TaxTMI 
TaxTMI 
2020 (10) TMI 331
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....herein after referred to as 'NAFED'), the Operational Creditor against Umarai Worldwide Private Limited, the 'Corporate Debtor'. 2. Briefly put, the facts relevant to the case are that NAFED/Operational Creditor and the Corporate Debtor entered into a Leave and Licence Agreement for the usage of cold storage facilities on 01.10.2015, for a period of three years. The Agreement provides for the payment of licence fee of Rs. 9,31,000/- payable on the 7th day of every calendar month with an increase of 10% in the monthly licence fee on or after the expiry of 12 months. As per Clause 1.14 of the said Agreement, in case of default in payment of any monthly licence fee, the Corporate Debtor would be liable to pay an interest @ 21% p.a. for the delayed period. It is stated by the First Respondent that the Corporate Debtor defaulted in the payment of monthly rentals from September 2017 onwards and an outstanding amount of Rs. 2,14,14,560/- is due and payable together with interest, electricity and water charges. It is the case of First Respondent/NAFED that the Corporate Debtor acknowledged and confirmed the 'outstanding debt' vide its letters dated 01.06.2017 and 26.02.2018, but despite s....
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....pportunity to be heard. She submitted that criminal proceedings were initiated against the Appellant due to which the Appellant was in custody at the time of initiation of Section 9 proceedings and though efforts were made to follow up with the matter, the case status on NCLT website displayed a single date and, therefore, it was not possible for the Appellant to have knowledge of the proceedings. She, further, submitted that it was only on 07.01.2020, that the Advocate who had filed the Reply to the Demand Notice, informed the Appellant that he had received notices informing about the proceedings but due to lack of instructions, did not enter appearance. 5. Learned Counsel appearing for the Appellant, further, contended that the alleged 'Debt in Default' as per Demand Notice is for the period September 2017 to October 2018, which is subsequent to the termination of the Agreement; that the 'Adjudicating Authority' relied on letters dated 01.06.2017 and 26.02.2018, which is with respect to two outstanding months prior to termination and pertains to a different time period and hence, cannot be construed as 'Debt in Default'; that letters dated 11.09.2017, in Reply to the termination....
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.... Nadia Healthcare Pvt. Ltd. [Company Appeal (AT) (Ins) No. 513 of 2018] and also in Jindal Steel and Power Pvt. Ltd. V/s. DCM International Ltd. [Company Appeal (AT) (Ins) 288 of 2017] and that the Hon'ble Apex Court in Mobilox Innovations Private Limited V/s. Kirusa Software Private Limited (2018) 1 SCC 353, noted that any consideration by way of rent, Leave and Licence, while letting out premises would fall within the ambit of Section 5(21) of the Code and, therefore, since, there is an existence of 'Debt and Default', there is no evidence of any 'Pre-Existing Dispute' and the sum is higher than the stipulated threshold for initiating 'CIRP process', the 'Adjudicating Authority' had rightly admitted the Application. 8. This Tribunal finds force in the submission made by the Learned Counsel for the Appellant, that the Appellant was in custody during that period and hence, the minimal delay of 9 days ought to be condoned. Keeping in view, that the said delay of 9 days falls within the 15 days period as per Section 61 (2) of the Code whereby and whereunder this Appellate Tribunal is endowed with the Judicial discretion to condone the delay, there being a sufficient cause in this re....
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....ment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) Right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured; Section 3(11): "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; Section 3(12): "default" means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not 1[paid] by the debtor or the corporate debtor, as the case may be; Section 5(20): "operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; Section 5(21): "operational debt" means a claim in respect of the provision of goods or services including employment or a debt in respect of the 1[payment] of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;" Whether the F....
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....hly rent on a three-year lease". Hence, the BLRC recommends the treatment of lessors/landlords as Operational Creditors. However, in the definition adopted by the Legislature only claims relating to 'Goods and Services' were included within the definition and purview of 'Operational Debt'. 17. The Hon'ble Supreme Court in Mobilox Innovations Private Limited V/s. Kirusa Software Private Limited (2018) 1 SCC 353 in Para 5.2.1 observed as hereunder; "5.2.1 Who can trigger IRP? Here, the code differentiates between financial creditors and operational creditors. Financial creditors are those whose relationship with the entity is a pure financial contract, such as a loan or a debt security. Operational creditors are those whose liability from the entity comes from a 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....
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....ncing, insurance, transport, processing, supply of electrical or other energy, telecom, boarding or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service;" 21. The provisions of the Central Goods and Services Tax Act 2017. Schedule - II of the Act lists down the activities that are to be treated as supply of goods or services, and paragraph 2 of the Schedule stipulates as follows; (a) any lease, tenancy, easement, licence to occupy land is a supply of services; (b) any lease or letting out of the building including a commercial, industrial or residential complex for business or commerce, either wholly or partly, is a supply of services." As the premises in the case on hand is leased out for 'Commercial Purpose', the cold storage owner/NAFED on collection is required to pay 'service tax' which is reflected in the tax invoices and 'Ledger Accounts' which is part of the record filed. 22. Therefore, keeping in view, the observations made by the Hon'ble Supreme Court in Para 5.2.1 of Mobilox (Supra), and having regard to....
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.... with you in detailed. As advised we have submitted our detailed payment proposal vide our letter dated 12th September 2018 with the request kindly extend the leave & licence agreement for further two years to your Mumbai branch. Further after not getting any confirmation from your local office we have reminded them vide our mail dated 18/09/2018. In the meantime undersigned tried to contact you. Several times but unable to contact. And whenever contacted simply I have been informed that you are not out of office. Now since as per existing agreement my last date is 30/09/2018. Therefore my submissions are as under:- 1. As discussed in your chamber without any invoice of your branch we have made payment of September 2017 for an amount of Rs. 11,06,028/- through RTGS UTR NO - CIUBH18255028436 dated 19/09/2018. 2. As stated from past one year we have not received any debit note from your branch hence in absence of debit note we are unable to pay the rent. 3. You are well aware that during the month of February nafed display a notice outside the cold storage (photo enclosed). Informing the traders not to keep their goods in cold storages. 4. Due to their notice, immediate....
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....djudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational 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" 29. Adverting to the facts of the case in hand, it is evi....