2022 (1) TMI 1217 - Tri - Insolvency and Bankruptcy

Payment of the Lease Rental dues - whether the rental dues of the Applicant is required to be paid in priority along with the CIRP dues or whether it is required to be paid when a Resolution Plan is approved or when the Corporate Debtor is ordered for liquidation? - HELD THAT - In the present case, it is seen that the 2 Respondent is taking steps to keep the Company as a going concern and in such a case, it is the duty of the RP to pay the charges incurred on account of keeping the Company as a going concern. The RP during the CIRP period cannot at the one hand use the premises of the Applicants for generating revenue to keep the Corporate Debtor as a going concern and at the other hand not paying the rental dues of the Applicants during the CIRP period - the Insolvency Resolution process cost is required to be borne by the Committee of Creditors and the Applicants in the present case cannot be made to run from pillar to post to recover their legitimate dues which has been incurred during the CIRP period. In the present case, the RP has admitted that there are certain sum which are required to be paid to the Applicants, however relies upon the Judgment of this Tribunal passed In V. KARUPPIAH, K.R. POOMANI VERSUS V. MAHESH RESOLUTION PROFESSIONAL OF M/S. VASAN HEALTH CARE PRIVATE LIMITED 2021 (4) TMI 1305 - NATIONAL COMPANY LAW TRIBUNAL CHENNAI to state that the said amount would be paid in priority when a Resolution Plan is approved or when the Corporate Debtor is ordered for liquidation. The order passed by this Tribunal n the said case is required to be discerned with the case of the Hon ble NCLAT in the matter of Prerna Singh 2021 (12) TMI 742 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , wherein it was categorically held that the right of lessor to recover rent is affected on account of moratorium and therefore the lessor is entitled to recover the rent and which shall Include in CIRP costs. The 2 nd Respondent is directed to pay to the Applicants a sum of ₹ 1,17,28,159/- within a period of 14 days from the date of this order and the same shall be paid from the Insolvency Resolution process cost - the 2 nd Respondent Is directed to pay the monthly rent to the Applicants during the CIRP period, till such time the Corporate Debtor is in occupation of the demised premises. Application disposed off.

Summary

Issues Involved:

1. Payment of Lease Rental Dues
2. Recovery of Possession of Leased Premises
3. Timely Payment of Rent During CIRP
4. Classification of Rental Dues as CIRP Costs

Issue-Wise Detailed Analysis:

1. Payment of Lease Rental Dues:

The Applicant sought an order directing the 2nd Respondent to pay lease rental dues amounting to ?1,36,66,667/- as of 01.06.2021. The Tribunal noted that the Corporate Debtor had entered into a lease deed with the Applicants, which was amended in 2017. Despite the initiation of the Corporate Insolvency Resolution Process (CIRP) on 03.10.2019, the 1st Respondent failed to make any rental payments to the Applicants, although the property was continuously used by the Corporate Debtor. The 1st Respondent proposed a payment plan in a letter dated 06.02.2021, which the Applicants accepted. However, the payments were not made as agreed. The Tribunal directed the 2nd Respondent to pay ?1,17,28,159/- within 14 days from the date of the order from the Insolvency Resolution Process cost.

2. Recovery of Possession of Leased Premises:

The Applicants requested the Tribunal to direct the 2nd Respondent to hand over vacant possession of the leased premises upon the conclusion of the CIRP period. However, the Tribunal referred to Section 14(1)(d) of the Insolvency and Bankruptcy Code (IBC), 2016, which prohibits the recovery of possession of any property occupied by the Corporate Debtor during the moratorium period. Consequently, the Tribunal rejected this prayer.

3. Timely Payment of Rent During CIRP:

The Applicants sought an order directing the 2nd Respondent to make timely rent payments during the remainder of the CIRP period. The Tribunal emphasized that the Resolution Professional (RP) must pay charges incurred to keep the Corporate Debtor as a going concern, including rental dues. The Tribunal referenced the decision in Prerna Singh -Vs- Committee Of Creditors M/s Xalta Food and Beverages Pvt. Ltd., which held that rental dues should be included in CIRP costs. The Tribunal directed the 2nd Respondent to pay the monthly rent to the Applicants during the CIRP period until the Corporate Debtor vacates the premises.

4. Classification of Rental Dues as CIRP Costs:

The Tribunal referred to the definition of CIRP costs under Section 5(13) of the IBC and Regulation 31 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It was noted that amounts due to a person whose rights are prejudicially affected due to the moratorium are included in CIRP costs. The Tribunal concluded that the rental dues of the Applicants fall under this category and must be paid as part of the CIRP costs.

Conclusion:

The Tribunal directed the 2nd Respondent to pay ?1,17,28,159/- to the Applicants from the Insolvency Resolution Process cost within 14 days and to continue paying the monthly rent during the CIRP period. The prayer for recovery of possession was rejected. The application IA(IBC)/671(CHE)/2021 was disposed of with these directions.