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2020 (10) TMI 546 - Tri - Insolvency and BankruptcyReclassification of debt owed by the Corporate Debtor to the Applicant as 'financial debt' - inclusion of Applicant in the CoC as a 'financial creditor' - return of scheduled equipment to a working condition after carrying out the necessary repairs and handover the same once done at a location specified by the Applicant at that time, at the cost of the Corporate Debtor - inclusion of lease rental till the date of the handover of the scheduled equipment - possession of the scheduled equipment. Reclassification of debt owed by the Corporate Debtor to the Applicant as 'financial debt' - HELD THAT - This Adjudicating Authority has directed the RP to reconsider the decision only to the extent of the differential amount, such being the case, the reduction of the claim of the Applicant from ₹ 60,68,03,736.16/- to ₹ 12,73,69,756/- on the pretext of the order of this Adjudicating Authority is unfair and such reduction does not hold good in the eyes of Law - in relation to the reclassification of the debt from Financial debt to Operational debt on the pretext of order of this Adjudicating Authority also does not hold any good as there is no any specific finding regarding classification of debt in the above referred order. With regards to other prayers, this Adjudicating Authority observes that the equipment of the Applicant herein is lying in the premises of the Corporate Debtor and that the RP vide its letter dated 19.09.2019, has requested the Applicant to remove the Equipments from its premises and also indicated that it would charge a penalty of ₹ 1 lakh per day. Further it is not in dispute that the equipment is not in Workable condition' and the railway track is damaged, because of which the said Equipment could not be transferred to the Applicant - The Applicant relied on the Clause 18 of the Lease Agreement, wherein it is stated that it would be the Lessee's obligation to ensure that the equipment is handed over in the same operating order and condition as originally delivered to the lessee and at a place notified by the Lessor at the cost of the Lessee. However, the Applicant herein itself has waived Clause 18 vide its letter dated 21.11.2018, written to the RP wherein it has made a request to permit Applicant to remove the Equipment from the premises of the Corporate Debtor, the cost of which was to be borne by the Applicant itself. Therefore, the applicant cannot insist on execution of Clause 18 in its original form. This Adjudicating Authority, to put to rest the controversy surrounding this issue, hereby directs the RP to get the railway track repaired as soon as possible for transportation of Equipment in 'as is' condition. However, minor repair only, if any, required for smooth transportation of the Equipment, may be carried out. Lease Rentals during the CIRP - HELD THAT - This Adjudicating Authority observes that the Applicant herein was willing to take out its Equipments from the premises of the Corporate Debtor as indicated by its letter dated 21.11.2018. However, due to some circumstances including disrepair of the railway track, it was unable to do so. Thus, the Applicant alone cannot be said to be in default for non-removal of the Equipment. Further, till the time equipment is lying in the premises of the Corporate Debtor, it is deemed to be used by the Corporate Debtor - this Adjudicating Authority deems it proper to direct the RP to include such amounts as CIRP costs towards the 'lease rentals' for the period starting from 29.08.2018 i.e., date of initiation of CIRP, till the date the railway tracks are made ready by the RP for removal of the Equipment from the premises of the Corporate Debtor by the Applicant. Application disposed off.
Issues Involved:
1. Reclassification of debt as 'financial debt'. 2. Admission of the claim amount of ?66,58,01,020.16. 3. Return of scheduled equipment in working condition. 4. Inclusion of lease rental amount as CIRP costs. 5. Alternative relief if the equipment cannot be delivered. Issue-wise Detailed Analysis: 1. Reclassification of Debt as 'Financial Debt': The Applicant sought reclassification of the debt owed by the Corporate Debtor as 'financial debt'. The Tribunal had previously ruled in IA No. 115/2019 that the lease agreement did not have the attributes of a financial lease. Therefore, the Applicant's claim could not be considered as 'financial debt'. The Tribunal upheld this previous ruling, stating that the reclassification of the debt from Financial debt to Operational debt was correct and there was no specific finding regarding the classification of debt in the previous order. 2. Admission of the Claim Amount of ?66,58,01,020.16: The Applicant claimed an amount of ?66,58,01,020.16, which included future rentals, residual value, and other dues. The Tribunal noted that the Resolution Professional (RP) had previously admitted ?60,68,03,736.16 out of the claimed amount. However, the RP later reduced the admitted claim to ?12,73,69,756/- based on the previous order. The Tribunal found this reduction to be unfair and directed the RP to reconsider the decision only to the extent of the differential amount, emphasizing that the reduction did not hold good in the eyes of the law. 3. Return of Scheduled Equipment in Working Condition: The Applicant requested the return of the scheduled equipment in working condition. The Tribunal observed that the equipment was not in a workable condition and the railway track was damaged, preventing its transfer. The Tribunal directed the RP to repair the railway track for transportation of the equipment in 'as is' condition. Minor repairs for smooth transportation were allowed, with the cost of railway track repair to be borne by the Corporate Debtor and the cost of removal and transportation by the Applicant. The Tribunal also directed the RP not to charge any penalty for keeping the equipment in the premises of the Corporate Debtor, deeming the penalty exorbitant and arbitrary. 4. Inclusion of Lease Rental Amount as CIRP Costs: The Applicant sought inclusion of lease rental amounts as CIRP costs. The Tribunal noted that the Applicant had shown willingness to remove the equipment but was unable to do so due to the disrepair of the railway track. The Tribunal directed the RP to include lease rentals as CIRP costs for the period from the initiation of CIRP on 29.08.2018 till the railway tracks are made ready for removal of the equipment. 5. Alternative Relief if the Equipment Cannot Be Delivered: The Applicant requested that if the equipment could not be delivered, its current market value should be included as CIRP costs. The Tribunal did not explicitly address this alternative relief, focusing instead on ensuring the equipment's removal and the inclusion of lease rentals as CIRP costs. Conclusion: The Tribunal disposed of the application with the following key directives: 1. The RP must reconsider the differential amount of the claim and verify it from the Corporate Debtor's books. 2. The RP must repair the railway track for equipment transportation, with costs as specified. 3. No penalty should be charged for the equipment's storage. 4. Lease rentals should be included as CIRP costs until the equipment is ready for removal.
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