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TMI Blog2017 (10) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor-respondent has vacated the premises comprised of basement, second, third and fourth floor of the licensed premises on 11.04.2016 or it has retained possession of the whole till November, 2016. The property in dispute is commercial in character which is an admitted fact. Therefore, there is a serious dispute with regard to the application of Section 24 to the commercial premises because Section 24 applies only to residential premises as expressly provided. The parties have agreed to abide by the provisions of Section 24 but the Operational Creditor has not invoked any such provision by moving appropriate application before the Competent authority under the Rent Act. Moreover, these disputes have been in existence as the details of dispute are placed on record which date back to 13.01.2017 (Annexure-14), a notice sent by the Operational Creditor to the Corporate Debtor which was duly replied on 06.02.2017 (Annexure-15). There are again notices dated 16.03.2017 and 31.03.2017 (Annexure-16 and then vacation of a substantial part of leased premises would need further investigation. We cannot conclude that there is no dispute. Therefore, we are unable to persuade ourselv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the parties. It is in lieu of the aforesaid 'default' that a claim in the present petition has been made as the vacant possession of the premises was handed over on 19.11.2016 which is after a period of seven months. Therefore, a claim of ₹ 4,38,97,354/- (Rupees Four Crore Thirty Eight Lakhs Ninety Seven Thousand Three Hundred and Fifty Four Only) excluding service tax has been made. It has also been stated that a sum of ₹ 88,18,665 (Rupees Eighty Eight Lakhs Eighteen Thousand Six Hundred Sixty Five only) is lying with the 'Operational Creditor'-applicant as security deposit and hence, the balance amount of ₹ 3,64,28,017.20 including interest is claimed to be due and payable by the respondent to the applicant. The default is stated to have occurred on 12.04.2016 and continued till 19.11.2016. The dates when the amount fell due have been given in Annexure-1. In the reply filed by the Corporate Debtor it has not been disputed that the Leave and License Agreement was executed on 11.04.2017 for a period of two years. It is claimed that on 16.12.2015 Corporate Debtor intimated to the applicant that it is likely to vacate the premises on 11.04.2016 on the day of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor has claimed that there was pre-existing dispute between the parties much before the date of issuance of demand notice on 03.04.2017. Once there is a dispute then no Corporate Insolvency Resolution Process could be initiated. The Corporate Debtor has also placed reliance on clause 17.5.6 and has submitted that this clause cannot come in operation as it applies only to residential places whereas the premises in question is a commercial property. There is objection raised with regard to bank certificate dated 15.07.2017 alleging that it is false and incorrect. Rejoinder has also been filed reiterating the submissions made in the petition and controverting the allegations. Thereafter two additional affidavits by each of the party have been filed bringing on record the copies of the emails. We have heard learned counsel for the parties at a considerable length. The core question which arises for determination in the present case is 'whether there is an existing dispute between the parties before the issuance of notice under Section 8 of the Code' and 'whether the dispute is substantial or it is merely an illusory defence raised by the Corporate Debtor to defeat the process'. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess for extraneous considerations. It is for this reason that it is enough that a dispute exists between the parties." Therefore, it has been held that it will be open to the Adjudicating Authority (i.e. NCLT) to go into the issue whether a dispute existed or not. HonTDle the Supreme Court went on to observe in para 35 & 35 as under:- "35. We have already noticed that in the first Insolvency and Bankruptcy Bill, 2015 that was annexed to the Bankruptcy Law Reforms Committee Report, Section 5(4) defined "dispute" as meaning a "bona fide suit or arbitration proceedings...". In its present avatar, Section 5(6) excludes the expression "bona fide" which is of significance. Therefore, it is difficult to import the expression "bona fide" into Section 8(2)(a) in order to judge whether a dispute exists or not. 36. The expression "existence" has been understood as follows: "The Shorter Oxford English Dictionary gives the following meaning of the word "existence": (a) Reality, as opp to appearance. (b) The fact or state of existing; actual possession of being. Continued being as a living creature, life, esp. under adverse conditions. Something that exists; an entity, a being. All t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciples laid down by the Hon'ble Supreme Court in Mobilox Innovations Private Limited (supra) we find that a notice dated 13.01.2017 was issued by the applicant-Operational Creditor to the Corporate Debtor demanding the amount mentioned in the preceding para in pursuance of clause 17.5.6 of the Leave and License Agreement amounting to ₹ 3,50,78,689/- (Rupees Three Crores Fifty Lakhs Seventy Eight Thousand Six Hundred and Eighty Nine only). A part of the notice from para 7 to 16 as it is material to the fact of the present case are set out below and read as under:- "However, you vide your email dated April 19, 2016: a. once again reiterated your request; b. expressed your inability to vacate the Premises on or before April 11, 2016 due to technical reasons; and c. requested our client to allow you to occupy part of the Premises until October 2016 since they have started looking at alternate premises. 