2020 (9) TMI 1210 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - default in payment of conducting fees, water bills, electricity bills and property tax - Operational creditors or not - Operational debt or not - existence of debt and dispute or not - HELD THAT - When the enhanced rent payable under a tenancy agreement by the Corporate Debtor itself does not amounts to an Operational Debt, the municipal taxes and the Electricity Bills payable by Corporate Debtor under a business conducting agreement/lease agreement stands on lesser footing and cannot be considered as Operational Debt. Therefore, there are no hesitation in holding that the above amounts claimed by the Operational Creditor does not fall within the definition of Operational Debt and the petitioner cannot be termed as Operational Creditor . Time Limitation - HELD THAT - The company petition is filed on 12.03.2018. All the claims prior to 12.03.2015 are barred by limitation, since we are dismissing the above Company Petition on the very nature of the claim and the locus of the applicant, we are not dealing with each and every contention raised by the respondents. The Company Petition is not maintainable before this Tribunal and is liable to be dismissed - petition dismissed.

Summary

Issues:
1. Whether the amounts claimed by the petitioner constitute "Operational Debt" and if the petitioner can be considered an "Operational Creditor"?

Analysis:
The Company Petition was filed seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on payments totaling ?35,52,022 under Sections 8 & 9 of the Insolvency & Bankruptcy Code. The petitioner alleged non-payment of rent, municipal bills, electricity, and water bills by the Corporate Debtor after the Business Conducting Agreement expired in 2017. The respondent directors raised disputes and differences among themselves, acknowledging some outstanding dues but denying others. They argued that the Business Conducting Agreement was not meant to be acted upon as it was merely for convenience. The respondents also contended that the claimed amounts did not fall under "Operational Debt" as defined in the Code.

The Tribunal examined the definitions of "Operational Debt" and "Operational Creditor" as per the Code. It was established that Operational Debt is related to goods, services, employment, or government dues. The claimed amounts by the petitioner for unpaid electricity bills and property taxes did not fall under these categories, leading to the conclusion that the petitioner could not be termed as an "Operational Creditor." The Tribunal cited a previous NCLAT order to support the finding that enhanced rent or municipal taxes do not constitute Operational Debt.

The petitioner sought ?14,62,205 for municipal taxes covering the period from 2010 to 2017, but the Tribunal noted that claims prior to March 2015 were time-barred. Ultimately, the Company Petition was deemed not maintainable as the claimed amounts did not qualify as Operational Debt, resulting in the dismissal of the petition without costs. However, the order did not prevent the petitioners from pursuing recovery proceedings for dues within the limitation period against the Corporate Debtor.