License fees as 'Operational Debt' under Insolvency Code: Key ruling awaited

The Tribunal referred the matter to a Larger Bench to determine whether a claim for license fees for immovable property used commercially constitutes 'Operational Debt' under the Insolvency and Bankruptcy Code, 2016. Additionally, the Tribunal questioned whether the Appellant qualifies as an 'Operational Creditor' in a case involving a License Agreement for an Educational Institute. The conflicting judgments necessitated a definitive ruling on these issues.

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Issues Involved:
1. Whether the Appellant qualifies as an 'Operational Creditor' under the Insolvency and Bankruptcy Code, 2016.
2. Whether the claim arising from the License Agreement for immovable property constitutes an 'Operational Debt' under the Code.

Issue-wise Detailed Analysis:

1. Whether the Appellant qualifies as an 'Operational Creditor' under the Insolvency and Bankruptcy Code, 2016.

The Appellant filed an appeal against the judgment of the Adjudicating Authority (National Company Law Tribunal, Jaipur Bench) which rejected the Appellant's application under Section 9 of the Insolvency and Bankruptcy Code, 2016, holding that the Appellant is not an 'Operational Creditor'. The Appellant had entered into a 'Licence Agreement' with the Respondent for premises to run an Educational Establishment. The Respondent defaulted in paying the license fee, leading the Appellant to issue a Demand Notice under Section 8 of the Code and subsequently file an application under Section 9. The Adjudicating Authority rejected this application, stating that the Appellant does not fall under the category of 'Operational Creditor' as the claim did not arise from goods or services.

2. Whether the claim arising from the License Agreement for immovable property constitutes an 'Operational Debt' under the Code.

The Adjudicating Authority reasoned that the claim arising from the License Agreement does not fall under the category of goods or services, and therefore, the amount claimed is not an unpaid operational debt. The Tribunal examined the nature of the License Agreement dated 15th April 2017, which allowed the Respondent to use the premises for commercial purposes, specifically for running an Educational Institute. The Tribunal noted that the definition of 'Operational Debt' under Section 5(21) of the Code includes liabilities arising from transactions on operations. The Tribunal referenced the Hon'ble Supreme Court's judgment in "Mobilox Innovations (P) Ltd. Vs. Kirusa Software (P) Ltd." and the Bankruptcy Law Reforms Committee's report, which states that a lessor renting out space is considered an operational creditor.

The Tribunal also considered a previous judgment in "Anup Dubey Vs. National Agricultural Cooperative Marketing Federation of India Ltd. & Ors." where lease rentals for commercial purposes were deemed as 'Operational Debt'. However, there was a conflicting judgment in "Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan & Ors." where enhanced lease rent was not considered as 'Operational Debt'.

Given the conflicting opinions, the Tribunal decided that an authoritative pronouncement was necessary to resolve the issue. The matter was referred to the Hon'ble Chairperson for the constitution of a 'Larger Bench' to address the following questions:
i. Whether the judgment in "Mr. M. Ravindranath Reddy Vs. Mr. G. Kishan & Ors." lays down the correct law.
ii. Whether the claim of the Licensor for payment of License Fee for the use and occupation of Immovable Premises for commercial purposes is a claim of 'Operational Debt' within the meaning of Section 5(21) of the Code.

Conclusion:
The Tribunal highlighted the need for a Larger Bench to resolve the conflict regarding whether the claim for license fees for immovable property used for commercial purposes constitutes 'Operational Debt' and whether the Appellant qualifies as an 'Operational Creditor' under the Insolvency and Bankruptcy Code, 2016.

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