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2023 (1) TMI 946 - AT - Insolvency and BankruptcyRecovery of premises being used as Registered Office of the corporate debtor, by the landlord JOML during the subsistence of moratorium after the initiation of CIRP - monthly rent was agreed upon and is payable to the landlord JOML by the corporate debtor, before or during the imposition of moratorium. Whether said premises owned by JOML, situated at Village Tilmapur, Gazipur Road, Ashapur, Varanasi were being used by the corporate debtor prior to the initiation of CIRP of JVL Agro? - HELD THAT - The said premises were definitely in possession of JVL Agro from 14.2.2018, if not earlier, and was definitely in the possession of the corporate debtor on 25.7.2018 when the CIRP of the corporate debtor was initiated. Whether the insertion of padlocks on the gates of the said premises was permitted in view of moratorium which was in force? - HELD THAT - The recovery of any property by the owner was expressly prohibited under section 14(1)(d) of the IBC during the period when moratorium was in force. The insertion of padlocks by JOML at the said premises happened on 28.7.2020, which is as is stated in the complaint made by the RP to the Officer In-charge, Sarnath Thana, Varanasi and later to SSP, Varanasi and hence complaints are not disputed by JOML. Thus, this recovery which was done by the owner JOML of the said premises on 28.7.2018, is clearly after the initiation of CIRP on 25.7.2018 and therefore, during the period of enforcement of moratorium and thus, such a recovery is a clear infringement of section 14(1)(d) of the IBC - the said premises, therefore, should have lawfully been with the RP/ corporate debtor and continue in its lawful possession during the continuation of the CIRP of the corporate debtor. Whether any rent was payable to the owner of the said premises JOML by the corporate debtor during the period of subsistence of moratorium? - HELD THAT - The arguments of the corporate debtor JVL Agro/RP is convincing that no rent was agreed upon to be paid for use of said premises when the said premises were offered to be used as registered office of the corporate debtor nor any rent was paid prior to the initiation of the CIRP of the corporate debtor. Section 14(2-A) of the IBC, also taken note of, which the landlord JOML has placed reliance upon regarding payment of rent during the moratorium period. A plain reading of this provision makes it clear that supply of certain goods and services has to be considered critical by IRP/IP to protect and preserve the value of the corporate debtor. Quite clearly in this case, the IRP/RP has neither recorded such a need nor requested the landlord JOML for continuing the supply of rental services to the corporate debtor. Thus, section 14(2-A) is not attracted in the present case. Moreover, it is already seen how the present case is covered under section 14(1)(d) of the IBC, whereby the recovery of the said premises in the possession of the corporate debtor, though owned by JOML, is expressly prohibited during the moratorium period - no rent is payable to the owner JOML of the said premises by the corporate debtor during the period of moratorium as claimed by JOML. The Adjudicating Authority has gone beyond its jurisdiction in ordering payment of rent by the corporate debtor during the period of moratorium - the Adjudicating Authority did not adjudicate on the prayer made by the RP for restoration of the possession of the said premises, which it should have done to settle the dispute early. In view of the fact that liquidation order with respect to the corporate debtor has already been passed by the Adjudicating Authority, no orders are now necessary in connection with IA 199/2020 in the present appeals. Appeal disposed off.
Issues Involved:
1. Whether the 'said premises' of JOML being used as the Registered Office of the corporate debtor JVL Agro could be 'recovered' by the landlord JOML during the subsistence of moratorium after the initiation of CIRP. 2. Whether any monthly rent was agreed upon and is payable to the landlord JOML by the corporate debtor JVL Agro whether before the imposition of moratorium or during the moratorium period. Detailed Analysis: Issue 1: Recovery of 'Said Premises' During Moratorium The Tribunal examined whether the 'said premises' owned by JOML and used by JVL Agro as its registered office could be recovered by JOML during the moratorium period. It was established that JVL Agro had been using the premises since February 14, 2018, based on a 'no objection' letter from JOML. This was corroborated by filings with the Ministry of Corporate Affairs and complaints made by the Resolution Professional (RP) to local authorities. The Tribunal concluded that the premises were indeed in possession of JVL Agro at the time of CIRP initiation on July 25, 2018. Section 14(1)(d) of the Insolvency and Bankruptcy Code (IBC) prohibits the recovery of any property occupied by the corporate debtor during the moratorium period. The Tribunal found that JOML's act of placing padlocks on the premises on July 28, 2020, was a clear violation of this provision. The Tribunal noted that the RP had not considered the renting of the premises critical to protect and preserve the value of the corporate debtor, thus Section 14(2-A) of the IBC was not applicable. Issue 2: Agreement and Payment of Rent The Tribunal analyzed whether any rent was agreed upon and payable for the use of the 'said premises'. The 'no objection' letter from JOML did not mention any rent payment. JOML's email dated August 28, 2018, during the moratorium period, proposed a rent agreement starting from August 1, 2018, but there was no evidence of any prior agreement or payment of rent. The Tribunal found that the purported NOC indicating a rent agreement was of dubious origin and not credible. The Tribunal concluded that no rent was agreed upon or paid before the CIRP initiation. The issue of rent payment arose only after the corporate debtor entered CIRP. The Tribunal also referenced Section 14(2-A) of the IBC, which requires the RP to consider certain supplies critical, which was not the case here. Jurisdiction of NCLT The Tribunal addressed whether the NCLT had jurisdiction to adjudicate the rental dispute. Citing Supreme Court judgments, the Tribunal noted that NCLT's jurisdiction is limited to matters directly related to the insolvency resolution of the corporate debtor. The rental dispute did not fall within this scope, making the NCLT's direction for rent assessment and payment beyond its jurisdiction. Conclusion The Tribunal held that no rent was payable to JOML during the moratorium period and that the NCLT had overstepped its jurisdiction. The insertion of padlocks by JOML was a violation of the moratorium provisions. The Tribunal set aside the Impugned Order and disposed of the appeal accordingly, with no order as to costs.
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