2022 (4) TMI 1111 - Tri - Insolvency and Bankruptcy

Requirement of payment of claim of the applicant regarding the payment of dues after the commencement of the CIRP - effect of moratorium period - demand barred under Section 14 of the IBC or not - period 11.10.2019 to 30.06.2021 and for the Financial Year 2021-22 - HELD THAT -A bare perusal of Section 25(1) shows that it is the duty of the Resolution Professional to preserve and protect the assets of the Corporate Debtor including to continue the operation of the Corporate Debtor. Admittedly it is a Real Estate Project and for the construction of the buildings a lease was granted to the Corporate Debtor under terms and conditions, which includes the payment of premium and lease rent. The claim of the Applicant that so far the amount due and payable prior to the institution of the CIRP is concerned, same has already been submitted before the Resolution Professional but so far dues which are due and payable after the initiation of CIRP in terms of the rescheduled agreement, the Applicant is entitled to get it. A bare perusal of Section 14(2) of IBC, 2016 shows that during the moratorium, the supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted - Section 14(1)(d) restrain the owner or lessor from recovery of any property where such property is occupied or is in possession of the Corporate Debtor. But as per Explanation of Section 14(1) of the IBC, this provision is subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearance or a similar grant or right during the moratorium period. Admittedly, to enjoy the lease granted by NOIDA Authority to the corporate debtor, lease premium and lease rent are to be paid for during the period 11.10.2019 to 30.06.2021 as per the letter dt. 04.06.2021, sent by the Applicant to the Resolution Professional. Therefore, even if we accept the contention of the Resolution Professional that the lease rent does not fall under the categories of supplies to the essential gods and services, but in terms of Explanation of Section 14(1) of the IBC 2016 added w.e.f. 28/12/2019, the applicant is entitled to get lease premium amount as well as lease rent arising for the use or continuation of the lease during the moratorium period, failing which the moratorium will not apply for the suspension or termination of lease - as the Resolution Professional has failed to pay the lease premium and lease rent due to the NOIDA Authority, therefore, the respondent is directed to make the payment of the current amount, which is due and payable within 6 months or include the said amount as Insolvency Resolution Process Cost under Regulation 31 of the IBBI (Insolvency Resolution Process of Corporate Persons). Application allowed.

Summary

Issues Involved:
1. Whether the claim of the applicant regarding the payment of dues after the commencement of the CIRP is liable to be paid by the Respondent to the Applicant.
2. Whether the moratorium under Section 14 of the IBC bars the payment of lease rent and premium during the CIRP period.
3. Whether the lease rent and premium qualify as essential supplies under Regulation 32 of the IBBI Regulations, 2016.

Issue-wise Detailed Analysis:

1. Payment of Dues Post-CIRP Commencement:
The Applicant sought payment of outstanding dues that became payable during the CIRP period, including rescheduled installments and lease rent. The Respondent argued that these dues were not payable under the moratorium imposed by Section 14 of the IBC. The Tribunal examined the relevant regulations and concluded that the dues for the period from 11.10.2019 to 30.06.2021, as claimed by the Applicant, were indeed payable. The Tribunal directed the Respondent to make the payment of the current amount due within six months or include the amount as Insolvency Resolution Process Cost under Regulation 31 of the IBBI Regulations.

2. Moratorium Under Section 14 of IBC:
The Respondent contended that Section 14 of the IBC, which imposes a moratorium on the recovery of dues, barred the payment of the claimed amounts. The Tribunal referred to Section 14(1)(d) and its explanation, which allows the continuation of licenses, permits, and leases during the moratorium period, provided there is no default in payment of current dues. The Tribunal concluded that the lease premium and lease rent for the period in question were payable to the Applicant, as non-payment would lead to the suspension or termination of the lease, which is not protected under the moratorium.

3. Essential Supplies Under Regulation 32:
The Respondent argued that the lease rent did not qualify as essential supplies under Regulation 32 of the IBBI Regulations, which only includes electricity, water, telecommunication services, and information technology services. The Tribunal agreed that lease rent does not fall under the category of essential supplies. However, it emphasized that the explanation to Section 14(1) of the IBC mandates the payment of current dues for the continuation of the lease during the moratorium period. Thus, even though lease rent is not an essential supply, it must still be paid to avoid suspension or termination of the lease.

Conclusion:
The Tribunal allowed the application, directing the Respondent to pay the current dues or include them as Insolvency Resolution Process Cost. The Resolution Professional was also given the liberty to negotiate with the Applicant for rescheduling the payment of installments. The decision underscores the importance of adhering to the terms of the lease and the obligations under the IBC, even during the moratorium period.