Tribunal Orders Payment of License Fee and GST with Interest

The Tribunal held that the respondents must pay the license fee to Applicant No.2 (Grove Limited) and allowed deduction of the security deposit with interest. The Tribunal directed the Resolution Applicant to make the payments within four weeks from the order date, totaling Rs. 85,66,666 for the license fee and Rs. 15,42,000 for GST. The Tribunal did not address other charges separately, found claims for proportionate fees and loans non-maintainable under the Resolution Plan, validated claims based on Income Tax Returns, and did not resolve the issue of preferential transactions. The order was issued on 4th December 2020.

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Issues Involved:
1. Payment of license fee during the Corporate Insolvency Resolution Process (CIRP).
2. Payment of GST on the license fee.
3. Payment of various charges during the CIRP period.
4. Proportion of license fee and outstanding loans at par with other creditors.
5. Release of corporate guarantees executed favoring the corporate debtor.
6. Validity and enforceability of claims based on Income Tax Returns (ITR).
7. Allegations of preferential transactions.

Issue-wise Detailed Analysis:

1. Payment of License Fee During CIRP:
The applicants sought the payment of license fees during the CIRP period as CIRP costs. The Tribunal referenced the Hon’ble NCLAT order, which allowed the inclusion of license fees in CIRP costs if the business was running on a "going concern basis" and restricted to the Income Tax Returns filed. The Tribunal found that the factory premises of Applicant No.1 (MIPL) were not used for CIRP as a "going concern," thus no license fee was payable to MIPL. However, for Applicant No.2 (Grove Limited), since the premises were used, the Tribunal directed the payment of the license fee amounting to Rs. 85,66,666.

2. Payment of GST on the License Fee:
The Tribunal directed the payment of GST at 18% on the license fee payable to Applicant No.2, amounting to Rs. 15,42,000.

3. Payment of Various Charges During CIRP Period:
The Tribunal did not specifically address the payment of power charges, water charges, and other maintenance charges separately. The primary focus was on the license fee and GST.

4. Proportion of License Fee and Outstanding Loans at Par with Other Creditors:
The claims for proportionate license fee and outstanding loans by the applicants were deemed frivolous and non-maintainable. The Tribunal upheld that such claims were either settled or extinguished under the Resolution Plan, as per the IB Code, 2016.

5. Release of Corporate Guarantees:
The Tribunal did not specifically address the release of corporate guarantees in its order. The focus remained on the payment of the license fee and GST.

6. Validity and Enforceability of Claims Based on Income Tax Returns (ITR):
The Tribunal noted that the applicants had filed their ITRs within the extended timelines due to the Covid-19 pandemic. Hence, the Tribunal rejected the respondents' contention that the applicants had not furnished ITRs prior to the NCLAT order. The Tribunal found that the applicants' claims based on the ITRs were valid.

7. Allegations of Preferential Transactions:
The Tribunal acknowledged the pending application under Section 43 of the IB Code, 2016, seeking a declaration that payments made to the applicants amounted to preferential transactions. However, this issue was not resolved within the scope of the present order.

Findings and Order:
The Tribunal concluded that the respondents were bound to pay the license fee to Applicant No.2 (Grove Limited) and allowed the deduction of the security deposit with interest from the payable amount. The Tribunal directed the Respondent No.3 (Resolution Applicant) to make the payments within four weeks from the date of the order.

Implementation:
The Tribunal ordered the implementation of the payment of Rs. 85,66,666 as the license fee and Rs. 15,42,000 as GST to Applicant No.2 within four weeks, allowing the adjustment of the security deposit with interest.

Date of Order:
4th December 2020.

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