2024 (4) TMI 867

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ating Authority ( National Company Law Tribunal, Mumbai Bench - V ) , admitting Section 9 application filed by Operational Creditor. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: i. The Leave and License Agreement was entered on 27.12.2019 between the Reward Business Solutions Private Ltd and the Sporta Technologies Private Limited for two units situated at 8th Floor of Tower B in Penisula Business Park, Lower Parel - Mumbai. ii. Leave and license was for a period from 27.12.2019 to 26.12.2024. iii. There was rent free period for a period of three months from license commencement date. The lease amount was fixed in Leave and License Agreement. iv. The email dated 29.05.2020 was received from Director of the Reward Business Solutions Private Limited to the Corporate Debtor that Operational Creditor has taken loan from Mangalam which was in turn secured by the mortgage of licensed premises and the Mangalam has taken over the licensed premises and draft Tripartite Agreement was shared with the Appellant. v. On 18.06.2020, the Corporate Debtor asked for certain clarifications. Mangalam sent an email dated....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....lication filed by the Operational Creditor was barred by 10A and application for amendment was rejected but the Adjudicating Authority has not considered 10A bar in the impugned order. Learned counsel for the Respondent submits that after filing of the Application under Section 9, the Respondent has also issued fresh notice under Section 8 on 23.01.2023 and had also filed an application for withdrawal of the Section 9 petition to enable the Respondent to file fresh application, on which application no order could be passed. Submission needs scrutiny. Issue notice. Learned counsel for the Operational Creditor accepts notice. Let notice be issued on Respondent No.1. Learned counsel for the Respondent prays for one week time to file an Additional Affidavit. Learned counsel for the Respondent may file Reply/Additional Affidavit within one week. List this Appeal on 23.02.2024. In the meantime, the order impugned shall remain stayed. No steps, till the next date shall be taken by the IRP in the CIRP." 5. Sh. Arun Kathpalia Learned Counsel for the Appellant submits that Section 9 application filed by the Operational Creditor was barred by Se....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....considering the submission in detail. The main submission advanced by the Appellant is that Section 9 application filed by Operational Creditor was barred by Section 10A. We need to notice the pleadings and claim as contained in Section 9 application. Part IV of the application mentioned the details amount of debt as Rs.7,61,08,246/- and debt fell due since March 2020. Part IV of the application is as follows: PART-IV PARTICULARS OF OPERATIONAL DEBT 1 TOTAL AMOUNT OF DEBT, DETAILS OF TRANSACTIONS ON ACCOUNT OF WHICH DEBT FELL DUE AND THE DATE FROM WHICH SUCH DEBT FELL DUE.   Total Amount of Debt: Rs.7,61,08,246/- [Rupees Seven Crores Sixty-One Lacs Eight Thousand Two Hundred and Forty-Six] Details of Transaction: The transactions in question pertain to a Leave and License Agreement dated 27th December 2019, for Unit Nos. 801 and 802, Tower B, Penisula Business Park, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013; As per the terms of the Leave and License Agreement, a monthly license fee of Rs. 49,83,636/- for the first three [3] years and Rs. 57,31,181/- for the remaining two [2] years; Corporate Debtor has not paid the monthly license....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation. - For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020." 11. Section 10A of the Code prohibited filing an application under Sections 7, 9 & 10 for any default arising on or after 25.03.2020. The prohibition continues for one year from 25.03.2020 i.e., upto 24.03.2021. When we look into the Part IV of the application as well as the statement showing particulars of claim it is clear that apart from lease rental from April 2021, all claim was within the 10A period. For lease rental of April 2021, no CIRP can be commenced since it did not fulfil the threshold. 12. It is relevant to notice that application for amendment was filed by the Appellant seeking amendment in Company Petition. The Amendment Application came to be heard and rejected by Adjudicating Authority vide its order dated 22.12.2023. Adjudicating Authority by rejecting the appli....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....in a period stipulated in Section 10A of the Code. However, the Applicant has submitted that this objection has not been taken by the Corporate Debtor in the Reply. Para 5 of the order is as follows: "5. The Petitioner fairly admits the fact that pending amount falls within the period stipulated under Section 10A of the Code however this objection had not been taken by the Corporate Debtor in its reply. Also, no amount has been paid by the Corporate Debtor pursuant to the Demand Notice sent by the Operational Creditor and up to the time the premises were vacated by it." 14. Section 10A came to considered by the Hon'ble Supreme Court in `Ramesh Kymal' Vs. `Siemens Gamesa Renewable Power (P) Ltd.', reported in (2021) 3 SCC 224, Hon'ble Supreme Court after noticing the legislative scheme noticed that Section 10A provides that no application for initiation of CIRP can be initiated for a default occurring on or after 25.03.2020. The Hon'ble Supreme Court held that the expression "shall never be filed with the clear indicator that the intent of legislature is to bar the institution of any application". In paragraph 27 of the Judgment following has been held: "27. Ado....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....a) requires the application to be accompanied by a copy of the invoice demanding payment or demand notice delivered by the operational creditor to the corporate debtor. This again highlights that it could be either one of the two i.e. an invoice or a demand notice." 17. In para 32 of the Judgment, Hon'ble Supreme Court noticed the scheme under Section 9 sub-Section (1). Section 9 sub-Section (1) provides: "9. Application for initiation of corporate insolvency resolution process by operational creditor.-(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. 18. We need to notice Section 8 also which contemplates that the Operational Creditor may on the occurrence of default deliver a Demand Notice. Section 8 sub-Section (1) thus clearly contemplates default has to be prior to the delivery of the D....