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TMI Blog2020 (9) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued on 11th October, 2019. This Petition was filed even later. There was therefore a pre-existing dispute, and was still pending in the Hon'ble Civil Court at Bengaluru - In the instant case, neither could the debt be considered to be an Operational debt for the reasons mentioned in the foregoing paragraphs, nor was there a clear undisputed debt as there was a pre-existing dispute taken to the Hon'ble Civil Court, much prior to the issue of the Demand Notice in Form 3 and Form 4 as prescribed under the Code on 11th October, 2019, which was received by the Corporate Debtor on 14th October, 2019. For this reason, also, the Petition has to be dismissed. Petition dismissed. - C. P. (IB) No. 20/BB/2020 - - - Dated:- 31-1-2020 - Rajeswara Rao Vittanala , Member ( J ) and Ashutosh Chandra , Member ( T ) For the Appellant : Hari Babu Thota ORDER Ashutosh Chandra, Member (T) 1. This Company Petition has been filed by Mr. B.S. Ashok Kumar (hereinafter referred to as 'Petitioner/Operational Creditor') under Section 9 of the I B Code, 2016 (hereinafter referred to as 'the Code') read with Rule 6 of the I B (Application to Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019. However, both the cheques were dishonoured when presented for payment by the Operational Creditor. (5) Subsequently, the Operational Creditor has filed a Memo before the Hon'ble City Civil Court, Bengaluru to recall the order of settlement dated 30th January, 2019 and permit him to present the case, in accordance with law in the interest of justice, which was scheduled for hearing on 19th November, 2019. (6) It is stated that the Operational Creditor sent Demand Notice in Form 3 and Form 4 as prescribed under the Code on 11th October, 2019, which was received by the Corporate Debtor on 14th October, 2019. (7) The Applicant vide Affidavit dated 07th November, 2019 has affirmed that the Corporate Debtor is indebted of ₹ 5,60,95,250/- towards payment of outstanding rent to the Applicant which is an Operational Debt, and that the Corporate Debtor has not responded to the said notice till date. Therefore, the Petitioner seeks to initiate CIRP in respect of the Corporate Debtor, appoint IRP and declare moratorium, etc. 3. The Petitioner has also filed written submissions dated 21.01.2020, by inter alia stating as follows: (1) It is stated that a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration by way of rent, lease from time to time and license fee for letting out the premises would fall under the purview of providing services and the consideration that is receivable becomes an Operational Debt. 4. We have heard Mr. Hari Babu Thota, learned PCS for the Petitioner and have perused the submissions/materials placed on record and extant provisions of the Code and the Rules made thereunder. 5. As per the Petition, it is an admitted fact the Petitioner/Operational Creditor and the Respondent/Corporate Debtor had entered into Lease Deed on 16th April, 2015 for a lease period of 19 years 7 months commencing from 1st June, 2015, as per which the Corporate Debtor shall pay rent for the month on or before 7th day of subsequent month. The Corporate Debtor failed to pay the rent for the month of December 2017 onwards and the default occurred on 7th January 2018. Thus, the issue in question is admittedly the non-payment of rent for the let out property, from where a hospital is being run, in respect of which the Petitioner seeks to initiate CIRP, for the recovery of rent. 6. Sub-section (20) of Section 5 of the I B Code, defines an 'Operational Creditor' as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndering of any services and thus, cannot fall within the definition of 'operational debt'. 10. More recently, the issue of the meaning of the words 'Operational Creditor' were examined by the Hon'ble Mumbai Bench of this Tribunal in the case of Citicare Super Speciality Hospital Vs. Vighnaharta Health Visionaries Pvt. Ltd., in its order dated 11.03.2019. In this case, heavy reliance was placed on the earlier decision of the Hon'ble Delhi Bench, dated 06.10.2017, in the case of Jindal Steel and Power Ltd. Vs. DCM International Ltd. On similar facts, as obtaining in our case, the Hon'ble Delhi Bench held that any amount claimed as due by a person representing as 'Operational Creditor' should demonstrate firstly that the said amount in default falls within the definition of 'claim' as defined in Section 3(6). Such a claim, secondly should be capable of being treated as a 'debt' as defined under Section 3(11) of the Code, and finally the 'debt' should fall within the confines of Section 5(21) of the Code i.e. it should be capable of being treated as an 'Operational Debt' and such an operational debt must be owed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore rejected. 14. The Petitioner has also stated that in the case of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd., the Hon'ble Apex Court had held that any consideration by way of rent or lease, if receivable, becomes an Operational Debt. A perusal of the said judgement would show that the reference to rent as being included in goods and services was only in connection with the recommendations of the Bankruptcy Law Reforms Committee. No opinion on the same has been given on the issue. 15. The Appellant also placed reliance on the provisions of the Central Goods and Services Tax Act, 2017. This argument has also been considered by different Benches of this Tribunal as also by the Hon'ble NCLAT in the latest decision in Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan Ors. (Supra). It cited the decision in the case of Jindal Steel Power Ltd. Vs. DCM International Ltd., Company Appeal (AT) (Insolvency) No. 288 of 2017, which held as follows: Admittedly, the Appellant is a tenant of Respondent. Even if it is accepted that a Memorandum of Understanding has been entered between the parties in regard to the premises in question, the Appellant being a tenan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this Petition. It had filed a suit before the Court of City Civil Judge at Bengaluru under the Code of Civil Procedure on 1st October, 2018. The matter went to the Lok Adalat. Some payments were made but later the cheques paid towards rent were dishonoured on 31st January, 2019. The settlement was got annulled through the Civil Court. The Demand Notice as prescribed under the Code was issued on 11th October, 2019. This Petition was filed even later. There was therefore a pre-existing dispute, and was still pending in the Hon'ble Civil Court at Bengaluru. In Transmission Corporation of A.P. Ltd. Vs. Equipment Conductors and Cables Ltd., (CA No. 9597 of 2018) dated 23rd October, 2018, (2018) 147 CLA 112 (SC) the Hon'ble Supreme Court of India has inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. As per para 34 of the judgement, it is stated that the Adjudicating Authority, while examining an application filed under Section 9 of Code, will have to determine a) whether there is an 'operational debt' as defined exceeding ₹ 1 Lakh? b) Whether documentary evidence furnished with the application shows that the aforesaid debt is du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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