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TMI Blog2019 (3) TMI 1655X X X X Extracts X X X X X X X X Extracts X X X X ..... s a Petition filed U/s 9 of Insolvency & Bankruptcy Code, 2016 (hereinafter as Code) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter as Rules) on 28.11.2017 by the Petitioner 'Indiabulls Real Estate Company Private Limited' in the capacity of "Operational Creditor", against Crest Steel & Power Private Limited (hereinafter as 'Corporate debtor' having registered address at Joratrai Village, P.O. Mangatta, Dist. Rajnandgaon, Chattisgarh. 2. The Petitioner has submitted Form-5 as prescribed under the rules. In the requisite Form, under the Head "Particulars of Operational Debt" the total amount in default is stated as ₹1,88,64,345/-, as on 01.06.2017 (exclusive of interest @ 18% p.a. till the date of realisation). The date of default is stated to be 10.12.2016. A) Background of the Case : 3. The Corporate Debtor entered into a Leave and License Agreement dated 14.11.2013 with the Operational creditor to take on Lease the premises admeasuring 13944.36 sq. ft. of chargeable area being Unit No. 1601 in Tower-3 of the Indiabulls Finance Centre together with exclusive right to use 15 car parking spaces. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There were email communications between the parties where in the Corporate Debtor has given the reason for termination of the agreement as 'financial crisis' and Operational Creditor contending that the termination of the agreement during subsistence of lock in period was 'wrongful'. The Corporate Debtor abandoned the leased premises without any notice or intimation, however, did not remove its furniture and fixtures from the Licensed Premises, as per the pleadings. It is informed that in terms of Lease Agreement ( 14.11.2013 supra) the lock in period was to end on 30/11/2017 , and therefore the furniture was not removed until October-November, 2017. 8. The Operational Creditor further submits that the Corporate Debtor stopped the business operations in the licensed premises somewhere in February, 2017 and around the month of May-June 2017, the Corporate Debtor vacated the premises without any prior notice and without paying any outstanding License Fees and other charges for the unexpired lock in period. 9. The Operational Creditor issued a Demand Notice U/s 8 of the code on 15.06.2017, to which the Corporate Debtor replied vide letter dated 30.06.2017 raising certain 'dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clause 15.4 of the Agreement, which says: " Neither party shall be liable for its failure to perform or fulfil any of its obligations to the extent that its performance is delays or prevented, before or after the commencement of the license, in whole or in part, due to acts of god, floods, cyclones, earthquakes, fires, wars, riots, strikes (unless caused by the acts or omissions of the parties, or their failure to act in a good faith to resolve the same), orders of governmental or other statutory authorities, national emergency or any other similar causes beyond the reasonable control of the party effected ("Force Majeure"). ( high lighted in the order ) 11. It is thus argued that , on a conjoint reading of the above provisions, it can be inferred that the Agreement entered into binds the Corporate Debtor to stay in the leased premises for a period of 5 years, and in case the Corporate Debtor choses to vacate the said premises before the expiry of lock in period, the Security Deposit of the Corporate Debtor shall be forfeited by the Operational Creditor and the Corporate Debtor is under an obligation to pay the License fee for the unexpired lock in period after adjusting the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perational Debt' has neither arisen out of the provision of goods or services nor out of the employment of dues which are payable under the statute to the State/Central Government or local body. 16. The Corporate Debtor also contends that the Bank Certificate U/s 9(3)(c) has not been filed with the petition which is a mandatory requirement of the Code. Also, an affidavit U/s 9(3)(b) for no notice of dispute by the Corporate Debtor has also not been filed. 17. The Corporate Debtor further goes on to raise a dispute in the said matter by saying that the Operational creditor has suppressed certain material facts and documents from this Tribunal. One being when the Corporate Debtor tried to handover a peaceful and vacant possession of the licensed premises to the Operational Creditor, the Operational Creditor refused to take the same. Moreover, the Petitioner had disconnected the air conditioning units from December, 2016 onwards. Power supply was disconnected in the said premises. The premises were vacated, however, the personnel of the Operational Creditor in the said premises did not allow the Corporate Debtor to withdraw their movables/belongings on 14.09.2017. 