational creditor to follow specific procedures before initiating the Corporate Insolvency Resolution Process. The court cited previous judgments to highlight the importance of a genuine dispute between the parties to reject an insolvency application. After analyzing the facts and legal arguments presented by both parties, the court concluded that the impugned order suffered from legal infirmity. The court found in favor of the Appellant, setting aside the rejection order and allowing the appeal. The Adjudicating Authority was directed to admit the application under Section 9 of the I&B Code, giving the Respondent an opportunity to settle the claim. In summary, the judgment addressed the dispute over rent payment, the legal requirements for initiating insolvency proceedings, and the importance of genuine disputes in insolvency applications. The decision favored the Appellant, highlighting the need for proper adherence to contractual terms and dispute resolution mechanisms outlined in agreements.
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