Committee Of Creditors Of M/S Xalta Food ... vs Prerna Singh
- CitationCompany Appeal (AT) (Insolvency) No. 104 of 2019
Ratio decidendi
The rule this decision rests on
The moratorium under Section 14 of the Insolvency and Bankruptcy Code does not bar the payment of current rent for premises occupied by the corporate debtor after the commencement of the insolvency resolution process; the Section 14 moratorium is not applicable to current rent, and the Committee of Creditors may be directed to pay such rent or make suitable alternative arrangements for it. The landlord cannot be compelled, by reason of the moratorium, to treat the security deposit held against the premises as adjustable against outstanding dues or future rent, since the moratorium precludes such negotiation or adjustment of the security amount.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Committee of Creditors of M/s. Xalta Food and Beverages Pvt. Ltd. ...Appellant
Versus
Ms. Prerna Singh ...Respondent
Present: For Appellant : Mr. Brijesh Kumar Tamber, Advocate
ORDER
31.01.2019 The 'Corporate Debtor' (Company) is situated in a rented
premises for which rent of every month is liable to be paid. The 'Resolution
Professional' has moved the matter before the 'Committee of Creditors' but they
disallowed the payment of rent. In this background, when the matter was
brought to the notice of the Adjudicating Authority (National Company Law
Tribunal), New Delhi Bench, the Adjudicating Authority directed the 'Committee
of Creditors' to pay the rent w.e.f. 1st December, 2018 or make suitable
arrangements in the alternative. Learned counsel appearing on behalf of the
appellant (Committee of Creditors) submitted that the outstanding dues is Rs.
Two crores and the security lying with the landlord is of Rs. 3.4 Crores. However,
such argument cannot be accepted in view of the order of the moratorium. The
landlord cannot negotiate the security amount nor can adjust the payment. With
regard to the current rent as Section 14 moratorium is not applicable, we are of 2
the view that Adjudicating Authority has rightly directed the parties to pay rent
w.e.f. 1st December, 2018 or make suitable arrangements in the alternative.
Learned counsel appearing on behalf of the appellant submits that some more
time may be given to pay the rent. We accordingly allow the appellant to pay the
rent w.e.f. 1st December, 2018 and onwards i.e. up to the date of moratorium.
Rent of December, 2018 be paid by 15th February, 2019. Rent for the month of
January, 2019 be paid by 28th February, 2019. Thereafter the rent for each
month should be paid by 15th of next month.
With the aforesaid observations, while we condone five days delay in
preferring the appeal, the appeal stands disposed of with the aforesaid
observations and directions. No cost.
[Justice S.J. Mukhopadhaya] Chairperson
[ Justice Bansi Lal Bhat ] Member (Judicial)
/ns/uk/
Company Appeal (AT) (Insolvency) No. 104 of 2019
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