https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=772493 https://www.taxtmi.com/caselaws?id=772493 Liability to pay license fees to the Corporate Debtor despite alleged mutual agreements to adjust renovation expenses against such fees - jurisdiction of the Adjudicating Authority to adjudicate inter-se disputes between the parties - initiation of moratorium period and Respondent No. 1 could not have initiated any proceedings against the Appellant or terminated the LLA. There was no money payable i.e. License fee by the Appellant to the Corporate Debtor since it was agreed between the Appellant and the Corporate Debtor that the cost incurred by the Appellant would be settled against License fee - HELD THAT:- The license was to commence from 12.07.2022 (license commencement date) for the period upto five years. The LLA provided for a grace period i.e., fit out period to the Appellant of 60 days from the date of commencement, within which the Appellant was supposed to commence the business and pay the license fee as per the LLA - The Appellant's pleading is that since he incurred more than Rs.1 Crore to obtain such license, therefore he was not supposed to pay to the Corporate Debtor as per their mutual understanding. It is found that this pleading is not legally tenable in view of clause 5 of LLA. The Appellant was duty bound to pay the license fee after the fit out period of 60 days was over. There was no authorisation from the Corporate Debtor to the suspended director of the Corporate Debtor to issue such letters to the Appellant regarding issuance of such correspondence as per record made available and also that the letter do not bear the seal/stamp of the Corporate Debtor - The Adjudicating Authority has categorically recorded that the correspondence relied upon by the Appellant with the suspended board of directors is contrary to the terms and conditions of LLA. Appellant is that it is not within jurisdiction of the Adjudicating Authority to adjudicate inter-se disputes between the parties and for any remedy, the Respondent No. 1 was required to approach appropriate suitable judicial forum like the small cause court - HELD THAT:- The Respondent No. 1 is duty bound to act in accordance with code and according to which the liquidator is supposed to take over the assets of the Corporate Debtor in terms of section 25(2)(a) & (b) of the Code. We have already noted that the Respondent No. 1 gave due notice to the Appellant for termination of LLA after obtaining approval of the CoC since the Appellant failed to make payment as per notice by the Respondent No.1 - It is also noted that Respondent No 1 initiated the IA No. 5065 of 2023 before the Adjudicating Authority who passes the Impugned Order asking the Appellant to vacate the said property and to pay the necessary dues to the Respondent No.1. There are no merit in the argument of the Appellant that the Adjudicating Authority erred in passing the Impugned Order or it is only small cause court is competent to adjudicate such matters. The Impugned Order has been correctly passed by the Adjudicating Authority. As per Section 14 of the Code, the moratorium period started and the Respondent No. 1 could not have initiated any proceedings against the Appellant or terminated the LLA - HELD THAT:- It is an obligation as well as the right of the Resolution Professional to protect the interest of the Corporate Debtor and take necessary action including realising recoverable dues from third party like the Appellant on behalf of the Corporate Debtor as well as take legal action in accordance with law to take possession of property in given circumstances. In the present case the Appellant has not paid the license fee on certain assumptions - there are no merit in the contentions of the Appellant that during moratorium period the Respondent No. 1 could not have terminated the LLA. This Appellate Tribunal in the matter of Deepak Sakharam Kulkarni & Anr. vs. Manoj Kumar Agarwal, Resolution Professional of DS Kulkarni [2024 (9) TMI 1254 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI], has recognized the power of the Resolution Professional to terminate agreements, and observe that, while it is impermissible to deprive third parties of their rights solely on the basis of the initiation of insolvency proceedings, there is no prohibition on terminating agreements in accordance with the contractual terms during the CIRP or even thereafter. Thus, during moratorium the respondent could terminate the LLA and also was entitled to take legal action against the Appellant. Conclusion - i) The Appellant is liable to pay license fees as per the LLA, and the alleged mutual agreement to adjust renovation expenses is not binding or enforceable against the Corporate Debtor. ii) The Adjudicating Authority has jurisdiction to entertain and decide the Interim Application for possession and recovery of dues under the Code, and the Appellant's contention that only civil courts had jurisdiction was rejected. iii) The moratorium under Section 14 do not bar the Resolution Professional from terminating the LLA or initiating proceedings against the Appellant, as such actionsaere within the Resolution Professional's statutory authority acting on behalf of the Corporate Debtor. There are no error in the Impugned Order. The Appeal devoid of any merit stand rejected. Case-Laws IBC Wed, 28 May 2025 00:00:00 +0530