Payment Of Lease Amount, Lease Rent And Premium Cannot Be Considered As CIRP Costs; Not Recoverable U/S 14 Of IBC: NCLAT New Delhi
Mohd Malik Chauhan
26 Oct 2024 2:00 PM IST
The NCLAT New Delhi Bench of Justices Rakesh Kumar Jain and Indevar Pandey held that the payment of lease amount, lease rent and premium arising during CIRP cannot be considered as CIRP costs. Therefore, they cannot be claimed in view of section 14 of the IBC which prohibits any recovery of the property of the corporate debtor during the CIRP. Brief Facts M/s Concord...
The NCLAT New Delhi Bench of Justices Rakesh Kumar Jain and Indevar Pandey held that the payment of lease amount, lease rent and premium arising during CIRP cannot be considered as CIRP costs. Therefore, they cannot be claimed in view of section 14 of the IBC which prohibits any recovery of the property of the corporate debtor during the CIRP.
Brief Facts
M/s Concord Infrastructure Pvt. Ltd. (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy Codebefore the Adjudicating Authority against M/s Shubhkamna Buildtech Pvt. Ltd. (Corporate Debtor) which was admitted on 26.11.2018.
After approval of the resolution plan by the CoC, the RP filed under Section 30(6) and 31 of the Code read with Regulation 39(4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (in short 'Regulations') for approval of the resolution plan.
During the pendency of the application filed by the RP, New Okhla Industrial Development Authority/Respondent No. 2 (objector no. 3) and Greater Noida Industrial Development Authority/Respondent No. 3 (GNIDA) (objector no. 4) raised following objections, noticed in the impugned order.
By the impugned order, outstanding lease rental and premium due from the date of CIRP commencement that is 26.11.2018 till the approval of the resolution plan i.e. 12.09.2022 has been ordered to be included in the CIRP costs and both the authorities have been directed to submit the details of the lease rentals and premium within a period of 15 days of the impugned order to the RP.
Contentions
The appellant submitted that the resolution plan approved by the CoC cannot be tinkered with by the AA for the purpose of alteration and modification in the resolution plan and in this regard, reliance has been placed upon a decision of this Court in the case of Mathuraprasad C Pandey Vs. Partiv Parikh (2021).
It was further submitted that the plan already includes the CIRP cost as ratified by the CoC which is to be paid in priority to other creditors as per Clause 8.3, Chapter VIII of the resolution plan.
Per contra, the respondents submitted that a conjoint reading of Section 5(13) of the Code and Regulation 31 of the Regulations makes it clear that the Tribunal is bound to provide lease rentals and lease premium which become due during the CIRP period and the same has to form part of the CIRP costs.
It was further contended that since the right of Respondent No. 2 to cancel the lease during the moratorium period is prejudicially effected and their due amount is not granted in their favour as CIRP costs then they can terminate the lease as per explanation to Section 14(1)(d) of the Code.
NCLAT's Analysis
The tribunal agreed with the contention of the appellant and referred to the NCLAT judgment in Mathuraprasad C Pandey & Ors. Vs. Partiv Parikh RP (2021) wherein it was held that on examination of the aforesaid provisions there is no doubt that if a resolution plan is submitted before the Adjudicating Authority which is in compliance with subsection (1) of Section 31 as well as in consonance with the provisions of Section 30 of the Code such resolution plan has to be approved by the Adjudicating Authority.
The NCLAT in the above case further observed that it is clear that mandate of legislation is either to approve the resolution plan or to reject. However, there is no provision for making alteration or modification in the resolution plan.
The tribunal further referred to its own judgment in Sunil Kumar Agrawal Vs. New Okhla Industrial Development Authority (2022) wherein in the similar circumstances, it was held that explanation to section 14(1)(d) of the IBC is not applicable because the premium amount or lease rent is not part of Section 14(1)(d) which cannot be read as similar grant or right which has to be in respect of the license, permit, registration, quota, concession, clearance etc. but not with premium amount or lease rent.
Based on the above, the tribunal concluded that the order passed in the case of Sunil Kumar Agarwal (Supra) applies to this case also even though the said decision has been challenged by the Noida before the Hon'ble Supreme Court in which notice has been issued but stay has not been granted.
In such circumstances, we cannot but have to maintain the same order that has been passed in the case of Sunil Kumar Agrawal (Supra) till a decision about its correctness is taken by the Hon'ble Supreme Court.
In view of the aforesaid observations, the present appeal was allowed and the impugned order was set aside.
Case Title: Sunil Kumar Agarwal & Anr v. Anand Sonbhadra Resolution Professional of Shubhkamna Buildtech Pvt. Ltd. & Ors
Case Reference: Comp. App. (AT) (Ins) No. 1351 of 2022 & I.A. No. 4196, 4197, 4666, 4731 of 2022 & 1500 of 2023
Judgment Date: 25/10/2024
