2022 (9) TMI 628 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - failure on the part of the Corporate Debtor to refund the refundable security deposit amount relating to sub-licensing transaction in immovable property - Operational Debt or not - Operational Creditor - existence of debt and dispute or not - HELD THAT - The Operational Creditor's claim is based on the fact that a sum of Rs. 27,10,656/- was paid by the Operational Creditor to the Corporate Debtor as 50% refundable security deposit for sub-licensing office space at tower -2, 702/B Konnectus Bhavbhuti Marg, New Delhi in terms of MOU dated 30th March 2017, which could not be acted upon due to failure on the part of Corporate Debtor to hand over the said office space on account of termination of Concession Agreement in their favour by DMRC. It is advantageous at this juncture to refer to the recent decision of the Hon'ble NCLAT in the matter of VIBRUS HOMES PVT. LTD. VERSUS ASHIMARA HOUSING PVT. LTD. ANR. 2022 (4) TMI 1448 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI wherein it has been laid down that an interest free security deposit received in respect of a lease or licence transaction with regard to an immovable property will qualify as an operational debt under IBC. On consideration of submissions of the Operational Creditor for the claims towards the advance payment made as Security Deposits, it appears that the same shall also fall within the ambit of the definition of operational debt and the applicant will qualify as an Operational Creditor in terms of section 5(20) of the Code - Since the Corporate Debtor has chosen not to avail the due and sufficient opportunity of being heard as granted on various dates, the averments of the applicant stating that there is a 'debt' which the corporate debtor was liable to pay but failed to do so, remain unrebutted. Therefore, this Adjudicating Authority has no other option but to admit the Corporate Debtor into CIRP under the provisions of the Code. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Whether the failure to refund the refundable security deposit constitutes an 'operational debt' under Section 5(21) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).
2. Whether the applicant can maintain the application as an Operational Creditor to the Corporate Debtor.
3. Admission of the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP).

Issue-Wise Detailed Analysis:

1. Whether the failure to refund the refundable security deposit constitutes an 'operational debt' under Section 5(21) of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016):

The Tribunal examined whether the refundable security deposit paid by the Operational Creditor (HDFC ERGO General Insurance Company Limited) to the Corporate Debtor (Prime Infra Private Limited) qualifies as an 'operational debt' under IBC, 2016. The Operational Creditor had paid Rs. 27,10,656/- as a 50% refundable security deposit for sub-licensing office space, which could not be acted upon due to the termination of the Concession Agreement by DMRC. The Tribunal referred to the decision of the Hon'ble NCLAT in "Vibrus Homes Pvt. Ltd. v. Ashimara Housing Pvt. Ltd." where it was held that an interest-free security deposit in respect of a lease or license transaction with regard to immovable property qualifies as an operational debt. Based on this precedent, the Tribunal concluded that the refundable security deposit in this case also falls within the ambit of 'operational debt'.

2. Whether the applicant can maintain the application as an Operational Creditor to the Corporate Debtor:

The Tribunal noted that the Operational Creditor made several demands for the refund of the security deposit, which the Corporate Debtor failed to pay. Given the definition of 'operational debt' and the circumstances of the case, the Tribunal determined that the applicant qualifies as an Operational Creditor under Section 5(20) of the IBC, 2016. Therefore, the application was maintainable by the Operational Creditor.

3. Admission of the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP):

The Corporate Debtor did not respond to the notices and remained ex parte throughout the proceedings. The Tribunal, having no rebuttal from the Corporate Debtor, accepted the averments of the Operational Creditor regarding the existence of a debt and the failure of the Corporate Debtor to repay it. Consequently, the Tribunal admitted the Corporate Debtor into CIRP under the provisions of the IBC, 2016. The Tribunal appointed Mr. Santanu Kumar Samanta as the Interim Resolution Professional (IRP) and declared a moratorium as per Section 14 of the IBC, 2016, prohibiting various actions against the Corporate Debtor. The Operational Creditor was directed to provide initial finance for the CIRP process, and the Registry was instructed to update the status of the Corporate Debtor on the MCA-21 site.

Conclusion:

The Tribunal concluded that the failure to refund the refundable security deposit constitutes an 'operational debt', and the applicant can maintain the application as an Operational Creditor. Consequently, the Corporate Debtor was admitted into CIRP, and an IRP was appointed to manage the process. The moratorium was declared, and necessary directions were issued to ensure compliance with the IBC, 2016.