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2022 (4) TMI 205 - Tri - Insolvency and BankruptcyMaintainability of application - termination of sub-leases - Company under liquidation under IBC - Whether the Tribunal has jurisdiction to decide the issues pertaining to the subleases or not - validity/effect of deemed termination was never given effect - restraint from alienating the property during the pendency of the Application - HELD THAT - The Counsel for the Respondent contends that this Application is not maintainable since, it is filed for the same reliefs under I.A. No. 17/2020. It is true that I.A. No. 17/2020 is filed for the same reliefs during the CIRP period and an interim order was obtained to maintain status-quo. Later, the Corporate Debtor was ordered for Liquidation hence, considering that I.A. No. 17/2020 has become infructuous and since the RP against whom the application is filed ceased to be RP and since the role of the RP has changed into that of the Liquidator on the Corporate Debtor being taken for liquidation, this LA got to be filed with the same relief - I.A. No. 17/2020 is not yet decided hence, this application is not hit by the principles of res-judicata. To meet the procedural requirement this I.A. came to be filed. Since, a status-quo order is made in I.A. No. 17/2020, at request of the Applicant the same is kept alive. Hence, this point is answered by holding that this application is maintainable. Whether the subleases under the Sublease Agreements dated 06.03.2013 and 18.03.2014 are not terminated and whether they are still in force? - HELD THAT - When there is no dispute that part of the leased land is taken over by the Respondent, the Applicant cannot be heard to contend that the termination of lease was not affected. That part of the land which is not taken possession is allegedly retained with the Corporate Debtor due to its equipment being kept in the said land. But technically the possession stands with the Respondent since, the termination letter was acted upon and part of the land was given possession to the Respondents. Moreover the letter dated 08.11.2019 clearly specifies that the subleases were terminated. The letter was issued only with a request to clear the outstanding amounts. Hence, the subject of the letter qualifies the subleases as terminated. The request for clearing the outstanding amounts cannot be interpreted to mean that there is a waiver on the part of the Respondent. More so when part of the land was taken over by the Respondents. There is no dispute that the letter of termination is prior to the CIRP period and before the admission of the Application under Section 9 of IBC and before the operation of the moratorium under Section 14. The Petitioner admittedly paid part of the rents during the pendency of this Application. The contention based on the said fact is that the acceptance of rents by the Respondents would amount to waiver as per Section 114 of Transfer of Property Act - But the rent as stipulated in the agreement is admittedly not tendered, the rent towards the infrastructure is an issue in I.A. No. 21/2021 and the same is not paid yet. Even according to section 114 of Transfer of Property Act, the rent, when it is paid together with interest thereon and his full cost of the suit, would keep the lease alive. In this case no interest was paid on the arrears of rent. Apart from the rent being unpaid as per the agreement, even according to what is mentioned in the written submissions the dues as mentioned in the notice of the termination dated 22.02.2019, also included all other dues which are purportedly levied on the basis of unregistered MoU under the guise of infrastructure development charges and is challenged in I.A. No. 21/2021 and is accordingly sub-judice. Hence unless it is proved that the arrears of the rent is paid in accordance with the Section 114 of the Transfer of Property Act, it cannot be held that, no order can be passed relieving the petitioner against the forfeiture. The Order of this Bench dated 19.06.2021 would also show that the Bench considered that the dues pertained not only to the rent but also other dues. Hence, this point is answered by holding that the subleases in question are terminated and are not in force by the date of this application. Whether this Tribunal has jurisdiction to decide the issues pertaining to the subleases? - HELD THAT - The possession of the land under leases is already taken over by the Respondent. Section 25 of IBC is also considered where under the Resolution Professional is obligated to represent and act on behalf of the Corporate Debtor with third parties and exercise the rights for the benefit of the Corporate Debtor in judicial and quasi-judicial and arbitration proceedings. It was held that wherever the Corporate Debtor has to exercise the rights in judicial, quasi-judicial proceedings the Resolution Professional cannot short-circuit the same and bring a claim before NCLT taking advantage of Section 60(5). It was also held that in the light of the statutory scheme as culled out from various provisions of the IBC, 2016 it is clear that wherever the Corporate Debtor has to exercise a right that falls outside the purview of IBC, 2016, especially in the realm of the public law, they cannot, through the Resolution Professional take a bypass and go before NCLT for enforcement of such a right - if the Corporate Debtor is still in possession of the property of the 3rd party his possession can be safeguarded by preventing the 3rd party from dispossessing. But if, the possession of the property is no longer with the Corporate Debtor Section 14 would not come to the rescue of the Corporate Debtor. Hence, it can be concluded that this Tribunal would have limited jurisdiction in respect of leases and if, the Corporate Debtor is in possession of the property under lease the jurisdiction of the Tribunal will extend only to safeguard the Corporate Debtor's interest by seeing that it is not dispossessed during the existence of the moratorium and nothing more. The application is dismissed.
Issues Involved:
1. Maintainability of I.A. No. 127/2021. 2. Validity and current status of Sublease Agreements dated 06.03.2013 and 18.03.2014. 3. Jurisdiction of the Tribunal to decide issues pertaining to the subleases. 4. Final result of the application. Issue-wise Detailed Analysis: I. Maintainability of I.A. No. 127/2021: The Respondent argued that the application is not maintainable as it seeks the same reliefs as I.A. No. 17/2020, which was filed during the CIRP period and had an interim order maintaining status-quo. However, since the Corporate Debtor was ordered for liquidation, I.A. No. 17/2020 became infructuous, and the role of the Resolution Professional (RP) changed to that of a Liquidator. Therefore, I.A. No. 127/2021 was filed for the same reliefs to meet procedural requirements. The Tribunal used its inherent powers under Rule 11 of the NCLT Rules to pass the status-quo order in I.A. No. 17/2020 without notice to the Respondent. The Tribunal concluded that I.A. No. 127/2021 is maintainable. II. Validity and Current Status of Sublease Agreements dated 06.03.2013 and 18.03.2014: The Respondent claimed that the subleases were terminated by a notice dated 22.02.2019, which called for payment of dues amounting to ?46.70 Crores and stated that the subleases would be deemed terminated if the dues were not paid within three months. The Applicant argued that the termination was not valid as the notice dated 08.11.2019 requested clearing dues to avoid further steps, implying that the termination had not been effected. However, the Tribunal found that the Respondent had taken possession of part of the leased land and allotted it to another party, Arya Offshore Services Private Limited, indicating that the termination was acted upon. The Tribunal held that the subleases were terminated before the admission of the application under Section 9 of IBC and the commencement of the moratorium under Section 14, and therefore, the subleases were not in force at the time of the application. III. Jurisdiction of the Tribunal to Decide Issues Pertaining to the Subleases: The Tribunal referred to the Supreme Court judgment in Embassy Property Developments Pvt. Ltd. vs. State of Karnataka & others, which discussed the jurisdiction of NCLT and NCLAT. It was observed that NCLT and NCLAT have limited jurisdiction concerning leases and can only safeguard the Corporate Debtor's interest by preventing dispossession during the moratorium period. The Tribunal concluded that it did not have jurisdiction to enforce rights outside the purview of IBC, especially in the realm of public law, and that the moratorium under Section 14 does not create new rights but only preserves the status-quo. IV. Final Result: Based on the findings on the above issues, the Tribunal dismissed the application and vacated the interim order dated 30.01.2020 in I.A. No. 17/2020.
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