TaxTMI 
TaxTMI 
2020 (3) TMI 1287
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....s agreed that a monthly rent in respect of the abovementioned property at a sum of Rs. 17,00,000/- p.m. (Rs. 18,36,000/- after deducting TDS and adding GST) shall be payable by the Corporate Debtor to the Operational Creditor in advance by the 7th day of each calendar month, w.e.f. 01.03.2016 to 28.02.2019. As per the Lease Deed dated 04.01.2016 between the parties it was agreed that a monthly rent in respect of the abovementioned property at a sum of Rs. 19,55,000/- p.m. (Rs. 21,11,400/- after deducting TDS and adding GST) shall be payable by the Corporate Debtor to the Operational Creditor in advance by the 7th day of each calendar month, w.e.f. 01.03.2019. The lease was for a total period of 9 years commencing from 01.03.2016. In addition to the monthly rent, the Corporate Debtor was also liable to pay service tax, and any other taxes/levies, as made applicable by the Govt. agencies, including GST etc. 3. The Operational Creditor has claimed as detailed as under: - Particulars Outstanding Amount as on 19.03.2019 (Rs.) Outstanding Unpaid Operational Debt at an admitted rate of s. 18,36,000/- per month with effect from 01.11.2018 to 28.02.2019 a....
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....nal also held that any debt arising without nexus to the direct input to the output produced or supplied cannot, in the context of the Code, be considered as an operational debt, it cannot be categorized as an operational debt. Even though it can be a claim amounting to a debt, it cannot be categorized as an operational debt. The aforementioned position was further upheld by National Company Law Appellate Tribunal (NCLAT) in a different case rejecting an argument that a transaction of lease of immovable property will fall within the term of "service" under Section (21) of the Code. Thus, it is submitted and contended that the 'purported debt' claimed by the operational creditor does not fall within the definition of "operational debt" as defined under Section (21) of the IBC, 2016. c. Further there is an existence of a "dispute" which was cogently raised by the corporate debtor in its reply to the demand notice sent by the operational creditor. The pending litigation with respect to the property bearing No. C-2/10 Safdarjung Development Area, New Delhi against which the rent was withheld by the corporate debtor will fall under the term "existence of a dispute". The....
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....further submitted that it was the Operational Creditor, who is contesting the proceedings, which have been illegally initiated by the MCD and till date the operations of the Corporate Debtor has not been hampered. He further submitted that despite the expiry of the initial period of 3 years, the Corporate Debtor has not exercised any right to terminate the lease and premises. 9. On the other hand, Ld. Counsel appearing for the Corporate Debtor submitted that the claims of arrear of rents by the Operational Creditor are not maintainable because the amount claimed by the Operational Creditor does not come within the definition of Operational debt. He further submitted that the Corporate Debtor had obtained premises to start its business of gym and he had invested huge amount but after 8 months from the date of entering the aforesaid lease agreement, he came to know that the said premises is not a commercial premises and running of gym is not permissible and in this regard a notice dated 19.09.2016 was served to the Operational Creditor under Section 345A of the Delhi Municipal Corporation Act 1957 alleging the misuse of the said premises for the commercial purposes. 10. He furt....
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....he submissions raised on behalf of the parties, we have gone through the averment made in the application, reply, documents enclosed with the application and reply as well as the decisions upon the both parties placed it. At this juncture, we would like to refer the latest decision of the Hon'ble NCLAT passed in M. Ravindranath Reddy vs. G. Kishan & Ors. Company Appeal (AT) (Insolvency No. 331 of 2019) upon which the Ld. Counsel appearing for the respondent place reliance we have gone through the decisions and we find that in this appeal the Hon'ble NCLAT formulated the two questions:- a. Whether a landlord by providing lease, will be treated as providing services to the corporate debtor, and hence, an operational creditor within the meaning of Section 5(20) read with Section 5(21) of the Insolvency and Bankruptcy Code, 2016? b. Whether the petition filed U/S 9 of the Insolvency and Bankruptcy Code, 2016 is not maintainable on account of pre-existing dispute? 12. In the light of aforesaid questions, when we shall consider the case in hand then we find, here in the case in hand also the similar issues are raised by the parties, it is admitted facts that ....
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....of hearing, the Operational Creditor has not raised the issue that the reply of the demand notice was not given within 10 days from the date of receipt of demand notice, therefore, in the absence of any tracking reports. We have come to the conclusion that the Corporate Debtor has sent the reply within the period of 10 days of the receipt of the demand notice and we further find that the Corporate Debtor in his reply raised these issues that the debt is not operational debt and there is a dispute regarding the use of the buildings. 15. Now we would again like to refer the finding given by the Hon'ble NCLAT on the questions and for that we have gone through the decisions upon which the Corporate Debtor has placed reliance and we find, the Hon'ble NCLAT discuss the decisions on this issue as well as the definition of the operational debt and held that: "The Code provides that for an amount to be classified as an Operational Debt under I&B Code, 2016 the alleged claim should fall in the definition of: - 3(6) "Claim" means - (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secu....
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....under Section 9 of the "I&B Code". We are also do not find the term is defined under the General Clauses Act, 1897 and hence the term has to be given the meaning as ordinarily understood. The dictionary meaning of 'Operational' is given as 'of or relating to the operation or an operation'. For an amount to be classified for an operational debt under I&B Code, 2016, it is provided: Firstly, the amount falls within the definition of "claim" as defined under Section 3(6) of the Code; Secondly, such a claim should claim within the confines of the definition of a 'debt' as defined under Section 3(11), meaning it should be by way of a liability or obligation due from any person; Thirdly, such a "debt" should fall strictly within the scope of an "Operational Debt" as defined under Section 5(21) of the Code, i.e. the claim should arise in respect of (i) provision of goods or services including employment or (ii) A debt in respect of the repayment of dues arising under any law for the time being in force and payable either to the Central Government, any State Government or any local authority. Th....