8. As you refused to vacate the Premises, our client vide their letter dated June 1, 2016 called upon you to: a. pay a sum of ₹ 67,31,582 (Rupees Sixty Seven Lakhs Thirty One Thousand Five Hundred and Eighty Two Only) (inclusive of service tax) being an amount pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o offered to settle the disputes for an amount which is lower than what our clients are entitled to and therefore the same was rejected by our clients. Thus, after deducting a sum of ₹ 88,18,665/-(Rupees Eighty Eight Lakhs Eighteen Thousand Six Hundred Sixty Five Only) being interest free security deposit lying with our clients, a sum of ₹ 3,50,78,689/- (Rupees Three Crores Fifty Lakhs Seventy Eight Thousand Six Hundred and Eighty Nine Only) is due and payable by you to our clients. 16. In the circumstances aforesaid, our clients have given us pre-emptory instructions to proceed further and initiate legal proceedings against you. However, before doing so, they intend to give you one final opportunity, which we hereby do, and call upon you to pay to our clients or to us as their attorneys a sum of ₹ 3,50,78,689/- ((Rupees Three Crores Fifty Lakhs Seventy Eight Thousand Six Hundred and Eighty Nine Only) alongwith interest at the rate of 18% per annum from the date of this notice till payment / realization within 7 (seven) days from receipt of this letter, failing which our client shall initiate such legal proceedings against you, as may be advised, entirely at you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and License Agreement. (emphasis added) (f) Subsequently, Mr. Vipul Ambani (President - Finance 8b Corporate Development of PEPL) confirmed the aforesaid meeting on February 13, 2016, which is indicative of the fact that your client in the month of February, 2016 was in fact contemplating extension of the Initial Term; otherwise your client would have clearly intimated in the response e-mail, as request by my client in the e-mail dated February 8, 2016 (as stated in (e) above). It is also pertinent to note that your client was fully aware of the fact that my client was only interested in extension of the license for only 2 (two) floors and not the entire Premises. (g) Thereafter, the meeting was held at uour client's office on February 17, 2016, and basis the discussion and the understanding reached, an oral assurance was given by uour client to my client that the license for the ground floor and first floor of the Premises would in any case be extended till October 31, 2016 ("Oral Assurance for Extension"). However, for extension for a longer tenure i.e. 2 (two) years, would also be contemplated by your client and the decision in that regard would be communicated to my cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at: "We are not in a position to accept the terms of your extension as requested. We will need you to handover all the floors of the said property on the expiry of the lease........,, (emphasis in original) (j) That your client was always aware of the fact that my client, given the sensitive nature of the business operations being undertaken at the Premises will not be able to vacate the Premises within a short period of 4 (four) days, and despite the Oral Assurance for Extension provided to my client, your client waited till the penultimate hour, to induce breach of the Leave and License Agreement by my client. In this regard, it may be noted that the 3 (three) months' notice period in case of early termination as provided in the Leave and License Agreement, was specifically incorporated to allow reasonable time to my client to shift/ wind up its sensitive business operations being undertaken at the Premises in such a scenario. (k) Furthermore, despite my client's intimation to PEPL to take possession of the second, third and fourth floor of the Premises, vide e-mails dated April 7, 2016, April 19, 2016, as well as, vide letters dated April 7, 2016 and June 8, 2016, your cli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 11, 2016, with respect to the portion of the Premises occupied by my client and for the period for which the same were occupied. In light of the same and the aforesaid circumstances, my client vehemently denies all the allegations and claims made in your Notice by your client; as also that my client is ^ not liable to pay any statutory damages calculated on the basis of double the license fee as claimed in your Notice. Furthermore, vide this legal notice, I call upon a your client to refund the entire security deposit provided by my client under the Leave and License Agreement, i.e. INR 88,18,665/- (Indian Rupees Eighty Eight Lakhs Eighteen Thousand Six Hundred and Sixty Five Only), within a period of 10 (ten) days of receipt of this legal notice, along with interest @ 18% p.a. from the date the said sum became due; failing which my client would be constrained to take appropriate legal proceedings which would be entirely at your client's risk as to the costs and consequences thereof. Needless to state, the above is without prejudice to my client's rights under law, contract, equity or otherwise." In response to the reply of the Corporate Debtor a rejoinder reply was sent by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Premises fixed under the Leave and License Agreement* The Licensee has agreed and confirmed that the Agreement was subject to the rights of the Licensors as provided under Section 24 of the Rent Act and the provisions of Chapter VIII of the Rent Act which are applicable to this Agreement. It was further highlighted -^ that this is an important condition of the Agreement. 16. Section 24 of the Maharashtra Control Rent Act has also been relied upon in the reply filed, by the Corporate Debtor and the same reads as under:- 24. Landlord entitled to recover possession of premises given on licence on expiry. (1) Notwithstanding anything contained in this Act, a licensee in possession or occupation of premises given to him on licence for residence shall deliver possession of such premises to , the landlord on expiry of the period of licence; and on the failure of the licensee to so deliver the possession of the licensed premises, a landlord shall be entitled to recover possession of such premises from a licensee, on the expiry of the period of licence, by making an application to the Competent Authority, and, the Competent Authority, on being satisfied that the period of licence has e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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