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TMI Blog2019 (7) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... the creditors clarity regarding the financial health of the Corporate Debtor and providing them a drawing board to formulate a Resolution Plan, which could effectively restructure the outstanding debts. The action of the Applicant terminating the agreement during the moratorium declared vide order dated 13.09.2017 by this Authority is in violation of Clause (d) of Sub-Section (1) of Section 14 of the IBC, as the interest created in favour of Corporate Debtor by virtue of the agreement has been taken away, on which the whole of the business of the Corporate Debtor was dependent. Thus, the termination of the agreement vide letter dated 28.11.2017 by the Applicant is declared as null and void and stands set aside. Both the Applicant and the Corporate Debtor are directed to perform their respective obligations as per the terms and conditions of the Agreement dated May 12, 2011 r/w Addendum Agreement dated April 27, 2016, as if the agreement(s) was never terminated - this Tribunal is not inclined to grant any relief to the Applicant as prayed for. - MA/174/2018 in CP/564/IB/CB/2017 - - - Dated:- 28-5-2019 - CH. MOHD SHARIEF TARIQ, MEMBER (JUDICIAL) For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the Applicant that this authority has initiated the Corporate Insolvency Resolution Process against the Corporate Debtor vide its order dated, 13.09.2017. Accordingly, the Applicant addressed a termination notice dated November 28, 2017 to the Corporate Debtor with a copy marked to the IRP, stating inter alia that in view of the admission of the captioned Petition for insolvency against the Corporate Debtor; the Agreement was liable to be terminated under Clause 15.3(b) of the Agreement. Accordingly, the Applicant vide letter dated 28.11.2017 terminated the Agreement with immediate effect. 5. The learned Sr. Counsel for the Applicant has further submitted that upon termination, as per Clause 16 of the Agreement, the Corporate Debtor was required to hand over the items specified thereunder, including the Assets, to the Applicant or its nominee. It is submitted that on November 28, 2017, the Applicant also addressed a letter to the IRP enclosing a copy of the above Termination Notice and intimated him about the termination of the Agreement. The learned Sr. counsel also pointed out the post-termination obligations of the Corporate Debtor and requested the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The RP has contended that the Applicant being the Prime Contractor appointed the Corporate Debtor as its manufacturer and supplier of certain products by using of Applicant s Trademarks for a period of 10 years from 12.05.2011 to 12.04.2021 vide master agreement dated 12.05.2011. The said agreement is still subsisting and in force. Subsequently, the parties entered into an addendum to the master agreement on 27.04.2016 for manufacturing of new products. 11. The RP has submitted that the Corporate Insolvency Resolution Process (CIRP) was triggered against the Corporate Debtor vide order dated 13.09.2017 . After initiation of the CIRP, the Applicant issued notices to the Corporate Debtor for termination of said agreement, however, the Resolution Professional duly issued a reply notice stating that no termination could be effected against the Corporate Debtor owing subsistence of the moratorium by virtue of order passed under Section 14 of the Insolvency and Bankruptcy Code, 2016. Despite the said notice, the Applicant terminated the agreement in arbitrary manner and claiming the recovery of impugned assets by way of present application. 12. The RP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, the Applicant claims to be entitled to recover a sum of INR 2,98,317/- from the Corporate Debtor towards scrap debit. 15. The ld. Counsel has further submitted that the Respondent has now falsely alleged that a sum of INR 3,98,91,388/- is payable by the Applicant to the Corporate Debtor. It is submitted that the purported invoice dated October 11, 2018 raised by the Corporate Debtor shows that the Corporate Debtor has claimed a sum of INR 1,74,64,000/- towards fixed monthly overheads pertaining to the period April-September, 2018 whereas the Agreement was already terminated on November 28, 2017. Further, it is alleged that in the purported ledger statement of the Applicant annexed to the Counter Affidavit, Corporate Debtor has even included amounts allegedly payable by one NourishCo Beverages Ltd., (NCBL). It is stated that the Applicant is a partner in NCBL which is a joint venture entity, NCBL is a separate entity which had a separate agreement with the Corporate Debtor and the Applicant does not have any liability under such agreement between NCBL and the Corporate Debtor. 16. The Applicant further submitted that the Respondent/Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) any action to foreclose, recover or enforce any security interest created by the Corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor..... 19. The conjoint reading of the provisions of the contract and section 14 of the IBC, it becomes clear that the abovementioned condition of the agreement is inconsistent with the provisions of Section 14 of the IBC, as Clause (d) of sub section (1) of Section 14 prohibits the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. 20. The intention of the legislature in relation to Section 14 is to ensure that after the declaration of moratorium, there is a standstill period during which there is a bar on creating any encumbrance, sale or alienation of the assets of the Corporate Debtor, so that the financial position of the Corporate Debtor must remain preserved and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, on 13.09.2017 this authority initiated the CIR Process against the corporate debtor due to which the Applicant has terminated the agreement on 28.11.2017 by invoking Clause 15.3(b) of the agreement dated 12.05.2011 which is in violation of Clause (d) of sub-section (1) of Section 14 of IBC. 22. The term Property used in Clause (d) of Sub-Section (1) of Section 14 is of wide connotation as defined under Clause (27) of Section 3 of the IBC, which reads as follows:- (27) property includes money, goods, actionable claims, land and every description of property situated in India or outside India and every description of interest including present or future or vested or contingent interest arising out of, or incidental to, property. (Emphasis supplied) From the above, it becomes clear that the term Property includes every description of interest including present or future or vested or contingent interest arising out of, or incidental to property. In the case on hand the sole business of the Corporate Debtor is to manufacture, process and package Slice RGB, Mirinda Cups for the Applicant for distribution under the tradem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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