TaxTMI 
TaxTMI 
2024 (5) TMI 1347
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....an "Operational Creditor" under the IBC as the claim did not arise from the provision of goods or services to the Respondent. Brief facts of the case : 2. The facts of the case as relevant to decide the matter are noted herein. On 7 May 2019, the Appellant and Respondent entered into a "Without Prejudice" Letter of Intent (WP-LOI) for leasing unit no. 702 in the Silver Metropolis building. The Appellant paid a security deposit of Rs. 25,68,280/. The Appellant discovered that the premises were not eligible for IT/ITES/STPI registration after due diligence, despite the initial representation. Consequently, the Appellant sought to terminate the LOI and requested a refund of the security deposit. The Appellant issued several notices and reminders to the Respondent seeking a refund, including: Email dated 4 June 2019 for cancellation and refund. Reminders on 18 June 2019 and 27 August 2019. Legal notice on 14 November 2019. Demand Notice under Section 8 of the IBC on 10 February 2020. 3. The Respondent replied on 17 February 2020, disputing the Appellant's claims and contending the right to forfeit the security deposit due to non-compliance by the Appellant. Thereafter, ....
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.... premises could not be lawfully licensed by the Respondent. 8. Appellant claims that multiple notices were sent requesting the security deposit refund and the details of the exchange of communication between them are as follows: Email on 04 June 2019 for cancellation and refund of Rs. 25,68,280/- Reminders on 18 June 2019 and 27 August 2019. Notice on 14 November 2019. Reply from Messrs. Narang Law on 03 December 2019, referencing M/s. Optium India Private Limited. Demand Notice under Section 8 of the I & B Code on 10 February 2020 for Rs. 25,68,280/- plus 18% interest of Rs. 3,37,248/- Respondent's reply on 17 February 2020. 9. The Appellant thereafter filed a section 9 petition on 20 February 2020. The Respondent's affidavit-in-reply was filed on 01 September 2020. 10. The Appellant submits that security deposit is an Operational Debt as per the IBC Code and as per various rulings. The claimed amount qualifies as 'operational debt' under Section 5(21) of the I & B Code. The Hon'ble Supreme Court in Consolidated Construction Consortium Limited vs. Hitro Energy Solutions Private Limited [2022 (7) SCC 164] has held that advance payment to a Corporate D....
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....on of which advance payments are made, are wholly inapposite as examples visà- vis advance payments made by allottees". Hence, this leaves no doubt that a debt which arises out of advance payment made to a corporate debtor for supply of goods or services would be considered as an operational debt. 52. Similarly, in the present case, the phrase "in respect of" in Section 5(21) has to be interpreted in a broad and purposive manner in order to include all those who provide or receive operational services from the corporate debtor, which ultimately lead to an operational debt. In the present case, the appellant clearly sought an operational service from the proprietary concern when it contracted with them for the supply of light fittings. Further, when the contract was terminated but the proprietary concern nonetheless encashed the cheque for advance payment, it gave rise to an operational debt in favour of the appellant, which now remains unpaid. Hence, the appellant is an operational creditor under Section 5(20) IBC." 11. Appellant further claims that the Appellate Tribunal in Jaipur Trade Expocentre Private Limited vs. Metro Jet Airways Training Private Limited [Company ....
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....ncy and Bankruptcy Code, 2016 (IBC). The Appellant seeks a refund of a security deposit paid under a Letter of Intent (LOI), which is a precursor to a leave and licence agreement. This does not pertain to the provision of goods or services, hence it does not qualify as operational debt. 16. A pre-existing dispute invalidates any application filed under Section 9 of the IBC. It is well-settled that if disputes between the parties exist, an application for Corporate Insolvency Resolution Process (CIRP) is not maintainable. In this case, the Appellant's demand notice was responded to by the Respondent, raising and indicating the existence of disputes. The following points highlight the pre-existing disputes: 16.1 There is a dispute regarding whether Annexure A3 at page 47 or Annexure A5 at page 53 is the subsequent LOI. The Corporate Debtor, in its reply to the demand notice and the Affidavit in Reply to the Petition, claimed that Annexure A3 is the subsequently executed document. The Operational Creditor has not denied this claim. 16.2 The LOI at Annexure A3 is dated 7 May 2019, while the LOI at Annexure A5 lacks a date on the execution page. 16.3 There are differences in clau....
