2018 (6) TMI 973 - AT - Insolvency and Bankruptcy

Appeal Dismissed: Sub-Tenant Payments Not Creditor-Debtor

Rahul Gupta Versus Mahesh Madhavan And M/s. Black N. Green Mobile Solutions Pvt. Ltd.

Rahul Gupta Versus Mahesh Madhavan And M/s. Black N. Green Mobile Solutions Pvt. Ltd. - TMI Issues:1. Maintainability of appeal under Section 9 of the Insolvency and Bankruptcy Code against a sub-tenant.2. Whether a sub-tenant can be treated as a Corporate Debtor of the owner of the premises.3. Interpretation of lease agreements and their implications on insolvency proceedings.Issue 1:The appellant contended that the appeal under Section 9 of the Insolvency and Bankruptcy Code was not maintainable against the second respondent, who was not the lessee or tenant of the Operational Creditor. The main plea was based on the lack of direct agreement between the Operational Creditor and the Corporate Debtor.Issue 2:The question raised was whether a sub-tenant could be considered a Corporate Debtor of the owner of the premises. The Tribunal analyzed the lease agreements to determine the legal relationship between the parties involved, emphasizing that the sub-tenant's occupation did not establish a direct liability towards the Operational Creditor.Issue 3:The Tribunal scrutinized the lease agreements executed between the parties to ascertain the obligations and liabilities under the agreements. It was highlighted that the sub-tenant's payment directly to the Operational Creditor did not establish a creditor-debtor relationship between the Operational Creditor and the Corporate Debtor.The Tribunal found that the Operational Creditor had not entered into any agreement with the Corporate Debtor directly. The separate lease agreement between the original lessors and the Corporate Debtor indicated that the sub-tenant's payments to the Operational Creditor did not create a creditor-debtor relationship between them. Consequently, the Tribunal set aside the impugned order, declaring the application under Section 9 of the I&B Code as not maintainable.In conclusion, all orders related to the appointment of a Resolution Professional, declaration of moratorium, freezing of accounts, and other actions were deemed illegal and set aside. The Corporate Debtor was released from the insolvency proceedings, allowing it to function independently. The Tribunal directed the Adjudicating Authority to determine the fees of the Resolution Professional, to be borne by the Corporate Debtor, with no order as to costs in the appeal.