Lease-based claims are not operational debt under the Insolvency and Bankruptcy Code when the dispute is genuine and pre-existing.

Lease of immovable property, together with claims for future rent and lock-in period amounts, was treated as a damages-based claim rather than an operational debt under the Insolvency and Bankruptcy Code, 2016, because such leasing did not amount to supply of goods or rendering of services. The claim for unexpired period rentals was not an immediately enforceable debt until quantified by a competent forum. The record also showed a real pre-existing dispute, supported by arbitration proceedings and a counter-claim, so the dispute was not illusory. On these grounds, insolvency admission was not maintainable.

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Issues: (i) Whether lease of immovable property and the related claim for rent and future damages constituted an operational debt so as to make the applicant an operational creditor under the Insolvency and Bankruptcy Code, 2016; (ii) Whether the claim for unexpired lock-in period rentals was in substance a claim for damages and therefore not a debt capable of triggering insolvency; (iii) Whether the existence of a prior dispute barred admission of the application.

Issue (i): Whether lease of immovable property and the related claim for rent and future damages constituted an operational debt so as to make the applicant an operational creditor under the Insolvency and Bankruptcy Code, 2016.

Analysis: The Code treats operational debt as a claim arising from provision of goods or services, or from statutory dues payable to government or local authorities. The expression must be read in the context of the scheme of the Code, including the concept of default, debt, claim, and the limited role of operational creditors in insolvency resolution. A lease of immovable property was held not to answer the description of supply of goods or rendering of services for the purposes of operational debt, particularly where no pleaded factual basis showed a direct nexus with the output or operations of the corporate debtor.

Conclusion: The lease transaction did not give rise to an operational debt, and the applicant was not an operational creditor for this purpose.

Issue (ii): Whether the claim for unexpired lock-in period rentals was in substance a claim for damages and therefore not a debt capable of triggering insolvency.

Analysis: The bulk of the demand related to amounts claimed for the unexpired period after termination of the lease, which was essentially a claim for damages for breach of contract rather than an admitted amount presently due and payable. A claim for damages becomes a debt only when quantified by a competent adjudicatory forum. Until then, it remains a claim and not an enforceable debt for invocation of insolvency proceedings.

Conclusion: The claim for future rentals and lock-in period amounts was a damages claim and not a debt capable of sustaining the application.

Issue (iii): Whether the existence of a prior dispute barred admission of the application.

Analysis: The record disclosed a prior invocation of arbitration and a counter-claim by the corporate debtor, which showed that the dispute was real and not a sham. Applying the test of a plausible contention requiring further investigation, the dispute was neither patently feeble nor illusory.

Conclusion: A pre-existing dispute existed, and the application was not maintainable.

Final Conclusion: The application under the Insolvency and Bankruptcy Code, 2016 failed on maintainability because the underlying claim was neither an operational debt nor free from a genuine prior dispute, and dismissal followed.

Ratio Decidendi: A claim arising from lease of immovable property, particularly one substantially founded on future rent or damages for breach, does not constitute operational debt under the Insolvency and Bankruptcy Code, 2016, and where a real pre-existing dispute exists, insolvency proceedings under section 9 cannot be admitted.

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