TaxTMI 
TaxTMI 
2022 (5) TMI 434
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....nts necessary to be noted for deciding this Appeal are:- The Appellant and the Corporate Debtor- 'Jet Airways (India) Private Limited' ("Jet" for short) entered into a License Agreement for license of office premises in a building owned by the Appellant on 24.02.2011. A security deposit was also made by the Corporate Debtor to the Appellant in pursuance of License Agreement. In the year 2018, Jet vacated four office units and substantial unpaid dues were set-off by the Appellant from the security deposit. Balance security deposit with the Appellant of the Corporate Debtor was INR 1,35,08,352/-. Monthly fees for two units that was retained by Jet was INR 28,51,031/-. On 28.02.2019, the Appellant wrote to Jet that all future monthly fees payable by the Corporate Debtor be deposited in the ICICI Bank account and all future communications with the Appellant must be addressed to the e-mail address of the Appellant's Managing Director. The Corporate Debtor did not deposit the monthly license fees in the months of March and April, 2019. On 30.04.2019, the Appellant issued a notice to the Corporate Debtor giving an opportunity to the Corporate Debtor to pay monthly fees within 30 days. ....
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....ment having been paid by the Corporate Debtor, the License Agreement stood automatically terminated on 31.05.2019. No further license fee is payable to the Applicant in terms of Clause 21.3 of the Agreement. Reliance was also placed on letter dated 17.08.2019 written by the Resolution Professional to the Appellant seeking for refund of security deposit. The Adjudicating Authority after hearing the Counsel for the parties took the view that under Clause 21.3 of Leave and License Agreement, the Respondent was not required to handover the possession till the security deposit was refunded and further the Corporate Debtor need not to pay any license fee for the premises from 01.06.2019. It was held that Applicant is not entitled to any payment with respect to license fee after 31.05.2019. The Applicant i.e. Appellant was directed to refund the security deposit to the Respondent after deducting the license fee payable from 01.03.2019 to 31.05.2019. Aggrieved by the order passed by the Adjudicating Authority, this Appeal has been filed. 3. We have heard Shri Jayant Bhushan, Learned Senior Counsel for the Appellant and Shri Rohan Rajadhyaksha, Learned Counsel for Respondent. 4. Learn....
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....e of Clause 21.3 is wholly erroneous. The Adjudicating Authority has not appreciated the relevant clauses of the Leave and License Agreement. 5. Shri Rohan Rajadhyaksha, Learned Counsel for the Respondent refuting the submissions of the Counsel for the Appellant submits that the Respondent being Resolution Professional of the Corporate Debtor is obliged to protect the assets and properties of the Corporate Debtor. The security deposit lying with the Appellant is assets of the Corporate Debtor which need to be protected by the Respondent. Learned Counsel for the Respondent heavily relied on Clause 21.3 of the Agreement and submits that since security deposit has not been refunded by the Appellant, the Respondent is entitled to retain the possession of the licensed premises till the security deposit is not refunded. It is submitted that there is automatic termination of the Leave and License Agreement under Clause 19.5 after issuance of 30 days' notice by the Appellant on 30.04.2019. It is submitted that in view of the automatic termination of Agreement, it was incumbent on the Appellant to refund the security deposit and after refund of the security deposit only the Respondent is....
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.... 19.1 if any of the representations made by the Licensee turning out to be materially false or misleading or there be breach of Licensee's Covenants or material breach of any covenants, conditions and stipulations herein contained on part of the Licensee, provided that the Licensee has been given an opportunity to remedy such breach and has failed to do so after expiry of 30 days from the receipt of the written notice in this regard from the Licensor; or 19.5 If the Licensee defaults in and or delays payment of any amount on due dates payable under this Agreement, save and except the Events of Default set out in sub-clauses 19.3 and 19.4 above, the Licensor shall for the purposes of pre-determining and terminating this Agreement give a notice requiring the Licensee to rectify and/or comply with the requirements of the notice within 30 (thirty) days of the receipt of such notice and in the event of the Licensee having failed to rectify or comply with the same within the said notice period, this Agreement shall stand pre-determined/terminated without any further notice." "21. Effects of Termination /Expiration of the Agreement: 21.1 In the event of pre....
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....at the Licensor may have against the Licensee under this Agreement or in law, if the Licensee (ails to ensure that vacant and peaceful possession of tile Licensed Premises is handed over and made available to the Licensor and to remove from the Licensed Premises all personnel, belongings, installations and merchandise within 10 (ten) days from the date the pre-determination/ termination of this License becomes effective in terms of Clause 19 hereinabove, then (in addition to the License Fees payable as per Clause 21.1 hereinabove and the other rights and remedies o fthe Licensor,) the Licensee shall be liable to pay to the Licensor 1.5 (one and a half) times the daily License Fee payable at that time for every day that the Licensed Premises is not handed over to the Licensor." 9. The submission of the Appellant is that the Appellant never terminated the Leave and License Agreement dated 24.02.2011. The Notice dated 30.04.2019 cannot be treated to be notice terminating the Agreement. Paragraphs 3 and 5 of the Notice dated 30.04.2019 which are relevant are as follows:- "3. Our Client notes that despite this request being shared with you almost two months ago, you have not....
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....en terminated by the company prior to the Insolvency Commencement Date ("ICD") and the Security Deposit of INR 3,29,61,490/- (Three crore twenty-nine lakh sixty-one thousand four hundred ninety) has not been refunded to the company." 11. As noticed above, before the Adjudicating Authority and before this Tribunal, now the case of the Respondent is that there is automatic termination of the Agreement by virtue of the Notice dated 30.04.2019. We proceed to examine the submission of the Counsel for the Respondent on the premise that there is automatic termination of Agreement. 12. Learned Counsel for the Respondent submits that under Clause 21.3 when the licensor does not refund the security deposit, licensee is entitled to continue to occupy the licensed premises until receipt of the entire security deposit amount less deductions. We need to look into the Clause 21 of the Agreement which provides for 'effects of termination/ expiration of the Agreement'. Clause 21 has to be conjointly read to give meaning and effect to all clauses. Clause 21.1 contains undertaking of the licensee that vacant and peaceful occupation of the licensed premises be handed over within 30 days of pre-d....
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....e hundred sixteen only) to the Corporate Debtor ("Security Deposit"). Accordingly, the Respondent's advocate addressed a letter dated May 12, 2021 to the Appellant inter alia seeking a refund of the Security Deposit in compliance with the Impugned Order. A copy of the letter from the Respondent's advocate to the Appellant is annexed hereto and marked as Annexure A-31." 14. Admittedly, the monthly rent of the premises is Rs.28 Lakhs and odd. No amount has been paid towards the license fee after March, 2019 on the ground that security amount of Rs.82 lakhs and odd is payable by the Appellant. The Respondent is continuing in the premises occupying the same for last more than three years whereas the security lying with the Appellant at best is avail to cover the license fee for about three months only. The Appellant's case in the I.A filed before the Adjudicating Authority was that the occupation of the premises by Corporate Debtor is continuing, hence, the monthly license fee be treated as CIRP costs. The Adjudicating Authority has rejected the Application relying only on the submission of the Respondent that under Clause 21.3 till the security deposit is refunded, the Respondent i....