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2019 (9) TMI 414 - Tri - Insolvency and BankruptcySeeking to initiate Corporate Insolvency Resolution Process - whether outstanding amount is free from dispute? - HELD THAT - Petitioner that the Respondent is doing its business in the leased premises. Even though notice was issued as early as 2.08.2017, the Petitioner failed to take any action as threatened except issuing another Demand Notice dated 25.10.2018. Respondent, admittedly raised substantial dispute, in terms of Lease Deed in question and the Petitioner, even prior to the issue statutory Demand notice in question. There are serious allegations made against the Petitioner saying that the Building in question was constructed illegally and it was not issued even occupancy certificate and criminal proceedings too was initiated against the Petitioner for cheating, mischief etc., and stated to be pending. Petitioner did not prove that it had complied with all the obligations cast upon it in the Lease Deed to claim rents on the premises in question. Petitioner has alternative remedy to initiate eviction and recovery proceedings by terminating the lease in question as mentioned in their legal notice, as referred to above. However, the Petitioner chose to invoke provisions of Code without substantiating that they are entitled to claim for the alleged rent accrued. They have also not stated as to how period of 45 days exemption of rent and the Advance of ₹ 35 Lakhs deposit were treated. Petitioner has not produced any evidence to show that the lease premises were delivered to Lessee as per the terms and conditions mentioned in the Lease Deed in question. Moreover, the Petitioner failed to attend the defects as pointed out by the Respondent in their reply. Main lease deed was executed by and between the Operational Creditor and M/s. New Deccan International. The prime responsibility lies on M/s. New Deccan International, and subsequently only, they have executed amendment lease deed executed on 05.04.2017. The amendment lease deed only refers all terms and conditions as mentioned in the Lease deed dated 10.12.2015 except the Rent would be paid by the present Corporate Debtor. However, the Petitioner chose to file the present case only against one of them absolving original Lessee i.e. M/s. New Deccan International. Proceedings under provisions of Code are summary in nature and disputed questions fact and law cannot be gone into under it. In the instant case, the terms and conditions as per the Lease Deed in question are not complied with by the Petitioner, especially with regard statutory permission, occupancy Certificate etc., to claim any rent under the Deed. Whether the Petitioner is entitled to claim rents on the leased property itself is in dispute and the Respondent has also raised prior dispute. Therefore, proceedings initiated by the Petitioner under the Code are misconceived and the Petitioner also failed to make out any case that the outstanding amount is free from dispute and the claimed amount is also varying and not correlated as detailed supra. Therefore, the petition is liable to be dismissed.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) 2. Validity of the Lease Deed and Compliance with its Terms 3. Allegations of False Declarations and Misrepresentations 4. Alternative Remedies Available to the Petitioner Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The petitioner, M/s. Pleasant Valley Development Private Limited, sought to initiate CIRP against the respondent, M/s. Wall Street Lounge Bar Private Limited, under Section 9 of the IBC, 2016, for defaulting on a rent payment of ?1,60,67,240 including interest. The Tribunal noted the petitioner's claim and the respondent's counterarguments, which included allegations of false declarations in the lease deed and ongoing criminal proceedings against the petitioner. 2. Validity of the Lease Deed and Compliance with its Terms: The lease deed dated 10.12.2015 between the petitioner and M/s. New Deccan International, later assigned to the respondent, contained several terms and conditions, including a lock-in period, rent payment schedule, and the requirement for statutory permissions. The Tribunal observed that the petitioner did not terminate the lease despite non-payment of rent and failed to address the respondent's claims of false declarations regarding statutory approvals. The Tribunal also noted the absence of evidence showing the lease premises were delivered as per the lease deed terms. 3. Allegations of False Declarations and Misrepresentations: The respondent alleged that the petitioner made false declarations about the building's compliance with statutory requirements, which led to significant investments by the respondent. The respondent claimed that the building lacked necessary licenses and occupancy certificates, resulting in substantial losses and the inability to commence business operations. The Tribunal found that these allegations raised substantial disputes that could not be resolved in summary proceedings under the IBC. 4. Alternative Remedies Available to the Petitioner: The Tribunal highlighted that the petitioner had alternative remedies, such as initiating eviction and recovery proceedings, as mentioned in their legal notice. The Tribunal emphasized that proceedings under the IBC are summary in nature and not suitable for resolving disputed questions of fact and law. The Tribunal concluded that the petitioner failed to prove compliance with the lease deed terms and the entitlement to claim rent, and therefore, the petition was dismissed. Conclusion: The Tribunal dismissed C.P. (IB) No.133/BB/2019, noting that the petitioner failed to establish a clear and undisputed debt. The Tribunal also stated that the order would not prevent the petitioner from pursuing other legal remedies to address its grievances. No order as to costs was made.
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