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TMI Blog2022 (3) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor defaulted in making the payment of license fee. Tow cheques which were issued 20 Lacs each by the Corporate Debtor on 07th May, 2018 and 08th October, 2018 were dishonoured. The Adjudicating Authority in its Order had stated that since the Appellant has allowed the Respondent to use its immovable property to carry out business, it does not fall in the category of goods and services including employment. The claim of the Appellant under Section 9 of the Code arising out of liability which fell on the Corporate Debtor to make the payment of License Fee as agreement dated 15th April, 2017 when the License Fee having not been paid it was clearly debt which was in default. There being two divergent opinions of this Tribunal, it is necessary that an authoritative pronouncement be made with regard to the issues which has been raised i.e. whether License Fee pertaining to immovable premises taken by Licensee from Licensor for running commercial activity i.e. Educational Institute fall within the definition of Operational Debt - the matter needs to be placed before the Hon ble Chairperson on administrative side for constitution of a Larger Bench to resolve the conflict. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the Appellant by the Corporate Debtor which too was dishonoured. When despite several reminders and emails, the Corporate Debtor did not clear outstanding payment towards License Fee, a Demand Notice under Section 8 of the Code dated 3rd May, 2019 was issued by the Appellant to the Corporate Debtor claiming an outstanding dues of ₹ 1,31,20,788/-. The Notice under Section 8 of the Code was delivered on 07th May, 2019 and was received by the Corporate Debtor but no Reply to Demand Notice was sent by the Corporate Debtor. The Appellant filed an Application under Section 9 claiming an amount of ₹ 1,31,20,688/- including interest. Notice was issued by the Adjudicating Authority. The Corporate Debtor filed its Reply-Affidavit dated 11.09.2019. Rejoinder to the Reply was also filed by the Appellant. Corporate Debtor was allowed to file Additional Documents to which Reply-Affidavit was also filed by the Operational Creditor-Appellant. Adjudicating Authority vide Order dated 04.03.2020 rejected the Section 9 Application holding that the Appellant is not an Operational Creditor and there is no Operational Debt due. Aggrieved by the said Order dated 04.03.2020, this App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13th April, 2007. The cheques which were issued to the Appellant by the Respondent were for security purposes. 6. We have considered the submissions of Learned Counsel for the parties and perused the record. 7. The Adjudicating Authority in the Impugned Judgment after noticing that claim of the Appellant arises out of a License Agreement under which Respondent has right to use immovable property, held that the claim arising out of grant of licence to use immovable property does not fall in the category of goods and services. The reasons given by the Adjudicating Authority for rejecting the Application is contained in Paragraph 25 of the Judgment which is to the following effect: 25. In the present Application the claim of the Applicant has arisen out of a License Agreement whereby the Applicant had granted, to the Respondent, the right to use its immovable property to carry out business. It can be concluded that the claim arising out of grant of licence to use immovable property does not fall in the category of goods or services including employment and is also not a debt for the payment of dues arising under any law for the time being in force and payable to the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s if any payable to the LICENSOR by means of Banker s cheque/cheque payable at par, in advance on or before 7th Day of each English Calender Month. Any delay in payment of the LICENSE FEE beyond the 7th of each calendar month would attract interest @2% per month compound monthly for the period of delay. The amounts payable per month shall be as described in the schedule annexed as Annexure B. ............ 7. LICENSEE S OBLIGATIONS AND COVENANTS a. The LICENSEE shall use the Demised Premises for specific purpose as aforesaid only i.e. for educational purposes only as allowed by the RIICO/Authority. ...... o. The LICENSEE shall not cease to carry on its commercial/business activity at the Demised Premises for which the Demised Premises has been licensed to the Licensee for more than 7 (seven) days in continuation. In the event of cessation of commercial activity/business by the LICENSEE for a period of 15 (fifteen) days, the LICENSOR shall have the right to cancel the agreement evict the Licensee by giving 15 days notice. The waiver of this right will be the sole discretion of LICENSOR on such terms and conditions as the LICENSOR may deem fit. 9. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial contract, such as a loan or a debt security. Operational Creditors are those whose liability from the entity comes from a 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 plugs are sold is an operational creditor. Similarly, the lessor that the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-year lease. The Code also provides for cases where a creditor has both a solely financial transactions as well as an operational transactions with the entity. In such a case, the creditor can be considered a financial creditor to the extent of the financial debt and an operational creditor to the extent of the operational debt. 13. Bankruptcy Law Reforms Committee has given a clear example in Paragraph 5.2.1 in following were similarly, the lessor that the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-year lease . The expression service used in Code has not been defined in the Court. 14. Learned Counsel for the Appellant has relied on Judgment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue, squarely falls within the ambit of the definition of Operational Debt as defined under Section 5 (21) of the Code. 15. Learned Counsel for the Respondent has placed reliance on the Judgment of this Tribunal in Company Appeal (AT) Ins. No. 331 of 2019 in the matter of Mr. M. Ravindranath Reddy Versus Mr G. Kishan Ors. delivered on 17th January, 2020 this Tribunal wherein application for recovery of alleged enhanced lease rent, held not to fall within the meaning of Operational Debt in terms of Section 5(21) of the Code. 16. There being two divergent opinions of this Tribunal, it is necessary that an authoritative pronouncement be made with regard to the issues which has been raised i.e. whether License Fee pertaining to immovable premises taken by Licensee from Licensor for running commercial activity i.e. Educational Institute fall within the definition of Operational Debt . We have our doubts over the opinion by this Tribunal in Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan Ors. . The Report of the Bankruptcy Law Reforms Committee as quoted with approval by Hon ble Supreme Court of India in Mobilox Innovative (Supra) has not been placed before the Bench decid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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