TaxTMI 
TaxTMI 
2020 (11) TMI 545
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....ppeal (AT) (Insolvency) No. 331 of 2019 dated 17th January, 2020 and held that dues in the nature of rent of immovable property do not fall under the head of Operational Debt as defined under Section 5 (21) of IBC. The Adjudicating Authority further held that there was pre-existing dispute. The Corporate Debtor claimed before the Adjudicating Authority that lease agreement was terminated in July, 2017 due to change of circumstances. 3. Learned Counsel for Appellant submits that the finding of the Adjudicating Authority that there was pre-existing dispute, is baseless. The Learned Counsel referred to the email relied on by the Corporate Debtor, copy of which is filed (Annexure A-1 with Diary No. 22971 filed by the Respondent). The Learned Counsel has taken us through the email to submit that the email only shows that the Corporate Debtor claimed that after taking the shop premises in Galaxy Mall on rent from the Appellant it had put in huge investment but suffered losses due to demonetization and as the entry to the mall was changed due to Judgment of Hon'ble Supreme Court. It is argued that the Corporate Debtor claimed that the Corporate Debtor was running Apparels Showroom from t....
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....mber Bench of this Tribunal in Company Appeal (AT) (Insolvency) No. 331 of 2019 (Mr. M. Ravindranath Reddy Versus Mr G. Kishan & Ors.). Both of us along with one more Hon'ble Member were party to that Judgment. In the said Judgment of Mr. M. Ravindranath Reddy Versus Mr G. Kishan & Ors, we had referred to the Insolvency Law Reforms Committee Report of November, 15 and observed as under: "The law has not gone into defining goods or services - hence, one has to rely on general usage of the terms so used in the law, with due regard to the context in which the same has been used. Simultaneously, it is also relevant to understand the intention of the lawmakers. The Bankruptcy Law Reforms Committee (BLRC), in its report dated November 2015, states that "Operational creditors are those whose liability from the entity comes from a transaction on operations". While discussing the different types of creditors, the Committee points out that "enterprises have financial creditors by way of loan and debt contracts as well as operational creditors such as employees, rental obligations, utilities payments and trade credit." Further, while differentiating between a financial creditor and an opera....
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....om 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 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. (Emphasis Supplied)" 9. In paragraphs 20 and 21 of the Judgment, there is reference to definition of "service" under the Consumer Protection Act, 2019 and "a list of activities" which are treated as supply of goods or services under the Central Goods and Services Tax Act, 2017. Referring to the same, in Paragraph 22 of the Judgment, Hon'ble Bench concluded that keeping in view the observations made by the Hon'ble Supreme Court in Para 5.2.1 of Mobilox Innovations Private Limited V/s. Kirusa....
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....er Section 9 of IBC all that Adjudicating Authority is to see is whether there is 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. Learned Counsel for Appellant, before us does not show anything that in Mobilox Judgment, Hon'ble Supreme Court has held Rent to be Operational Debt. It appears to us that the Learned Counsel for parties did not properly assist the Hon'ble Bench in the matter of Anup Shushil Dubey Vs. National Agriculture Co-operative Marketing Federation of India Limited & Ors. 12. Another aspect is that, Section 3 (37) of IBC reads as under: "(37) words and expressions used but not defined in this Code but defined in the Indian Contract Act, 1872 (9 of 1872), the Indian Partnership Act, 1932 (9 of 1932), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the Securities Exchange Board of India Act, 1992 (15 of 1992), the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993), the Limited Liability Partnership Act, 2008 (6 of 2009) and the Companies Act, 2013 (18 of 2013), shall have the meanings respectively a....