18. It is argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case as well as on law. Reliance has been placed on the decision of the Hon'ble Bombay High Court in the matter of Prime Broking Company (India) Ltd. V. National Securities Clearing Corporation Ltd, [(2017) 2 Bom CR 665] wherein the submission on a counter claim is rejected being a defence in a winding up proceeding. It was held that: 14] At the outset, we must say that we are doubtful whether the institution of a suit for damages by the company when in fact, the debt claimed by the petitioning creditor is not at all disputed by the such company, can at all constitute a valid defence to a petition seeking winding up of the company. Normally, in a petition seeking winding up on the ground of inability to pay debts, the dispute is with regard to the very liability for the payment of such debt. The question which normally arises is whether such dispute, to the very existence of the debt or the liability to pay the debt, is bona fide and one of substance. In this case, as we have noted earlier, there is no dispute whatsoever with regard to the debt of ₹ 90.90 crores which is due and payable by the company to the petitioning creditor. However, even if we were to proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivable becomes 'Operational Debt'. 'Arrears of rent' are in the nature of 'operational debt' within the meaning of definition of operational debt defined under Section 5(21) of the I&B Code. An action as regards recovery of arrears of rent is maintainable under Section 9 of the I&B Code, 2016. Reliance can be placed on Sarla Tantia V/s Nadia Health Care (P) Ltd. NCLT (Kolkata Bench), CP(IB) No. 108/KB/2018 and CA(IB) No. 119/KB/2018, Date of Decision: 05.10.2018 and Jindal Steel & Power Ltd. V. DCM International Limited by NCLAT [Company Appeal (AT) (Insolvency) No. 288 of 2017]. Furthermore, a similar view was taken by the legislature while framing this Code as given in the Report of the Bankruptcy Law Reforms Committee: "…the Code differentiates between financial creditors and operational creditors… Financial creditors are those whose relationship with the entity is pure financial contract, such as a loan or a debt security. Operational creditors are those whose liability from the entity comes from transaction on operations. Thus, the wholesale vendor of spare parts whose spark plugs are kept in inventory by the car mechanic and who gets paid only after the spark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eble legal argument and does not hold any water in my view. The job of the Adjudicating authority, as assigned by the Hon'ble Supreme Court in Mobilox Innovations Private Limited v. Kirusa Software Private Limited, Civil Appeal No.9405 of 2017 dated 21.09.2017 is to separate the grain from the chaff. It says: "It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efence to this petition. 30. Bank Certificate U/s 9(3)(c) is merely a corroborative piece of evidence and not a substantive piece of evidence. Hence, the requirement of the same can be dispensed with if other evidences supporting the claim of the Petitioner are on record. The petition is duly supported with the invoices raised, the Agreement and the email communications between the parties. Therefore, in view of Macquarie Bank Limited V. Shilpi Cable Technologies Limited [CIVIL APPEAL NO.15135 OF 2017], wherein it was observed that :- "19. It is true that the expression "initiation" contained in the marginal note to Section 9 does indicate the drift of the provision, but from such drift, to build an argument that the expression "initiation" would lead to the conclusion that Section 9(3) contains mandatory conditions precedent before which the Code can be triggered is a long shot. Equally, the expression "shall" in Section 9(3) does not take us much further when it is clear that Section 9(3)(c) becomes impossible of compliance in cases like the present. It would amount to a situation wherein serious general inconvenience would be caused to innocent persons, such as the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is a debt. It is payable eo instanti; debitum in praesenti and solvendum in praesenti. A party solemnly binds itself to a three-year license term for premises. The licensor agrees, in exchange, not to increase the license fee for that duration. The agreement is, clearly, that the licensee will pay the licensor the agreed monthly license fee for three years. To allow the licensee not only the option of a premature exit, but also to allow it to slither out of its financial liability, and, correspondingly, to drive the licensor to a protracted civil proceeding in which it needs prove nothing is clearly unjust. A defence that attempts this is not one that is bona fide or substantial. Defences of this stripe evidence commercial and corporate perfidy; they can never be allowed to constitute a bona fide or substantial defence." 32. In view of above, this petition deserves 'Admission'. The Operational Creditor has not received the outstanding Debt from the Debtor keeping in view the agreement and the relevant clauses therein. It is clear that there was a lock in period, which had to be complied with by the Corporate Debtor, failure to which would lead to the Corporate Debtor to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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