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TMI Blog2022 (5) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... s on record, it is clear that at no point of time, the Respondent handed over possession of the premises to the Appellant or asked the Appellant to take possession of the premises - Admittedly, the monthly rent of the premises is Rs.28 Lakhs and odd. No amount has been paid towards the license fee after March, 2019 on the ground that security amount of Rs.82 lakhs and odd is payable by the Appellant. The Respondent is continuing in the premises occupying the same for last more than three years whereas the security lying with the Appellant at best is avail to cover the license fee for about three months only. The Respondent has no right or entitlement to continue in the premises on the ground that security deposit has not yet been refunded without giving any opportunity to the licensor to determine whether as to any security is refundable or not. When we read Clauses 21.1, 21.2 and 21.3 conjointly, it is clear that the licensee is under obligation to handover the possession within 30 days of the date of termination and licensor has time of 30 days thereafter to refund the security deposit. When the licensee has not handed over possession, there is no occasion to determine whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re:- The Appellant and the Corporate Debtor- Jet Airways (India) Private Limited ( Jet for short) entered into a License Agreement for license of office premises in a building owned by the Appellant on 24.02.2011. A security deposit was also made by the Corporate Debtor to the Appellant in pursuance of License Agreement. In the year 2018, Jet vacated four office units and substantial unpaid dues were set-off by the Appellant from the security deposit. Balance security deposit with the Appellant of the Corporate Debtor was INR 1,35,08,352/-. Monthly fees for two units that was retained by Jet was INR 28,51,031/-. On 28.02.2019, the Appellant wrote to Jet that all future monthly fees payable by the Corporate Debtor be deposited in the ICICI Bank account and all future communications with the Appellant must be addressed to the e-mail address of the Appellant s Managing Director. The Corporate Debtor did not deposit the monthly license fees in the months of March and April, 2019. On 30.04.2019, the Appellant issued a notice to the Corporate Debtor giving an opportunity to the Corporate Debtor to pay monthly fees within 30 days. It was further mentioned that if deposit is not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od automatically terminated on 31.05.2019. No further license fee is payable to the Applicant in terms of Clause 21.3 of the Agreement. Reliance was also placed on letter dated 17.08.2019 written by the Resolution Professional to the Appellant seeking for refund of security deposit. The Adjudicating Authority after hearing the Counsel for the parties took the view that under Clause 21.3 of Leave and License Agreement, the Respondent was not required to handover the possession till the security deposit was refunded and further the Corporate Debtor need not to pay any license fee for the premises from 01.06.2019. It was held that Applicant is not entitled to any payment with respect to license fee after 31.05.2019. The Applicant i.e. Appellant was directed to refund the security deposit to the Respondent after deducting the license fee payable from 01.03.2019 to 31.05.2019. Aggrieved by the order passed by the Adjudicating Authority, this Appeal has been filed. 3. We have heard Shri Jayant Bhushan, Learned Senior Counsel for the Appellant and Shri Rohan Rajadhyaksha, Learned Counsel for Respondent. 4. Learned Counsel for the Appellant submits that the Adjudicating Authority com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciated the relevant clauses of the Leave and License Agreement. 5. Shri Rohan Rajadhyaksha, Learned Counsel for the Respondent refuting the submissions of the Counsel for the Appellant submits that the Respondent being Resolution Professional of the Corporate Debtor is obliged to protect the assets and properties of the Corporate Debtor. The security deposit lying with the Appellant is assets of the Corporate Debtor which need to be protected by the Respondent. Learned Counsel for the Respondent heavily relied on Clause 21.3 of the Agreement and submits that since security deposit has not been refunded by the Appellant, the Respondent is entitled to retain the possession of the licensed premises till the security deposit is not refunded. It is submitted that there is automatic termination of the Leave and License Agreement under Clause 19.5 after issuance of 30 days notice by the Appellant on 30.04.2019. It is submitted that in view of the automatic termination of Agreement, it was incumbent on the Appellant to refund the security deposit and after refund of the security deposit only the Respondent is liable to handover the possession of the premises. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing or there be breach of Licensee's Covenants or material breach of any covenants, conditions and stipulations herein contained on part of the Licensee, provided that the Licensee has been given an opportunity to remedy such breach and has failed to do so after expiry of 30 days from the receipt of the written notice in this regard from the Licensor; or 19.5 If the Licensee defaults in and or delays payment of any amount on due dates payable under this Agreement, save and except the Events of Default set out in sub-clauses 19.3 and 19.4 above, the Licensor shall for the purposes of pre-determining and terminating this Agreement give a notice requiring the Licensee to rectify and/or comply with the requirements of the notice within 30 (thirty) days of the receipt of such notice and in the event of the Licensee having failed to rectify or comply with the same within the said notice period, this Agreement shall stand pre-determined/terminated without any further notice. 