2022 (3) TMI 1393 - AT - Insolvency and Bankruptcy

Tribunal seeks 'Larger Bench' review on classifying License Fee payment as 'Operational Debt' under Insolvency Law

The Tribunal has referred questions to a 'Larger Bench' to determine the correctness of the law laid down in a previous case regarding the classification ... Operational Debt or not - claim of the Licensor for payment of License Fee for use and occupation of Immovable Premises for commercial purposes - applicability of decision in the case of M. RAVINDRANATH REDDY VERSUS G. KISHAN [2020 (2) TMI 56 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] where it was held that The alleged debt on account of purported enhanced rent of leasehold property does not fall within the definition of the operational debt in terms of Section 5(21) of the Code. HELD THAT:- The questions framed in Referring Judgment dated 07th March, 2022 be placed for consideration before the 'Larger Bench'. Let the matter be placed before the Hon'ble Chairperson on the administrative side to constitute a 'Larger Bench' for considering the questions as framed in the Judgment dated 07th March, 2022. Issues:1. Interpretation of the law laid down in a specific judgment.2. Determination of whether a claim for payment of License Fee constitutes 'Operational Debt' under Section 5(21) of the Insolvency and Bankruptcy Code, 2016.Analysis:1. The judgment in question involves the consideration of two main issues. Firstly, it pertains to the interpretation of the law laid down in a previous case, specifically in the matter of 'Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan & Ors.' The Tribunal, comprising two Members Bench, has referred questions to a 'Larger Bench' to determine if the judgment in the mentioned case lays down the correct law. The Appellant argues that the facts of their case, involving a warm shell building and services, are distinct from the facts of the previous case, and the debt in question should be classified as 'operational debt' under Section 5(21) of the Code.2. The second issue concerns whether the claim of the Licensor for payment of License Fee for the use and occupation of Immovable Premises for commercial purposes falls under the definition of 'Operational Debt' as per Section 5(21) of the Insolvency and Bankruptcy Code, 2016. The Respondent points out that there are other judgments aligning with the view taken in the 'Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan & Ors.' case. The Tribunal, however, expresses doubts regarding the correctness of the law laid down in the said judgment and notes that the Supreme Court's judgment in 'Mobilox Innovations (P.) Ltd. Vs. Kirusa Software (P.) Ltd.' has not been considered.3. Considering the doubts raised by both the parties and the Tribunal itself regarding the correctness of the law in the judgment of 'Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan & Ors.,' the Tribunal decides to refer the questions framed in the Referring Judgment dated 07th March, 2022, to a 'Larger Bench' for further consideration. The matter is to be placed before the Hon'ble Chairperson to constitute a 'Larger Bench' to address the questions raised. The parties are granted permission to submit written submissions within two weeks, along with relevant judgments they wish to rely on for further clarification and consideration.