Tribunal reclassifies debt, orders repair of railway track, includes lease rentals as CIRP costs. No penalty for equipment storage.

The Tribunal upheld the reclassification of debt as 'operational debt' rather than 'financial debt'. It directed the Resolution Professional to reconsider the reduction of the admitted claim amount, repair the railway track for equipment transportation, and include lease rentals as CIRP costs until the equipment is ready for removal. Additionally, the Tribunal ordered no penalty for storing the equipment and allowed minor repairs for transportation.

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Issues Involved:
1. Reclassification of debt as 'financial debt'.
2. Admission of the claim amount of Rs. 66,58,01,020.16.
3. Return of scheduled equipment in working condition.
4. Inclusion of lease rental amount as CIRP costs.
5. Alternative relief if the equipment cannot be delivered.

Issue-wise Detailed Analysis:

1. Reclassification of Debt as 'Financial Debt':
The Applicant sought reclassification of the debt owed by the Corporate Debtor as 'financial debt'. The Tribunal had previously ruled in IA No. 115/2019 that the lease agreement did not have the attributes of a financial lease. Therefore, the Applicant's claim could not be considered as 'financial debt'. The Tribunal upheld this previous ruling, stating that the reclassification of the debt from Financial debt to Operational debt was correct and there was no specific finding regarding the classification of debt in the previous order.

2. Admission of the Claim Amount of Rs. 66,58,01,020.16:
The Applicant claimed an amount of Rs. 66,58,01,020.16, which included future rentals, residual value, and other dues. The Tribunal noted that the Resolution Professional (RP) had previously admitted Rs. 60,68,03,736.16 out of the claimed amount. However, the RP later reduced the admitted claim to Rs. 12,73,69,756/- based on the previous order. The Tribunal found this reduction to be unfair and directed the RP to reconsider the decision only to the extent of the differential amount, emphasizing that the reduction did not hold good in the eyes of the law.

3. Return of Scheduled Equipment in Working Condition:
The Applicant requested the return of the scheduled equipment in working condition. The Tribunal observed that the equipment was not in a workable condition and the railway track was damaged, preventing its transfer. The Tribunal directed the RP to repair the railway track for transportation of the equipment in 'as is' condition. Minor repairs for smooth transportation were allowed, with the cost of railway track repair to be borne by the Corporate Debtor and the cost of removal and transportation by the Applicant. The Tribunal also directed the RP not to charge any penalty for keeping the equipment in the premises of the Corporate Debtor, deeming the penalty exorbitant and arbitrary.

4. Inclusion of Lease Rental Amount as CIRP Costs:
The Applicant sought inclusion of lease rental amounts as CIRP costs. The Tribunal noted that the Applicant had shown willingness to remove the equipment but was unable to do so due to the disrepair of the railway track. The Tribunal directed the RP to include lease rentals as CIRP costs for the period from the initiation of CIRP on 29.08.2018 till the railway tracks are made ready for removal of the equipment.

5. Alternative Relief if the Equipment Cannot Be Delivered:
The Applicant requested that if the equipment could not be delivered, its current market value should be included as CIRP costs. The Tribunal did not explicitly address this alternative relief, focusing instead on ensuring the equipment's removal and the inclusion of lease rentals as CIRP costs.

Conclusion:
The Tribunal disposed of the application with the following key directives:
1. The RP must reconsider the differential amount of the claim and verify it from the Corporate Debtor's books.
2. The RP must repair the railway track for equipment transportation, with costs as specified.
3. No penalty should be charged for the equipment's storage.
4. Lease rentals should be included as CIRP costs until the equipment is ready for removal.

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