2019 (10) TMI 620

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.... M/s. All Digital Network India Limited (Respondent/Corporate Debtor), on the ground that the Corporate Debtor committed default of an amount of Rs. 41,53,754/- (Rupees Forty One Lakh Fifty Three Thousand Seven Hundred and Fifty Four only). 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows: (1) M/s. Parvath Industries (hereinafter referred as Petitioner/Operational Creditor) is a partnership firm. (2) M/s. All Digital Network India Limited (hereinafter referred as Respondent/Corporate Debtor) was incorporated on 18.12.2012 under the Companies Act, 1956 and is in the Business of Cable TV operations. Its Authorized Share Capital is Rs. 40,00,00,00....

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....nd thus it is liable to be rejected on account of delay. The lease agreement dated 13.02.2013 is valid for a period of three years and there is no further extension of lease period. (2) The Petition is liable to be dismissed as vague, baseless and contrary to the provisions of law and failed to comply with the provision of Section 8 of the IBC, 2016. (3) The Petitioner being Landlord of the Respondent cannot qualify as "Operational Creditor" under the IBC, 2016. The object of the Code was to provide a smooth mechanism for commercial entities to approach this Bench, seeking insolvency of a debtor to ensure ease of doing business. A landlord cannot be said to be an Operational Creditor within the fold of the Code. The Respon....

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.... The lease deed dated 13.02.2013 was executed between the Petitioner and the Respondent. The main terms and conditions of the lease agreement relevant to the case, are as follows: A. Rate of Rent: 1. The LESSOR has agreed to rent the schedule property to the LESSEE and the LESSEE has agreed to pay monthly rent of Rs. 1,40,000/- towards rent. 2. The LESSEE shall pay the monthly rent in advance, every month on or before 5th of calculated according to English Calendar subject to tax deductions at source. The lease period shall be as per the English calendar. B. Period of Lease: 1. Both the parties have agreed that the lease is for a period of Three (3) years. It is further agreed that during the sai....

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....ESSEE committing any breach of any of the terms of this agreement or any of the charges including the rent remaining outstanding for more than two (2) months then, in that event the LESSOR shall have the right of termination of this lease without any notice. 2. In the event of LESSEE being ordered to be wound up for any reasons by any Court direction or voluntary liquidation or receiver being appointed, this agreement shall stand terminated and the LESSOR shall be handed over vacant possession of the schedule premises. 3. Upon giving of three months prior notice in writing of its intention to terminate this agreement to the LESSOR by the LESSEE after the initial lock in period of 12 months. In case the LESSEE chooses to te....

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.... its grievance. Instead, the Petitioner chose to invoke the Code for recovery of the lease arrears of rent for the period from December, 2016 to February, 2018. As stated supra, the Petitioner failed to prove that the outstanding arrears of rent arise out of any extended legal Agreement. 9. It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software Private Limited (2018) 1 SCC 353 has inter alia, held that IBC, 2016 is not intended to be substitute to a recovery forum. 10. Therefore, we are of the considered opin....