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        Insolvency and Bankruptcy

        2021 (1) TMI 1208 - Tri - Insolvency and Bankruptcy

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        Tribunal orders cooperation in vacating premises, refund of deposit, and classification of dues as 'Operational Debt'. The Tribunal partially allowed the application, directing the Respondents to cooperate with the RP in vacating the premises, refund the Security Deposit, ...
                      Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.

                          Tribunal orders cooperation in vacating premises, refund of deposit, and classification of dues as 'Operational Debt'.

                          The Tribunal partially allowed the application, directing the Respondents to cooperate with the RP in vacating the premises, refund the Security Deposit, and file their claim for unpaid rent and maintenance charges. The Tribunal declared the termination of the Lease Deed and Maintenance Agreement effective from 15.09.2020 and emphasized that the dues under the lease agreement are classified as 'Operational Debt'.




                          Issues Involved:
                          1. Termination of Lease Deed and Maintenance Agreement.
                          2. Access to and removal of Corporate Debtor's assets.
                          3. Calculation and waiver of rent and maintenance charges during the COVID-19 lockdown period.
                          4. Classification of dues under the lease agreement as 'Operational Debt'.
                          5. Adjustment of Security Deposit against outstanding dues.
                          6. Directions for cooperation from Respondents and local authorities.

                          Detailed Analysis:

                          1. Termination of Lease Deed and Maintenance Agreement:
                          The applicant, as the Resolution Professional (RP) of the Corporate Debtor, issued a Termination Notice on 13.02.2020 to terminate the Lease Deed and Maintenance Agreement. The Respondents acknowledged the termination notice and agreed that the Lease Deed would expire on 12.05.2020. However, due to the COVID-19 lockdown, the premises could not be vacated by the specified date. The Tribunal declared that the Lease Deed and Maintenance Agreement are terminated with effect from 15.09.2020, not excluding the lockdown period from 25.03.2020 to 28.07.2020.

                          2. Access to and Removal of Corporate Debtor's Assets:
                          The Respondents repeatedly prevented the Applicant from accessing and removing the assets and records of the Corporate Debtor from the office premises. The Tribunal found this action by the Respondents to be incorrect and contrary to the provisions of the Insolvency and Bankruptcy Code, which empowers the RP to take possession of all the assets of the Corporate Debtor. The Tribunal directed the Respondents to allow the RP to vacate the premises within 30 days and permitted the RP to seek assistance from local police if needed.

                          3. Calculation and Waiver of Rent and Maintenance Charges During the COVID-19 Lockdown Period:
                          The applicant sought a waiver of rent and maintenance charges for the lockdown period. The Tribunal referred to judgments from the Supreme Court and the High Court of Delhi, which held that payment of rent depends on a contractual arrangement and that courts cannot waive such amounts. The Tribunal declared that the premises were in possession of the RP/Corporate Debtor during the lockdown period, and thus, the Respondents are entitled to be paid rent and maintenance charges for that period. The Respondents were directed to file their claim before the RP for the unpaid rent from 25.03.2020 to 28.07.2020.

                          4. Classification of Dues Under the Lease Agreement as 'Operational Debt':
                          The Tribunal examined whether the lease dues fall under the term 'Operational Debt' as defined under Section 5(21) of the Code. The Tribunal relied on judgments from the National Company Law Appellate Tribunal and the Supreme Court, which held that dues arising from lease agreements are considered 'Operational Debt'. The Tribunal concluded that the amount due and payable to the Respondents is 'Operational Debt' and directed the Respondents to file their claim before the RP for verification and determination.

                          5. Adjustment of Security Deposit Against Outstanding Dues:
                          The Respondents claimed that they had appropriated the Security Deposit towards outstanding dues. However, the Tribunal found that the Respondents had not claimed any credit for the Security Deposit in their Claim Forms filed with the Applicant. The Tribunal directed the Respondents to refund the Security Deposit within 30 days but allowed them to file a claim for the rent during the lockdown period.

                          6. Directions for Cooperation from Respondents and Local Authorities:
                          The applicant sought directions for the Respondents to cooperate and not restrain the Company and the Applicant from accessing, dealing with, and relocating the assets and records of the Company. The Tribunal directed the Respondents to cooperate and allow the RP to vacate the premises within 30 days. The Tribunal also directed the local police to render assistance to the RP if needed.

                          Conclusion:
                          The Tribunal partially allowed the application, directing the Respondents to cooperate with the RP in vacating the premises, refund the Security Deposit, and file their claim for unpaid rent and maintenance charges. The Tribunal declared the termination of the Lease Deed and Maintenance Agreement effective from 15.09.2020 and emphasized that the dues under the lease agreement are classified as 'Operational Debt'.
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                          ActsIncome Tax
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