2025 (9) TMI 1343 - AT - IBC

Tribunal upholds licensee eviction and unpaid occupancy charges; one-month termination notice valid, RP entitled to fees, appeal dismissed

NCLAT upheld the Adjudicating Authority's order directing the licensee to vacate premises and to pay unpaid licence/occupation charges. The tribunal held ... Termination of pre-CIRP leave and licence agreements by one-month notice - No prayer for payment of any amount towards lease rent in the application filed by RP - No proceedings have been initiated by RERA or any other authority asking the appellant to vacate, RP could not have terminated the Leave and license agreement. No prayer for payment of any amount towards lease rent in the application filed by RP - HELD THAT:- The present is the case where notice was issued for termination on 28.10.2024 and in which appellants were asked to vacate by 28.11.2024. Application was filed by the RP before the Adjudicating Authority in January 2025 and the order which was passed by Adjudicating Authority was on 13.08.2025. When the Adjudicating Authority was directing for vacation of the premises, the order for direction to pay the licence fee which remains unpaid for the period under which premises is under occupation that is till time of vacation, was a consequential relief which could have very well be granted by Adjudicating Authority, while directing for vacation. The judgment of the Supreme Court in Bharat Amratlal Kothari vs Dosukhan Samadkhan Sindhi & Ors. [2009 (11) TMI 942 - SUPREME COURT], relied by the appellant has held that relief which is not claimed shall not be granted in the case where granting of such relief would result in serious prejudice and deprive him of the valuable right under the statue. Present is the case, where the grant of relief is not depriving the appellant of any valuable rights under any statue. The premises were taken by appellant under lease and licence agreement for fixed amount for payment of monthly licence fee. When the licence was terminated by RP by notice dated 28.10.2024 and gave one-month time to vacate and the appellant having continuing in the occupation of premises, they are liable to pay occupation charges and unpaid amount of lease rent - there are no substance in the submission that direction by the Adjudicating Authority to pay licence fee for period which remains unpaid was unjustified. No proceedings have been initiated by RERA or any other authority asking the appellant to vacate, RP could not have terminated the Leave and license agreement - HELD THAT:- It is already noticed the statement in notice dated 28.10.2024 that sanction approval was received for commercial utilisation of ground, first and second floor of ‘Pulse Care’ and third and fourth floor was designated for car parking area and no commercial usage of third and fourth floor is permitted - RP having noticed aforesaid, did not commit any error in issuing notice to the appellant to vacate. In any view of the matter, clause 10 and 19 of the leave and licence entitled both the party to terminate the licence with one-month notice. Termination notice was issued with notice of one-month period which notice was in accordance with leave and licence agreement - there are no substance in the submission of the appellant that since no proceedings have been initiated by RERA. RP could not have issued the termination notice. The mere fact that appellant was ready to pay the licence fee for the period for which leave and licence agreement was granted cannot preclude the RP to exercise his right under clause 10 and 19 to terminate the Leave and licence agreement in appropriate case. The Adjudicating Authority did not commit any error in directing vacation of the appellant and the order passed by the Adjudicating Authority has to be upheld. Appellant although were granted one-month time in order dated 13.08.2025, but premises have not yet been vacated as submitted by the learned counsel for the RP. The order impugned dated 13.08.2025 passed in I.A. No. 852, 1404, 1100 of 2025 are upheld - appeal disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether the Resolution Professional (RP) was entitled to terminate pre-CIRP leave and licence agreements by one-month notice under the contractual clauses (cl.10 and cl.19) when sanctioned plans (per RERA) restricted commercial use of the relevant floors. 2. Whether the Adjudicating Authority (AA) / Tribunal had jurisdiction to direct vacation of premises notwithstanding submissions that proceedings under the sanctioning authority (RERA) had not been initiated and that statutory exclusion (Section 33 of Maharashtra Rent Control Act) precluded its jurisdiction. 3. Whether the AA could, in granting the relief of vacation, also direct payment of unpaid licence fees/occupation charges although no specific monetary relief was expressly claimed in the IA, in light of the principle that courts should not grant unclaimed reliefs to the prejudice of a party. 4. Whether readiness of licensees to pay licence fees and alleged indemnity in the licence deed precluded termination by the RP and forfeiture/adjustment of security deposit against outstanding occupation charges. ISSUE-WISE DETAILED ANALYSIS Issue 1 - RP's entitlement to terminate leave and licence agreements (clause 10 & clause 19) on grounds of sanctioned plan restricting commercial use Legal framework: Contractual freedom governs leave and licence relationships; parties may provide termination rights. Section 20(2)(b) IBC empowers RP to enter into, amend or modify contracts on behalf of corporate debtor during CIRP. Sanctioned plan/approved use by RERA informs validity/use of premises. Precedent treatment: No particular earlier precedent was applied or overruled on the point; reasoning treated contractual termination rights and RP's statutory powers under IBC as determinative. Interpretation and reasoning: The agreements contained express mutual right to terminate with one-month notice (cl.10) and provision concerning delivery of possession after termination (cl.19). The RP's notice relied on RERA sanctioned plans showing that the 3rd/4th floors were designated for parking and not commercial use; RP invoked clause 10 read with clause 19 and Section 20(2)(b) IBC to initiate termination. The