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2019 (10) TMI 620 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor committed default - Section 9 of IBC 2016 R/w Rule 6 of I B(AAA) Rules 2016 - HELD THAT - The instant Petition is filed mainly to recover the alleged an outstanding amount of rent for 41, 53, 754/- which arise out of lease deed dated 13.02.2013. The lease deed dated 13.02.2013 was executed between the Petitioner and the Respondent. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software Private Limited 2017 (9) TMI 1270 - SUPREME COURT has inter alia held that IBC 2016 is not intended to be substitute to a recovery forum. The claim made in the instant Company Petition based on the expired Lease Deed as stated supra and that there is an alternative remedy available to the Petitioner to file Civil Suit to evict the tenant/Corporate Debtor and to recover alleged outstanding arrears of rent - Petition dismissed.
Issues:
- Initiation of Corporate Insolvency Resolution Process under IBC, 2016 based on default in rent payment. - Validity of the lease agreement and liability of the Corporate Debtor for outstanding rent. - Qualification of a landlord as an "Operational Creditor" under the IBC, 2016. - Alternative remedy available to the Petitioner for recovery of rent arrears. Analysis: 1. Initiation of Corporate Insolvency Resolution Process: The Petitioner filed a petition seeking to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on rent payment amounting to ?41,53,754. The Petitioner issued legal notices demanding payment, leading to the filing of the petition under Section 9 of IBC, 2016. 2. Validity of Lease Agreement and Rent Liability: The Respondent contended that the petition was barred by laches and limitation, arguing that the lease agreement expired after three years. The Tribunal noted that the lease agreement indeed expired in 2016, and the Petitioner failed to provide evidence of any extension. Consequently, the Tribunal found no legal basis for the alleged outstanding rent, leading to the dismissal of the petition. 3. Qualification of Landlord as an Operational Creditor: The Respondent argued that a landlord cannot be considered an "Operational Creditor" under the IBC, 2016, as the Code aims to facilitate insolvency resolution for commercial entities. The Respondent claimed efforts to settle with creditors due to business losses but faced the Petitioner's refusal to engage in compromise. The Tribunal acknowledged the Respondent's willingness to mediate and settle, emphasizing the Petitioner's misapplication of the Code. 4. Alternative Remedy for Rent Recovery: The Tribunal highlighted that the Petitioner had the option to pursue a civil suit for eviction and rent recovery instead of invoking the Code. Referring to legal precedent, the Tribunal emphasized that IBC, 2016 is not a substitute for recovery mechanisms. Given the expired lease, lack of evidence for extension, and availability of alternative remedies, the Tribunal dismissed the petition, allowing the Petitioner to seek redress through other legal avenues. In conclusion, the Tribunal dismissed the petition, emphasizing the expiration of the lease agreement, lack of legal basis for rent arrears, and the availability of alternative remedies for the Petitioner. The judgment underscores the importance of adhering to legal requirements and exploring appropriate legal channels for dispute resolution, rather than misusing insolvency proceedings for rent recovery.
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