2019 (12) TMI 1553 - Tri - Insolvency and Bankruptcy

Termination of contract - Corporate Debtor not served with the notice - Seeking to hand over the possession of the property to the owners of the premises and furnishes a compliance report of the same - liability of the corporate debtor is with regard to post CIRP and or from CIRP period? - whether the termination of contract dated 01.12.2016 is as per law or not? - HELD THAT - The counsel representing the respondent submits that there is arbitration clause and even before the initiation of the CIRP period they were not happy with the services provided by the corporate debtor and the same was conveyed to the corporate debtor. The corporate debtor was aware about consequences about the termination of the contract. Further whether the termination is good or bad in law is a matter of inquiry which requires examination of the fact and circumstances. In this scenario the termination of the contract even without serving a notice to the corporate debtor is not correct. The termination notice issued by the respondent is stayed - Until then the respondent shall adhere to the terms of contract without fail - application disposed off.

Summary

Issues:
1. Payment of rent post CIRP period
2. Termination of contract without notice

Payment of rent post CIRP period:
In the first issue, the Tribunal clarifies the liability of the Resolution Professional (RP) regarding the payment of rent post the Corporate Insolvency Resolution Process (CIRP) period. The RP is directed to make the payment of the entire amount due with regard to the rent, after deducting any applicable amounts like GST. The order emphasizes that the liability of the corporate debtor is only with regard to post CIRP period, not from the CIRP period.

Termination of contract without notice:
The second issue involves the termination of a contract dated 01.12.2016 without serving a notice. The Applicant contends that the termination by the respondent, Tata Consultancy Service Limited, without notice, would seriously affect the business of the corporate debtor, as substantial capital expenditure was incurred for providing services. The respondent argues that there is an arbitration clause, and dissatisfaction with the services was communicated to the corporate debtor before the CIRP period. The Tribunal opines that the termination without serving a notice is not correct and stays the termination notice issued by the respondent, directing adherence to the terms of the contract until further consideration on 30.01.2020. The matter requires detailed examination of facts and circumstances to determine the legality of the termination.