2021 (1) TMI 1208 - Tri - Insolvency and Bankruptcy

Seeking direction to Respondents to cooperate with the Applicant (Resolution Professional) and to not restrain the Company and the Applicant from accessing, dealing with, taking over possession of and relocating the assets and records of the Company present at the premises - seeking direction to local administration including police authorities to facilitate the Applicant in accessing, dealing with, taking over possession of and relocating the assets and records of the Company present at the Premises - effectiveness of Lease Deed and Maintenance Agreement - seeking waiver of the Lease Rent and Maintenance Charges payable under the Lease Deed and Maintenance Agreement, respectively, for the entire Lockdown Period - seeking deduction or adjustment of any amounts from the Security Deposit and/or Maintenance Advance available with them towards the admitted claims of the Respondents as admitted by the applicant at the commencement of the CIRP of the Corporate Debtor - HELD THAT - It is clear from the facts of the case and undisputed by the Respondents that they have repeatedly prevented the Applicant from accessing and removing the assets and records of the Corporate Debtor located at the office premises of the respondent company. This action on the part of the Respondents is not correct as there is no provision of law which entitles the Respondents to hold on to the assets and records of the Company and to prevent the Applicant from accessing and removing the same. Rather it is contravening the provisions of the Code which empowers the RP to take into possession all the assets of the Corporate Debtor. It is believed that the Respondents are seeking several directions against the RP vide their reply filed in this application which itself is filed by the RP seeking recourse against the land lords. If they had grievances against the RP, they should have filed appropriate proceedings against the RP either before this Tribunal or before any other competent authority to seek redressal of their grievances. But they have not filed any application in any court of law to prevent the Applicant from accessing and removing the assets and records of the Company from the office premises rather they left it as it is so as to continue the increase of rent on the Corporate Debtor for the reasons best known to them. The amount due and payable to the Respondents is the Operational Debt and with a view to put an end to this matter, it is advisable to the Respondents that they may file their claim before the RP as soon as possible and this Bench will direct the RP for verification of claim and determination of amount of claim in terms of Regulation 13 and 14 of the (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and pay the Respondents as and when the funds are available with him as per the waterfall mechanism provided under Section 53 of the Code - the Respondents cannot henceforth withhold the assets of the Corporate Debtor and thus are directed to allow the RP to vacate the premises within 30 days from the date of this Order. Application disposed off.

Summary

Issues Involved:
1. Termination of Lease Deed and Maintenance Agreement.
2. Access to and removal of Corporate Debtor's assets.
3. Calculation and waiver of rent and maintenance charges during the COVID-19 lockdown period.
4. Classification of dues under the lease agreement as 'Operational Debt'.
5. Adjustment of Security Deposit against outstanding dues.
6. Directions for cooperation from Respondents and local authorities.

Detailed Analysis:

1. Termination of Lease Deed and Maintenance Agreement:
The applicant, as the Resolution Professional (RP) of the Corporate Debtor, issued a Termination Notice on 13.02.2020 to terminate the Lease Deed and Maintenance Agreement. The Respondents acknowledged the termination notice and agreed that the Lease Deed would expire on 12.05.2020. However, due to the COVID-19 lockdown, the premises could not be vacated by the specified date. The Tribunal declared that the Lease Deed and Maintenance Agreement are terminated with effect from 15.09.2020, not excluding the lockdown period from 25.03.2020 to 28.07.2020.

2. Access to and Removal of Corporate Debtor's Assets:
The Respondents repeatedly prevented the Applicant from accessing and removing the assets and records of the Corporate Debtor from the office premises. The Tribunal found this action by the Respondents to be incorrect and contrary to the provisions of the Insolvency and Bankruptcy Code, which empowers the RP to take possession of all the assets of the Corporate Debtor. The Tribunal directed the Respondents to allow the RP to vacate the premises within 30 days and permitted the RP to seek assistance from local police if needed.

3. Calculation and Waiver of Rent and Maintenance Charges During the COVID-19 Lockdown Period:
The applicant sought a waiver of rent and maintenance charges for the lockdown period. The Tribunal referred to judgments from the Supreme Court and the High Court of Delhi, which held that payment of rent depends on a contractual arrangement and that courts cannot waive such amounts. The Tribunal declared that the premises were in possession of the RP/Corporate Debtor during the lockdown period, and thus, the Respondents are entitled to be paid rent and maintenance charges for that period. The Respondents were directed to file their claim before the RP for the unpaid rent from 25.03.2020 to 28.07.2020.

4. Classification of Dues Under the Lease Agreement as 'Operational Debt':
The Tribunal examined whether the lease dues fall under the term 'Operational Debt' as defined under Section 5(21) of the Code. The Tribunal relied on judgments from the National Company Law Appellate Tribunal and the Supreme Court, which held that dues arising from lease agreements are considered 'Operational Debt'. The Tribunal concluded that the amount due and payable to the Respondents is 'Operational Debt' and directed the Respondents to file their claim before the RP for verification and determination.

5. Adjustment of Security Deposit Against Outstanding Dues:
The Respondents claimed that they had appropriated the Security Deposit towards outstanding dues. However, the Tribunal found that the Respondents had not claimed any credit for the Security Deposit in their Claim Forms filed with the Applicant. The Tribunal directed the Respondents to refund the Security Deposit within 30 days but allowed them to file a claim for the rent during the lockdown period.

6. Directions for Cooperation from Respondents and Local Authorities:
The applicant sought directions for the Respondents to cooperate and not restrain the Company and the Applicant from accessing, dealing with, and relocating the assets and records of the Company. The Tribunal directed the Respondents to cooperate and allow the RP to vacate the premises within 30 days. The Tribunal also directed the local police to render assistance to the RP if needed.

Conclusion:
The Tribunal partially allowed the application, directing the Respondents to cooperate with the RP in vacating the premises, refund the Security Deposit, and file their claim for unpaid rent and maintenance charges. The Tribunal declared the termination of the Lease Deed and Maintenance Agreement effective from 15.09.2020 and emphasized that the dues under the lease agreement are classified as 'Operational Debt'.