TaxTMI 
TaxTMI 
2019 (3) TMI 1655
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....lt is stated as Rs.1,88,64,345/-, as on 01.06.2017 (exclusive of interest @ 18% p.a. till the date of realisation). The date of default is stated to be 10.12.2016. A) Background of the Case : 3. The Corporate Debtor entered into a Leave and License Agreement dated 14.11.2013 with the Operational creditor to take on Lease the premises admeasuring 13944.36 sq. ft. of chargeable area being Unit No. 1601 in Tower-3 of the Indiabulls Finance Centre together with exclusive right to use 15 car parking spaces. The said agreement provided as under: i. The term of the license was for 60 months commencing from 01.12.2012 to 30.11.2017. ii. The entire license period of 60 months was 'lock-in' for both the parties during which neither party can terminate the agreement except on case of default by the other party. iii. Charges for car parking spaces, license fees and maintenance charges were also levied in the agreement. The Corporate Debtor has paid an interest free security deposit of Rs.1,01,91,496/- to the Operational Creditor. 4. The Corporate Debtor had sent a notice dated 30.11.2016 for termination of the agreement under clause 15.4 (a) of the agreem....
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....t removed until October-November, 2017. 8. The Operational Creditor further submits that the Corporate Debtor stopped the business operations in the licensed premises somewhere in February, 2017 and around the month of May-June 2017, the Corporate Debtor vacated the premises without any prior notice and without paying any outstanding License Fees and other charges for the unexpired lock in period. 9. The Operational Creditor issued a Demand Notice U/s 8 of the code on 15.06.2017, to which the Corporate Debtor replied vide letter dated 30.06.2017 raising certain 'disputes' and allegations against the Operational Creditor. 10. The Operational Creditor has drawn the attention of this Bench towards the certain provisions of the Agreement which are relevant in deciding the present case in hand: i. Clause 5.5 of the Agreement deals with the provision of SECURITY DEPOSIT. It says: "the licensee on or before execution hereof, have deposited with the licensor as and by way of interest free refundable security deposit an amount of INR 92,03,278/- equivalent to 6 Months license fee (security deposit) for the due fulfilment and observance by the licensee's of the terms, co....
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.... of the party effected ("Force Majeure"). ( high lighted in the order ) 11. It is thus argued that , on a conjoint reading of the above provisions, it can be inferred that the Agreement entered into binds the Corporate Debtor to stay in the leased premises for a period of 5 years, and in case the Corporate Debtor choses to vacate the said premises before the expiry of lock in period, the Security Deposit of the Corporate Debtor shall be forfeited by the Operational Creditor and the Corporate Debtor is under an obligation to pay the License fee for the unexpired lock in period after adjusting the amount of security deposit forfeited. 12. It is finally argued that since the Debtor is not making the payment and all the procedural formalities have been complied with, this Petition/Application may be Admitted for the initiation of the CIRP. C) Contentions of the Corporate Debtor: 13. The Corporate Debtor has not filed an affidavit in Reply to this petition, instead, the Written submissions of the Corporate Debtor are on record. Certain objections have been raised by the Corporate Debtor, first being the maintainability of this petition before this T....
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....erational creditor has suppressed certain material facts and documents from this Tribunal. One being when the Corporate Debtor tried to handover a peaceful and vacant possession of the licensed premises to the Operational Creditor, the Operational Creditor refused to take the same. Moreover, the Petitioner had disconnected the air conditioning units from December, 2016 onwards. Power supply was disconnected in the said premises. The premises were vacated, however, the personnel of the Operational Creditor in the said premises did not allow the Corporate Debtor to withdraw their movables/belongings on 14.09.2017. 18. It is argued that due to disconnection of electricity, the Corporate Debtor had to suffer business losses as many of its group companies were operating from the licensed premises. Therefore, the Corporate Debtor is entitled to damages as a counter claim to the said claim of license fee and other charges. D) Rejoinder by the Operational Creditor: 19. The Operational Creditor in its rejoinder submits that this petition perfectly stands the test of maintainability due to the fact that the two clear requirements of Section 41 of Presidency Small Caus....
