Rental dues deemed IRP costs under Insolvency Code. Landlords awarded payment; rent to continue.

The Tribunal held that rental dues qualify as Insolvency Resolution Process (IRP) costs under the Insolvency and Bankruptcy Code. The Resolution Professional was directed to pay the landlords a specified sum and continue monthly rent payments during the Corporate Insolvency Resolution Process. The Tribunal emphasized the importance of complying with the Adjudicating Authority's order to maintain the Corporate Debtor as a going concern. The appeal was dismissed, affirming the Adjudicating Authority's decision and instructing prompt implementation of the order.

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Issues Involved:
1. Payment of rental dues by the Corporate Debtor during the CIRP period.
2. Applicability of Insolvency Resolution Process (IRP) costs to rental dues.
3. Compliance with the Adjudicating Authority's order.

Issue-wise Detailed Analysis:

1. Payment of Rental Dues by the Corporate Debtor During the CIRP Period:
The primary issue revolves around whether the Corporate Debtor is liable to pay the rental dues to the Respondents during the Corporate Insolvency Resolution Process (CIRP). The Appellant, who is the Resolution Professional, argued that the Corporate Debtor's revenues were severely impacted by the COVID-19 pandemic, leading to only partial payments towards rental dues. Despite these challenges, the Appellant managed to meet 100% of the rental payments from June 2021 onwards. Conversely, the Respondents, who are the landlords of the premises leased to the Corporate Debtor, contended that the non-payment of rents caused them significant monetary loss. They emphasized that the Corporate Debtor was obligated to pay the monthly rent as per the lease agreement dated 28.02.2011.

2. Applicability of Insolvency Resolution Process (IRP) Costs to Rental Dues:
The legal crux of the matter lies in whether the rental dues qualify as IRP costs under the Insolvency and Bankruptcy Code (IBC), 2016. The Respondents argued that the Appellant is duty-bound to pay the CIRP costs as per Section 5(13)(c) read with Regulation 31 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Tribunal concurred, stating that during the moratorium period, the lessor cannot recover the possession of the property from the Corporate Debtor. Consequently, the costs incurred by the Resolution Professional in running the business of the Corporate Debtor, including rental dues, must be treated as IRP costs. The Tribunal cited Regulation 31, which includes amounts due to a person whose rights are affected by the moratorium as IRP costs.

3. Compliance with the Adjudicating Authority's Order:
The Tribunal upheld the Adjudicating Authority's order dated 07.01.2022, which directed the Appellant to pay the Respondents a sum of Rs. 1,17,28,159/- within 14 days and to continue paying the monthly rent during the CIRP period. The Tribunal dismissed the Appellant's contention that complying with this order would lead to financial strain due to similar claims from other landlords. The Tribunal emphasized that the law mandates the payment of IRP costs to keep the Corporate Debtor as a going concern. Furthermore, the Tribunal directed the Appellant to implement the Adjudicating Authority's order within two weeks from the passing of this judgment, considering the appeal's pendency period.

Conclusion:
The Tribunal concluded that the rental dues qualify as IRP costs and must be paid by the Resolution Professional. The Adjudicating Authority's order was sustained, and the appeal was dismissed with a directive for compliance within two weeks. The Tribunal emphasized adherence to the IBC provisions and the principles of natural justice in its judgment.

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