Tribunal found the notice complied with contractual notice requirement and that RP did not err in issuing it even though RERA had not itself initiated proceedings; the RP's identification of a valid ground (sanctioned-plan inconsistency) justified termination in the circumstances of the CIRP. Ratio vs. Obiter: Ratio - contractual termination clauses properly exercised by RP where notice complied with the contract and where RP relied on regulatory sanctioned plan indicating impermissible commercial use; RP's power under Section 20(2)(b) supports such action in CIRP. Obiter - none of significance beyond applying the contractual clauses to factual matrix. Conclusion: RP validly terminated the licence agreements by issuing one-month notice relying on contractual clauses and sanctioned-plan inconsistency; termination was not impermissible merely because RERA had not commenced proceedings. Issue 2 - Jurisdiction of AA/Tribunal to direct vacation notwithstanding Section 33 Maharashtra Rent Control Act and absence of RERA action Legal framework: IBC confers jurisdiction on Adjudicating Authority to decide IA under Section 60(5) seeking directions in CIRP. Parties raised exclusionary jurisdiction argument invoking Section 33 of the Maharashtra Rent Control Act. Precedent treatment: The Tribunal addressed and rejected the plea that Section 33 MRCA ousted its jurisdiction; no precedent was followed or distinguished in detail in the text, but the AA's power under IBC was treated as operative. Interpretation and reasoning: The Tribunal observed that the submissions that AA's jurisdiction was excluded by MRCA were without substance in the facts. Given RP's contractual termination right and IBC powers to manage corporate debtor's assets and contracts during CIRP, the AA could grant relief of vacation. The lack of separate RERA proceedings did not preclude RP or AA from acting on the basis of sanctioned plans and contractual terms in the CIRP context. Ratio vs. Obiter: Ratio - AA/Tribunal may exercise jurisdiction to direct vacation of premises in CIRP despite parallel regulatory processes not having been initiated, where RP acts pursuant to contractual termination rights and IBC powers. Obiter - treatment of interaction between MRCA Section 33 and IBC was fact-specific and not a broad declaration. Conclusion: The Tribunal upheld AA jurisdiction to direct vacation; Section 33 MRCA did not preclude the AA from granting relief in these IAs. Issue 3 - Power to grant consequential monetary relief (payment of unpaid licence fees) though not expressly prayed for Legal framework: Courts may mould reliefs; however, established principle forbids granting unclaimed reliefs where doing so would cause serious prejudice (citing the tested principle from the cited precedent concerning reliefs not claimed). Precedent treatment: The Tribunal considered the Supreme Court dictum that reliefs not claimed should not be granted if they prejudice a party; but applied the principle contextually. Interpretation and reasoning: The IAs sought vacation and 'any order as deemed fit'. The Tribunal treated an order for payment of unpaid licence fees as a consequential relief flowing from an order directing vacation because the licensees continued in occupation after termination notice and were therefore liable for occupation charges. The Tribunal found no prejudice or deprivation of a valuable right; licensees had opportunity to contest and their own case showed RP received licence fees till September 2024. Hence the direction to pay unpaid licence fees was within the AA's remedial competence and not an impermissible grant of an unclaimed relief. Ratio vs. Obiter: Ratio - AA/Tribunal can grant consequential reliefs (such as payment of unpaid licence/occupation charges) when they are incidental to the primary relief (vacation) and do not deprive parties of statutory or other valuable rights; grant will not offend the principle against unclaimed reliefs where no prejudice results. Obiter - general scope of 'any order as deemed fit' is fact-sensitive. Conclusion: Direction to pay outstanding licence/occupation charges was a permissible consequential relief and not beyond the AA's jurisdiction despite lack of an express monetary prayer in the IA. Issue 4 - Effect of parties' readiness to pay licence fees and indemnity clause on termination and adjustment of security deposit Legal framework: Contractual termination clauses determine continuance; readiness to pay does not nullify a valid termination right. Security deposit may be adjusted against outstanding dues as contractual/relief consequence. Precedent treatment: No contrary authority was applied to negate contractual termination where exercised duly; the Tribunal relied on contractual interpretation. Interpretation and reasoning: The Tribunal held that willingness to pay licence fees for the unexpired contractual term could not prevent RP from exercising the termination right under cl.10/cl.19. The indemnity provision in the licence deed referred to mortgage with a lender and the licensor's promise to settle mortgage-related problems; it did not operate as an indemnity against termination lawfully effected under cl.10/cl.19. The Tribunal further allowed RP to adjust security deposits towards outstanding licence/occupation charges, directing payment of any balance by appellants. Ratio vs. Obiter: Ratio - a licensee's offer to continue payment does not preclude lawful termination where contractually permitted; indemnity clauses are construed in their expressed scope and do not prevent termination or enforcement of consequent monetary liabilities unless expressly so stated. Obiter - none beyond application to facts. Conclusion: Readiness to pay and the indemnity clause did not prevent termination; RP could adjust security deposits against outstanding dues and appellants remained liable for balance licence/occupation charges. Final Disposition (as concluded by the Tribunal) The Tribunal upheld the AA's orders directing vacation of premises and the concomitant directions regarding liability for unpaid licence/occupation charges; it permitted adjustment of security deposits against outstanding dues and granted appellants time until the specified date to vacate. Each party to bear their own costs.