2022 (10) TMI 434 - AT - Insolvency and Bankruptcy

Appeal allows rent liability post-CIRP only. RP not liable for entire rent. Adverse observations stand.

VISHAL GHISULAL JAIN Versus AMAR UNIVERSAL PVT. LTD.

The appeal was allowed to the extent of setting aside the order directing the Resolution Professional (RP) to pay the entire rent amount. The Tribunal ... Validity of order of NCLT - seeking expunging the observations made against the RP - Seeking extension of claim amount - alleged non-compliance of the order - HELD THAT:- As a matter of fact, when the contempt petition was filed by the Respondent for the non-compliance of the direction it contained in the order dated 16.10.2019, the Adjudicating Authority vide its order dated 11.11.2019 directed the Appellant to appear personally on 13.11.2019. The Adjudicating Authority has observed that the Appellant was found by the staff of the court sitting outside the court room but he refused to appear when he was asked for it and when the court was about to rise after passing the remarks about which the prayer has been made for expunction, the Appellant appeared and prayed for recall of the order. All these observations were made either in the presence or with the knowledge of the Appellant but at no point of time any application was made by the Appellant before the Adjudicating Authority to expunge those remarks and has now challenged the order dated 13.11.2019 on the ground that he could not appear before the Adjudicating Authority because he was having injury on his hand - If a party thinks that the happenings in court have been wrongly recorded in a judgment, it is incumbent upon the party, while the matter is still fresh in the minds of the judges, to call attention of the very judges who have made the record to the fact that the statement made with regard to his conduct was a statement that had been made in error. That is the only way to have the record corrected. If no such step is taken, the matter must necessarily end there. The present appeal is allowed only to the extent of setting aside the order dated 18.12.2019 by which the Adjudicating Authority has directed that “in view of the same we hereby clarify that the RP shall make the payment of entire amount due with regard to the rent after deducting any amount like GST etc. as per law” - Petition disposed off. Issues Involved:1. Challenge to orders dated 13.11.2019, 25.11.2019, and 18.12.2019 by the Adjudicating Authority.2. Expunging of adverse observations made against the Resolution Professional (RP).3. Compliance with the order dated 16.10.2019 regarding payment of rent and handing over possession.4. Contempt proceedings against the RP for non-compliance.5. Clarification on payment of rent for the period post-Corporate Insolvency Resolution Process (CIRP).Detailed Analysis:1. Challenge to Orders Dated 13.11.2019, 25.11.2019, and 18.12.2019:The RP of the Corporate Debtor challenged the orders dated 13.11.2019, 25.11.2019, and 18.12.2019 passed by the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench). The appeal was based on the contention that the Adjudicating Authority had committed errors in directing the RP to pay the entire amount of rent and hand over possession of the premises. The RP argued that the Tribunal had earlier directed the payment of rent only for the period after the initiation of the CIRP.2. Expunging of Adverse Observations Against the RP:The RP sought to expunge certain adverse observations made against him in the orders. Specifically, the RP objected to remarks about his 'impertinent, carelessness indifferent attitude' and allegations of having 'his own personal interest in the whole episode.' The RP argued that these observations were harsh and unwarranted, given his compliance with the law and the fact that he was unwell at the time of the hearing.3. Compliance with the Order Dated 16.10.2019:The Adjudicating Authority had directed the RP to hand over possession of the premises and pay the claim amount within a week. The RP delayed compliance, leading to further orders and contempt proceedings. The RP eventually complied by handing over possession and submitting a compliance report. However, the RP contested the requirement to pay the entire amount of rent, arguing that only the rent for the post-CIRP period was payable.4. Contempt Proceedings Against the RP:The Respondent filed a contempt petition for non-compliance with the order dated 16.10.2019. The Adjudicating Authority noted the RP's refusal to appear in court and his delay in complying with the order. The Authority made strong observations about the RP's conduct, which were later challenged by the RP. The Tribunal emphasized that the RP, as an officer of the court, was expected to assist in achieving the objectives of the Insolvency and Bankruptcy Code (IBC).5. Clarification on Payment of Rent for the Post-CIRP Period:The Tribunal clarified that the RP was required to pay only the rent for the period after the initiation of the CIRP. The earlier direction to pay the entire amount of rent was modified to align with the Tribunal's order dated 20.11.2019. The Tribunal cited the case of Damodar Valley Corporation Vs. Karthik Alloys Limited, which held that past dues prior to the initiation of CIRP should be considered by the Committee of Creditors (CoC) and settled according to the resolution plan.Conclusion:The appeal was allowed to the extent of setting aside the order dated 18.12.2019, which directed the RP to pay the entire amount of rent. The Tribunal reiterated that the RP was only liable for rent during the post-CIRP period. The adverse observations against the RP were not expunged, as the Tribunal found no merit in the RP's contention. The appeal was disposed of with these observations.