2020 (5) TMI 272 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - The resolution professional in all his pleadings has made a submission that the claim of the applicant is under process and that a part of the applicant's claim has already been admitted. However, it is to be noted herein that the claim of the applicant was filed in June 4, 2018, it has been more than 4 months since then, the resolution professional has not yet decided the claim of the applicant - It is an undisputed fact that the land on which the resolution professional/corporate debtor currently has his possession on, belongs to the applicant herein. Keeping in mind that the applicant is being deprived from his right of using the land that owns is patently illegal and wrong, therefore cannot be allowed. It is trite law that this Tribunal has been provided with vast powers under section 60(5) of the Code. Therefore, based on the above this Bench is of the view that the actions or rather inaction on the part of the resolution professional in not taking a decision with respect to the claim of the applicant is an abuse of the powers given to him under the Code and contrary to justice and public policy. His actions are nothing more but an abuse of his dominant position - Further, this is a very peculiar case where the resolution professional maliciously neither paid the rent nor vacated the premises and on the other hand, he wanted to hand over the said premises to the successful resolution applicant as a going concern, putting the landowner to further trouble - This kind of injustice carried out by the resolution professional herein is completely unacceptable. The landowner is just not entitled to receive the licence fee but also, he has to right to receive the possession of the said premises. The tenancy rights automatically get terminated, the moment default in payment of rent is committed. This miscellaneous application is allowed with cost, and the resolution professional is directed to hand over of the possession of the said premises forthwith to the applicant and pay the claim amount as raised by the applicant in his claim within a week from the date of this order - Application allowed.

Summary

Issues:
1. Dispute over non-payment of licence fees and termination of leave and licence agreement.
2. Resolution professional's failure to decide on applicant's claim.
3. Possession of premises and payment of claim amount.

Analysis:
1. The case involved a dispute between the applicant, a private limited company, and the corporate debtor regarding non-payment of licence fees leading to the termination of a leave and licence agreement. The applicant claimed that the corporate debtor defaulted in making payments from June 2018, despite reminders and termination notices. Consequently, the applicant filed a civil suit seeking possession of the premises and recovery of arrears amounting to ?1,08,44,655. The admission of a petition against the corporate debtor under the Insolvency and Bankruptcy Code led to a moratorium, halting the civil suit between the parties.

2. The applicant filed a claim before the resolution professional, but the resolution professional failed to decide on the claim, citing pending clarifications and substantiations. The resolution professional raised objections, including discrepancies in the claim submission and the alleged failure of the applicant to come with clean hands due to unresolved repair disputes. The applicant, in response, denied the allegations and argued for the possession of the premises based on the termination notice and the absence of any clause regarding adjustment of repair costs in the agreement.

3. The Tribunal found the resolution professional's inaction regarding the applicant's claim to be an abuse of power and against public policy. Emphasizing the applicant's right to possession of the land, the Tribunal ruled in favor of the applicant, directing the resolution professional to hand over possession of the premises and pay the claim amount within a week. The Tribunal highlighted the automatic termination of tenancy rights upon non-payment of rent, emphasizing the landowner's entitlement to both licence fees and possession of the premises.

In conclusion, the Tribunal allowed the applicant's application, emphasizing the resolution professional's duty to promptly decide on claims and uphold the rights of the landowner in possession disputes.