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....l disputed by the such company, can at all constitute a valid defence to a petition seeking winding up of the company. Normally, in a petition seeking winding up on the ground of inability to pay debts, the dispute is with regard to the very liability for the payment of such debt. The question which normally arises is whether such dispute, to the very existence of the debt or the liability to pay the debt, is bona fide and one of substance. In this case, as we have noted earlier, there is no dispute whatsoever with regard to the debt of Rs. 90.90 crores which is due and payable by the company to the petitioning creditor. However, even if we were to proceed on the basis that the institution of a suit for damages against the petitioning creditor, in a given case, constitutes valid defence, it is necessary for the company to further establish that such defence is bona fide, one of substance, likely to succeed in point of law and finally backed by prima facie proof of the facts upon which such defence depends. In the present case, we agree with the learned Company Judge that none of these matters have been established by the company and therefore, there is really no warrant to interfer....
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....eal (AT) (Insolvency) No. 288 of 2017]. Furthermore, a similar view was taken by the legislature while framing this Code as given in the Report of the Bankruptcy Law Reforms Committee: "...the Code differentiates between financial creditors and operational creditors... Financial creditors are those whose relationship with the entity is pure financial contract, such as a loan or a debt security. Operational creditors are those whose liability from the entity comes from transaction on operations. Thus, the wholesale vendor of spare parts whose spark plugs are kept in inventory by the car mechanic and who gets paid only after the spark plugs are sold is an operational creditor. Similarly, the lessor that the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-year lease. The Code also provides for cases where a creditor has both a solely financial transaction as well as an operational transaction with the entity. In such a case, the creditor can be considered a financial creditor to the extent of the financial debt and an operational creditor to the extent of the operational debt..." 25. Therefore, not an iota of doubt can be rai....
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....perational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application". In the present case, though the Corporate Debtor raised a dispute at the time when the demand notice was sent. But there was no 'pre-existing dispute' and the same never arose w....
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.... it was observed that :- "19. It is true that the expression "initiation" contained in the marginal note to Section 9 does indicate the drift of the provision, but from such drift, to build an argument that the expression "initiation" would lead to the conclusion that Section 9(3) contains mandatory conditions precedent before which the Code can be triggered is a long shot. Equally, the expression "shall" in Section 9(3) does not take us much further when it is clear that Section 9(3)(c) becomes impossible of compliance in cases like the present. It would amount to a situation wherein serious general inconvenience would be caused to innocent persons, such as the appellant, without very much furthering the object of the Act, as has been held in the State of Haryana v. Raghubir Dayal (1995) 1 SCC 133 at paragraph 5 and obviously, therefore, Section 9(3)(c) would have to be construed as being directory in nature. 20. Even otherwise, the important condition precedent is an occurrence of a default, which can be proved, as has been stated hereinabove, by means of other documentary evidence. Take for example the case of an earlier letter written by the corporate de....
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....d, correspondingly, to drive the licensor to a protracted civil proceeding in which it needs prove nothing is clearly unjust. A defence that attempts this is not one that is bona fide or substantial. Defences of this stripe evidence commercial and corporate perfidy; they can never be allowed to constitute a bona fide or substantial defence." 32. In view of above, this petition deserves 'Admission'. The Operational Creditor has not received the outstanding Debt from the Debtor keeping in view the agreement and the relevant clauses therein. It is clear that there was a lock in period, which had to be complied with by the Corporate Debtor, failure to which would lead to the Corporate Debtor to pay outstanding license fee after adjusting the security deposit. The formalities as prescribed under the Code have been completed by the Operational Creditor. In my conscientious view this Petition deserves 'Admission' specially when the Debtor is accepting its default. 33. The Operational Creditor has proposed the name of Interim Resolution Professional. Consequentially, this Bench hereby appoints Mr. Ashish Singh, having registration no. as IBBI/IPA-002/IP-N00416/2017-18/11230, havi....