AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (5) TMI 979
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....f the case for deciding this Appeal are:- (i) The Appellant is engaged in the business of coworking and/or providing flexi office space i.e. a working arrangement where different corporate bodies come together to work for a single business center run and maintained by the Appellant. The Appellant developed the premises with all required amenities, facilities conducive to run/operate a fully functional office with day to day service/support service as per requirement of each and every client. Appellant makes provision of goods and provision of services as per clients' requirements. The Appellant entered into an Agreement with the Respondent-Corporate Debtor. Agreement was called "Services Providers Agreement". The Agreement do not create any right or title or interest in the property immovable or movable. Under the Agreement, the Corporate Debtor was to make monthly office fee of Rs. 3,52,000/. Period of Agreement was from 01st October, 2018 to 30th September, 2021. Agreement provided for lock-in period of 36 months. (ii) The Corporate Debtor in pursuance of the Agreement started using the premises. On 04th June, 2019, the Corporate Debtor wrote email to the Operat....
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....rious cities at its various business centers/coworking office. The Appellant makes provision of goods and provision of services as per client's requirements. The agreement entered with Corporate Debtor had a lock-in period of 36 months. During the lock-in period, the Corporate Debtor had no authority to terminate the agreement and termination of agreement is breach of contract which entitles the Appellant to right to remedy. The right of Appellant is a claim within the meaning of Section 3(6) of the Code. The claim in respect of provision of goods and services is debt. The view of the Adjudicating Authority that license fee is not operational debt is erroneous. Learned Counsel for the Appellant relied on judgment of larger bench of this Tribunal in Jaipur Trade Expocentre Private Limited v. Metro Jet Airways Training Private Limited, C.A. (AT) Insolvency No. 423 of 2021 where it was held that debt pertaining to unpaid license fee is covered within the meaning of operational debt. Appellant's claim or right of appellant arises out of breach of contract which is debt within the meaning of I&B Code, 2016. It is submitted that Agreement dated 17th August, 2018 did not require any regis....
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....ment: This agreement (hereinafter this Agreement) is a service providers agreement for pay as you go model. This agreement Creates No Right Title or Interest Either in The Property (Immovable or Movable) Nor Any Other Form of Right to Asset Any Claim Save And Except Availing Of Services Being Rendered By Smartwork. This Agreement is in person to the Client and is non-heritable and cannot be transferred or assigned to anyone else. This Agreement is composed of the cover page describing the Service(s), the service charges and the tenure with the escalation (if any), the present 'Terms and Conditions', the house rules and service price guide as published and made applicable from time to time by Smartwork." 9. Clause 1.4 deals with cancellation which provides as follows: "The agreement can be terminated with 30 (Thirty) day(s) notice in advance in writing by the client without assigning any reason after the lock in period (if any). However, the Provider has no right to terminate the agreement during the validity of the agreement except in the circumstances of material breach of any of the terms of this agreement or the client is in default as more specifically mentioned her....
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....that you have taken up your own space, but the agreement need to be honoured and payment for the balance term to be made as well. I have attached the agreement for your reference. Ward Regards, Surojit Ray Regional Director (East) ........." 12. The Operational Creditor thereafter issued notices to the Corporate Debtor demanding payment in respect of unpaid operational debt and ultimately a Demand Notice under Section 8 was issued on 18th August, 2020. 13. As noted above, the Adjudicating Authority framed three points for determination. The first point which was framed for consideration is as to whether the debt claimed by the Appellant was an Operational Debt. 14. In IBC, Section 3 of the Code is definition clauses. Section 3(6) defines "claim" in following words: "3(6). "Claim" means- (a) a right to payment, whether or not such right is reduced to judgment, 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, fi....
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....h judgement in M. Ravindranath Reddy came to be referred to Larger Bench of this Appellate Tribunal and Appellate Tribunal by a Larger Bench Judgement in Jaipur Trade Expocentre Pvt. Ltd. (Supra) has overruled the Judgement of this Tribunal in M. Ravindranath Reddy. In paragraph 39 of the judgement of the larger bench held that debts pertaining to unpaid license fees is fully covered within the meaning of 'operational debt'. Para 39 is as follows: "39. The observation of this Tribunal in the above case in respect of definition of 'service' under Consumer Protection Act, 2019 and Central Goods and Services Tax Act, 2017 are not covered by Section 3(37) of the Code, with regard to which observation, no exception can be taken. However, in the facts of the present case, where Agreement itself contemplate payment of GST for the services under the Agreement, on which GST is payable, the definition of 'service' under Central Goods and Services Tax Act, 2017 cannot be said to be irrelevant. More so, even if an expression is not defined in the statute, the meaning of expression in general parlance has to be considered for finding out the meaning and purpose of expression. After mak....
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....agreement created in favour of the Corporate Debtor, the Agreement was not compulsorily registrable under Section 17(b) of the Registration Act. Section 17(b) provides as follows: "17. Documents of which registration is compulsory.- (b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title, or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;" 21. When we look into the agreement as noted above, it is clear that agreement does not purport or operate to create, declare, assign, limit or extinguish any right, title or interest in immovable or movable property. The Agreement was clearly not required to be compulsorily registered under Section 17(b). The above determination by the Adjudicating Authority was also fallacious. 22. Now we come to the 3rd Point determined by the Adjudicating Authority that agreement was originally engrossed on an unstamped paper. Question framed clearly indicates that agreement as filed contained stamp paper but Agreement was written on plain papers. The case of the....
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....t at Annexure-E; the present deponent had been given the right to enjoy the property. The transfer of the right is made for a certain time. At Page-48 of Annexure-E, the length of agreement has been mentioned from 01.10.2018 to 30.09.2021. The transfer is in consideration of a price paid or promised or of money, a share of crops, service or any other thing of value. At page-48, the total amount payable is Rs. 3,52,000/- which squarely falls under the ambit of 'money', as provided in Section -105. The consideration is payable periodically or in specified occasions. At page-48, read with Clause -7 of the Lease Agreement; the payment of the consideration amount has been specified to be monthly. The consideration is payable by the transferee to the transferor. At Page-48, read with Clause -7 of the Lease Agreement, the consideration is payable to the corporate debtor. Hence, from the above averments it can be safely concluded that, the above agreement is only a lease agreement. Hence, as the above agreement is a lease agreement; it must be compulsorily registered as per Section-17(1)(d) of the Registration Act, 1908. Moreover, as per Section -49 (c), if....