2021 (6) TMI 699 - Tri - Insolvency and Bankruptcy

Seeking direction to the Respondent to handover the vacant possession of a unit of the Corporate Debtor - seeking alternatively to permit the Applicant to take available recourse by filing a suit - denial to vacate the premises - violation of leave and license agreement - HELD THAT - It is not in dispute that the Respondent has been a tenant in respect of the shop room in the Mall. The Respondent himself had terminated the lease under his email dated 13.07.2020. However, he continued to occupy the premises on the ground that he was not allowed to remove his belongings from the shop room. It is alleged by the Respondent that the terms and conditions of the leave and license agreement dated 03.10.2012 have also been violated by the Mall management and by the Applicant. The detailed appraisal of the terms and conditions of the lease and their ramifications including application of the force majeure clause would require an incisive judicial enquiry. It would not be possible for this Authority to go there into by in a summary proceeding as the present one - Since the Corporate Debtor is under CIRP, it would also be not appropriate for the Respondent to continue in the lease premises. His continuance in the shop would thwart the resolution process and would frustrate the object of the Code. It would accordingly be appropriate to direct the Respondent to handover the vacant possession of the shop room to the Applicant. The Applicant may approach the appropriate judicial forum for realisation of the outstanding rent - Respondent is directed to handover vacant possession of the shop room to the Applicant (or his successor in office) and to remove his belongings therefrom forthwith - Application allowed in part.

Summary

Issues:
- Application seeking direction for vacant possession of a unit of the Corporate Debtor
- Dispute over outstanding dues and termination of lease due to force majeure
- Violation of terms and conditions of leave and license agreement
- Applicability of force majeure clause in the lease agreement
- Resolution of outstanding rent during the lockdown period

Analysis:

1. The Liquidator of the Corporate Debtor filed an Application seeking direction for the Respondent to handover vacant possession of a unit of the Corporate Debtor or permit filing a civil suit. The Respondent, a tenant in the Mall, terminated the lease citing force majeure and outstanding dues. The Tribunal noted the need for detailed examination of lease terms and force majeure implications, directing the Respondent to vacate the premises to facilitate the Corporate Insolvency Resolution Process (CIRP).

2. The Respondent objected, claiming the force majeure clause due to the pandemic justified termination and sought compensation for goods left in the shop. The Tribunal acknowledged the Respondent's arguments but emphasized the need for a judicial enquiry into lease terms and force majeure application. It directed the Respondent to vacate the premises to avoid hindering the resolution process, allowing the Applicant to pursue outstanding rent through appropriate judicial channels.

3. The Tribunal recognized the complexity of the case, especially regarding force majeure and lease violations. It highlighted the need for a detailed legal examination of the issues, preventing a summary decision due to the ongoing CIRP. The judgment aimed to balance the rights of both parties while ensuring the smooth progress of the insolvency resolution process, ultimately directing the Respondent to vacate the premises and allowing the Applicant to pursue rent recovery through legal avenues.

4. In conclusion, the Tribunal partially allowed the Application, directing the Respondent to vacate the shop room and remove belongings promptly. The Applicant could seek recovery of outstanding rent through appropriate judicial forums, considering the impact of the pandemic on business operations. The judgment aimed to maintain fairness and uphold legal procedures in the context of insolvency proceedings, ensuring a balanced approach to resolving the dispute without awarding costs to either party.