Tribunal rules in favor of Appellant on CIRP costs and possession dispute

The Tribunal ruled in favor of the Appellant, holding that the monthly fees payable under the Service Agreements during the CIRP period should be treated as part of the CIRP costs. It was determined that the Leave and License Agreement was not terminated by the Notice dated 30.04.2019. The Respondent was not entitled to retain possession until the security deposit was refunded, and the Appellant was entitled to claim license fees for the period of occupation after 31.05.2019. The Tribunal set aside the previous order, directing the Respondent to hand over vacant possession within 15 days and allowing the Appellant to pursue their claim for license fees post the CIRP period.

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Issues Involved:
1. Whether the monthly fees payable to the Appellant under the Service Agreements during the CIRP period should be treated as part of the CIRP costs.
2. Whether the Leave and License Agreement was terminated by the Notice dated 30.04.2019.
3. Whether the Respondent is entitled to retain possession of the licensed premises until the security deposit is refunded.
4. Whether the Appellant is entitled to any payment with respect to license fees after 31.05.2019.

Issue-wise Detailed Analysis:

1. Treatment of Monthly Fees as CIRP Costs:
The Appellant contended that the Adjudicating Authority erred in rejecting the application to treat the license fee obligation of the Corporate Debtor during the CIRP period as CIRP costs. The Corporate Debtor was in use and occupation of the premises and never offered to handover the possession. The Appellant argued that the Corporate Debtor, being in possession of the premises, was liable to pay monthly license fees as CIRP costs. The Tribunal agreed that the occupation of the premises by the Corporate Debtor during the CIRP period should be treated as CIRP costs, as the Corporate Debtor continued to enjoy the premises and facilities.

2. Termination of Leave and License Agreement by Notice Dated 30.04.2019:
The Appellant argued that the Notice dated 30.04.2019 did not terminate the Leave and License Agreement but reserved the right to terminate it. The Tribunal noted that the Notice gave a cure period of 30 days and stated that the Appellant would have the right to terminate the Agreement if the amount was not paid within 30 days. The Tribunal concluded that the Notice did not expressly terminate the Agreement. The Tribunal also noted that the Respondent's initial claim was that the Corporate Debtor had terminated the Agreement, but later claimed that the Appellant had terminated it. The Tribunal found that the Agreement was not automatically terminated by the Notice dated 30.04.2019.

3. Entitlement to Retain Possession Until Security Deposit is Refunded:
The Respondent argued that under Clause 21.3 of the Agreement, they were entitled to retain possession of the licensed premises until the security deposit was refunded. The Tribunal examined Clauses 21.1, 21.2, and 21.3 of the Agreement and concluded that these clauses must be read conjointly. The Tribunal found that the initial burden of handing over vacant possession within 30 days of termination was on the licensee, and the licensor had 60 days thereafter to refund the security deposit. The Tribunal held that the Respondent had no right to continue in the premises on the ground that the security deposit had not been refunded without giving the licensor an opportunity to determine whether any security was refundable.

4. Entitlement to Payment of License Fees After 31.05.2019:
The Adjudicating Authority had held that the Appellant was not entitled to any payment with respect to license fees after 31.05.2019. The Tribunal disagreed, noting that the Respondent continued to occupy the premises and the Appellant was deprived of the use of the premises for a long period without any justifiable reason. The Tribunal found that the Respondent's interpretation of Clause 21.3 was erroneous and that the Appellant was entitled to claim license fees for the period of occupation. However, the Tribunal noted that the Resolution Plan approved by the Adjudicating Authority did not contemplate any payment to the Appellant for the leave and license fees of the premises.

Conclusion:
The Tribunal set aside the impugned order dated 18.03.2021 and directed the Respondent to hand over vacant possession of the premises within 15 days. The Tribunal also held that no monthly fees shall be payable to the Appellant during the CIRP period and that the Appellant is at liberty to take appropriate steps for its claim of license fees subsequent to 22.06.2021 (end of the CIRP period). The Appellant was directed to communicate within 30 days to the Respondent regarding the refund of the security deposit, if any, after possession of the premises is handed over. The parties were directed to bear their own costs.

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