Tribunal Orders Payment of Insolvency Resolution Costs and Monthly Rent

The Tribunal directed the 2nd Respondent to pay Rs. 1,17,28,159/- to the Applicants from the Insolvency Resolution Process cost within 14 days and to continue paying the monthly rent during the CIRP period. The prayer for recovery of possession was rejected.

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Issues Involved:

1. Payment of Lease Rental Dues
2. Recovery of Possession of Leased Premises
3. Timely Payment of Rent During CIRP
4. Classification of Rental Dues as CIRP Costs

Issue-Wise Detailed Analysis:

1. Payment of Lease Rental Dues:

The Applicant sought an order directing the 2nd Respondent to pay lease rental dues amounting to Rs. 1,36,66,667/- as of 01.06.2021. The Tribunal noted that the Corporate Debtor had entered into a lease deed with the Applicants, which was amended in 2017. Despite the initiation of the Corporate Insolvency Resolution Process (CIRP) on 03.10.2019, the 1st Respondent failed to make any rental payments to the Applicants, although the property was continuously used by the Corporate Debtor. The 1st Respondent proposed a payment plan in a letter dated 06.02.2021, which the Applicants accepted. However, the payments were not made as agreed. The Tribunal directed the 2nd Respondent to pay Rs. 1,17,28,159/- within 14 days from the date of the order from the Insolvency Resolution Process cost.

2. Recovery of Possession of Leased Premises:

The Applicants requested the Tribunal to direct the 2nd Respondent to hand over vacant possession of the leased premises upon the conclusion of the CIRP period. However, the Tribunal referred to Section 14(1)(d) of the Insolvency and Bankruptcy Code (IBC), 2016, which prohibits the recovery of possession of any property occupied by the Corporate Debtor during the moratorium period. Consequently, the Tribunal rejected this prayer.

3. Timely Payment of Rent During CIRP:

The Applicants sought an order directing the 2nd Respondent to make timely rent payments during the remainder of the CIRP period. The Tribunal emphasized that the Resolution Professional (RP) must pay charges incurred to keep the Corporate Debtor as a going concern, including rental dues. The Tribunal referenced the decision in Prerna Singh -Vs- Committee Of Creditors M/s Xalta Food and Beverages Pvt. Ltd., which held that rental dues should be included in CIRP costs. The Tribunal directed the 2nd Respondent to pay the monthly rent to the Applicants during the CIRP period until the Corporate Debtor vacates the premises.

4. Classification of Rental Dues as CIRP Costs:

The Tribunal referred to the definition of CIRP costs under Section 5(13) of the IBC and Regulation 31 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. It was noted that amounts due to a person whose rights are prejudicially affected due to the moratorium are included in CIRP costs. The Tribunal concluded that the rental dues of the Applicants fall under this category and must be paid as part of the CIRP costs.

Conclusion:

The Tribunal directed the 2nd Respondent to pay Rs. 1,17,28,159/- to the Applicants from the Insolvency Resolution Process cost within 14 days and to continue paying the monthly rent during the CIRP period. The prayer for recovery of possession was rejected. The application IA(IBC)/671(CHE)/2021 was disposed of with these directions.

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