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2021 (3) TMI 774 - Tri - Insolvency and BankruptcyMonthly fees payable to the Applicant under the service agreements - Will form part of the IRP Costs in terms of the IBC or not - permission to file its claims with the Respondent / Liquidator for payment of the monthly fees for the relevant period under the service agreements - right to terminate the lease agreement - HELD THAT - The Applicant required the Corporate Debtor to cure the breach of agreement within 30 days and invoked right to terminate the agreement in case the breach was not cured within that period. Admittedly the breach was not cured by the Corporate Debtor. Hence the Leave and Licence agreement stood terminated within 30 days from the period of notice i.e. with effect from 31/05/2019. Clause 21.3 of the Leave and License agreement is clear that if the Applicant did not refund the security deposit, the Corporate Debtor would be entitled to continue to occupy the premises until receipt of the entire security amount without payment of any further license fee during the period of occupation. In view of this the Respondent was not required to hand over the possession till the security deposit was refunded and also need not to pay any license fee for the premises from 1st June, 2019. The Applicant even though made elaborate pleadings, the letter dated 17/08/2019 written by the Respondent to the Applicant, was not enclosed to the Application (furnished in the reply). This letter makes it abundantly clear that the Respondent did not require the premises during the CIRP and the Applicant s insistence on the factor that the RP could utilise the premise for CIRP may not be helpful to the Applicant in aid of this Application - Applicant is not entitled to any payment with respect to the licence fee after 31st May, 2019. Since the security deposit is with the Applicant to ensure the payment of licence fee, the Applicant shall refund the security deposit to the Respondent after deducting the licence fee payable from 1st March 2019 to 31st May 2019 - application disposed off.
Issues Involved:
1. Whether the monthly fees payable to the Applicant under the service agreements should form part of the Insolvency Resolution Process (IRP) Costs. 2. Whether the Applicant is entitled to file claims with the Respondent for payment of the monthly fees under the service agreements. 3. Whether the Respondent should treat the Applicant's claims relating to monthly fees as IRP Costs. 4. Whether the agreements between the Applicant and the Corporate Debtor were terminated, and the implications of such termination on the Applicant's claims. Issue-wise Detailed Analysis: 1. Monthly Fees as IRP Costs: The Applicant sought a declaration that the monthly fees payable under the service agreements for the relevant period should form part of the IRP Costs in terms of the Insolvency and Bankruptcy Code (IBC). The Applicant argued that the services provided were essential for keeping the Corporate Debtor as a going concern, and thus, the costs incurred should be considered as IRP Costs under Section 5(13)(c) of the IBC. However, the Tribunal observed that the Leave and License Agreement was terminated on 31/05/2019 due to the Corporate Debtor's failure to cure the breach within the stipulated 30 days. Consequently, the Tribunal held that the Applicant was not entitled to any payment with respect to the license fee after 31/05/2019, and the claim for monthly fees as IRP Costs was not upheld. 2. Filing Claims with the Respondent: The Applicant requested permission to file claims with the Respondent for the payment of monthly fees under the service agreements. Given the Tribunal's finding that the Leave and License Agreement was terminated effective 31/05/2019, the Applicant's request to file claims for fees beyond this date was rendered moot. The Tribunal directed that the Applicant could only claim the license fee for the period from 1st March 2019 to 31st May 2019, which would be deducted from the security deposit held by the Applicant. 3. Treatment of Claims as IRP Costs: The Applicant sought a directive for the Respondent to treat any claims relating to monthly fees as IRP Costs. The Tribunal, however, concluded that since the agreement was terminated on 31/05/2019, the Applicant's claims for fees after this date could not be considered IRP Costs. The Tribunal emphasized that the Respondent was not required to pay any license fee for the premises from 1st June 2019 onwards, as the Corporate Debtor was entitled to occupy the premises without further payment until the security deposit was refunded. 4. Termination of Agreements and Implications: The Tribunal examined the termination clauses in the Leave and License Agreement. Clause 19 allowed the Applicant to terminate the agreement if the Corporate Debtor failed to rectify the breach within 30 days. Clause 21.3 stipulated that the Corporate Debtor could continue to occupy the premises without paying further license fees if the security deposit was not refunded. The Tribunal found that the agreement was effectively terminated on 31/05/2019, and the Applicant was obliged to refund the security deposit after deducting the license fees due up to this date. The Tribunal also noted that the Respondent's letter dated 17/08/2019, which was not initially enclosed by the Applicant, indicated that the Respondent did not require the premises during the CIRP. Conclusion: The Tribunal concluded that the Applicant was not entitled to any payments for the license fee after 31/05/2019. The Applicant was directed to refund the security deposit to the Respondent after deducting the license fees for the period from 1st March 2019 to 31st May 2019. Upon receipt of the balance security deposit, the Respondent was instructed to hand over the vacant possession of the premises to the Applicant within 7 days.
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