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....s recorded in the order dated 14 July 2021. Subsequently, in the Additional Affidavit dated 16 February 2022, the Appellant admitted they did not pursue certification under the IT/ITeS policy. The Appellant deliberately suppressed the additional affidavit filed by the Respondent pursuant to the 14 July 2021 order. 18. On 8 March 2020, the Respondent had inducted M/s Reliance Nippon Life Insurance Co. Ltd as a licensee, who successfully obtained IT/ITES certification under the State of Maharashtra's IT/ITES policy. This demonstrates that even an insurance company could obtain IT/ITES certification, which the Appellant chose not to pursue. CASE LAW 19. As per the Hon'ble Supreme Court in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Ltd., Civil Appeal No. 9405 of 2017, a Section 9 IBC application is not maintainable if a dispute exists. The adjudicating authority must assess whether a plausible contention requires further investigation and if the dispute is not patently feeble or unsupported by evidence. The present dispute is genuine, demonstrable, and supported by incontrovertible evidence. 20. The judgement in Consolidated Construction Consortium Limited v. Hitro Energ....
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....er Section 5(21) of the IBC. This definition specifies a claim arising from the provision of goods or services. We find that while the LOI contemplated a future license agreement, the security deposit itself was not directly linked to any service rendered by Seaview. 28. We also look into the judicial precedent as cited by the Appellant in Consolidated Construction Consortium Limited v. Hitro Energy Solutions Pvt. Ltd. [supra]. This judgement is only an authority for the proposition that the words "claim in respect of provision of goods or services" includes not only those who supply goods or services to corporate debtor but those who receive goods or services from the corporate debtor and the words "in respect of" must therefore not received a narrow interpretation but the claim must bear some nexus with the provision of goods or services. In the present case the Appellant has neither supplied goods nor services to the Corporate Debtor nor received goods or services from the Corporate Debtor. The said judgement is therefore of no assistance to the Appellant. 29. The appellant has cited Jaipur Trade Expo Centre Pvt. Ltd. v. Metro Jet Airways Training Pvt. Ltd. (supra) which is no....
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....e followed. 40. In view of the foregoing discussion, we answer the two questions referred to the larger Bench in the following manner : (1) Judgment of this Tribunal in Mr. M. Ravindranath Reddy (supra) as well as judgment in Promila Taneja's case does not lay down the correct law. (2) The claim of Licensor for payment of license fee for use of Demised Premises for business purposes is an 'operational debt' within the meaning of Section 5(21) of the Code." 30. The above-mentioned judgement is only an Authority for the proposition that a claim towards unpaid license fees for an immovable property would constitute an operational debt under the Insolvency and Bankruptcy Code, 2016 (Code). It doesn't support the cause of the Appellant that security deposit is a form of license fee available for adjustment on failure to meet the outstanding licence fee. In the present case, there is no outstanding licence fee and the security deposit, therefore, it cannot be termed as a form of license fee available for adjustment on failure to meet the outstanding licence fee. In any case, this judgement does not lay down any law that security deposit is a form of license fee. The said....
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....#39;s claim that the premises were ineligible for IT/ITES certification is contradicted by their actions, including attempts to obtain certification and subsequent communications indicating ongoing efforts to comply with IT/ITES requirements. 4. The conditions in the term sheet were incapable of performance as claimed by the Appellant. The Respondent claims that everything was known to the Appellant and it was its responsibility to obtain all permissions and it tried but later unilaterally cancelled the . 5. Possession and License Fee: The Appellant remained in possession of the premises from 7 May 2019 to 20 June 2019 without executing the final license agreement, thus triggering the Respondent's claim for a license fee for this period. 34. The core of the dispute revolved around two aspects: Validity of the LOI: There was a disagreement about which version of the LOI (Term sheet in Annexure A3 or A5) was the final and binding document. Annexure A3, as claimed by Respondent Seaview, mentioned IT/ITES use and allowed deposit forfeiture for non-performance. Annexure A5, on the other hand, which Appellant-Carestream argued was the valid version, did not contain the IT/ITES req....