Tribunal upholds Resolution Plan in insolvency case, directs premises vacation & return of security deposit

The Tribunal upheld the approval of the Resolution Plan submitted by Sify Technologies Limited in the Corporate Insolvency Resolution Process of the Corporate Debtor. It found that the termination of the Leave and Licence Agreement was permissible under the agreement's clause, allowing termination with notice. The Appellant was directed to vacate the premises within two months, paying outstanding charges, while the Successful Resolution Applicant was instructed to return the security deposit per the lease agreement. No costs were awarded in the matter.

---

---

Issues Involved:
1. Approval of the Resolution Plan.
2. Termination of the Leave and Licence Agreement.
3. Alleged contravention of Section 30(2)(e) of the Insolvency and Bankruptcy Code (IBC).
4. Alleged contravention of Section 62 of the Indian Contract Act, 1872.
5. Delay or laches in approaching the NCLT.
6. Commercial wisdom of the Committee of Creditors (CoC).
7. Provisions of the Indian Easements Act, 1882.
8. Implementation of the Resolution Plan.

Issue-wise Detailed Analysis:

1. Approval of the Resolution Plan:
The Adjudicating Authority approved the Resolution Plan submitted by Sify Technologies Limited (Respondent No. 3) in the Corporate Insolvency Resolution Process (CIRP) of Respondent No. 1-Corporate Debtor. The Appellant challenged this approval, arguing that the order affected its rights under the Leave and Licence Agreement without notice or opportunity of hearing.

2. Termination of the Leave and Licence Agreement:
The Appellant held a Leave and Licence Agreement with Respondent No. 1 for a period of five years, which included a lock-in period. The Appellant argued that there was no material breach of contract to justify termination. The Respondent No. 3, after taking over management, asked the Appellant to vacate the premises, which led to the appeal.

3. Alleged Contravention of Section 30(2)(e) of the IBC:
The Appellant claimed that the Impugned Order allowed unilateral termination of the Licence Agreement, contravening Section 30(2)(e) of the IBC, which requires the Resolution Plan to comply with the law. The Appellant argued that the RP and the Adjudicating Authority failed in their duty to ensure compliance.

4. Alleged Contravention of Section 62 of the Indian Contract Act, 1872:
The Appellant argued that the Impugned Order contravened Section 62 of the Indian Contract Act, 1872, which states that novation, rescission, or alteration of a contract requires the permission of all parties and cannot be done unilaterally.

5. Delay or Laches in Approaching the NCLT:
The Appellant denied any delay or laches, arguing that the cause of action arose only after the termination notice dated 26.4.2021. The Respondent No. 2 argued that the Appellant was aware of the Resolution Plan's approval and should have approached the NCLT earlier.

6. Commercial Wisdom of the Committee of Creditors (CoC):
Respondent No. 2 argued that the commercial wisdom of the CoC, which approved the Resolution Plan with 70.05% votes, is not open to judicial review. The Appellant's challenge to the Resolution Plan was thus not justified.

7. Provisions of the Indian Easements Act, 1882:
Respondent No. 2 referred to Sections 59, 62(a), and 62(i) of the Indian Easements Act, 1882, arguing that the guarantor's transferee is not bound by the licence agreement, and the licence is deemed revoked when the guarantor ceases to have any interest in the property.

8. Implementation of the Resolution Plan:
Respondent No. 3 (Sify Technologies Ltd.) argued that it had taken over management and invested substantial capital in the premises. The termination of the Licence Agreement was necessary for implementing the Resolution Plan, which was approved by the CoC and the Adjudicating Authority.

Judgment:
The Tribunal found that the unilateral termination of the Licence Agreement by the Successful Resolution Applicant (Sify Technologies Ltd.) was in accordance with clause 12(a) of the agreement, which allows termination with six months' notice. The Appellant was aware of the Resolution Plan and continued to occupy the premises while paying the licence fee. The appeal was disposed of with directions for the Appellant to vacate the premises within two months, paying the licence fee, water, and electricity charges until then. The Successful Resolution Applicant was directed to return the security deposit as per the lease agreement. There was no order as to costs.

---