21. Effects of Termination /Expiration of the Agreement: 21.1 In the event of pre-determination/ termination of this Agreement which has been effected in terms of clauses 19 and 20 hereinabove or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaceful possession of tile Licensed Premises is handed over and made available to the Licensor and to remove from the Licensed Premises all personnel, belongings, installations and merchandise within 10 (ten) days from the date the pre-determination/ termination of this License becomes effective in terms of Clause 19 hereinabove, then (in addition to the License Fees payable as per Clause 21.1 hereinabove and the other rights and remedies o fthe Licensor,) the Licensee shall be liable to pay to the Licensor 1.5 (one and a half) times the daily License Fee payable at that time for every day that the Licensed Premises is not handed over to the Licensor. 9. The submission of the Appellant is that the Appellant never terminated the Leave and License Agreement dated 24.02.2011. The Notice dated 30.04.2019 cannot be treated to be notice terminating the Agreement. Paragraphs 3 and 5 of the Notice dated 30.04.2019 which are relevant are as follows:- 3. Our Client notes that despite this request being shared with you almost two months ago, you have not yet deposited such amounts in the ICICI Bank Account. Our Client is hereby giving you an opportunity to cure the breach of your ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y-nine lakh sixty-one thousand four hundred ninety) has not been refunded to the company. 11. As noticed above, before the Adjudicating Authority and before this Tribunal, now the case of the Respondent is that there is automatic termination of the Agreement by virtue of the Notice dated 30.04.2019. We proceed to examine the submission of the Counsel for the Respondent on the premise that there is automatic termination of Agreement. 12. Learned Counsel for the Respondent submits that under Clause 21.3 when the licensor does not refund the security deposit, licensee is entitled to continue to occupy the licensed premises until receipt of the entire security deposit amount less deductions. We need to look into the Clause 21 of the Agreement which provides for effects of termination/ expiration of the Agreement . Clause 21 has to be conjointly read to give meaning and effect to all clauses. Clause 21.1 contains undertaking of the licensee that vacant and peaceful occupation of the licensed premises be handed over within 30 days of pre-determination/ termination and during the said 30 days period, licensee shall be liable to pay the license fee in all other charges. Even if t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Appellant inter alia seeking a refund of the Security Deposit in compliance with the Impugned Order. A copy of the letter from the Respondent s advocate to the Appellant is annexed hereto and marked as Annexure A-31. 14. Admittedly, the monthly rent of the premises is Rs.28 Lakhs and odd. No amount has been paid towards the license fee after March, 2019 on the ground that security amount of Rs.82 lakhs and odd is payable by the Appellant. The Respondent is continuing in the premises occupying the same for last more than three years whereas the security lying with the Appellant at best is avail to cover the license fee for about three months only. The Appellant s case in the I.A filed before the Adjudicating Authority was that the occupation of the premises by Corporate Debtor is continuing, hence, the monthly license fee be treated as CIRP costs. The Adjudicating Authority has rejected the Application relying only on the submission of the Respondent that under Clause 21.3 till the security deposit is refunded, the Respondent is entitled to continue in possession. The Adjudicating Authority has committed error in ignoring Clauses 21.1 and 21.3. The licensor under the Agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Plan, the CIRP period has come to an end and after 21.06.2021 still the premises are in occupation of the monitoring professional. It is not the case of the Respondent that any amount towards the license or damages have been paid or determined. On a pointed query, Learned Counsel for the Respondent submitted that no amount towards any payment to the leave and license fees of the premises have been contemplated in the Resolution Plan. Thus, Resolution Plan does not deal with any entitlement to the Appellant. Resolution Plan having been approved with no provision for making any payment to the Appellant since the Resolution Professional never accepted the amount as CIRP costs which was also approved by the Adjudicating Authority on 18.03.2021 by the impugned order erroneously. We, thus, are of the view that no direction in this Appeal can be given for payment of leave and license fees to the Appellant during the CIRP period even though we are satisfied that the Appellant was entitled for determination that monthly fees payable to the Appellant under the Service Agreement should have been treated as part of the CIRP costs. We, thus, dispose of this Appeal with following dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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