Vishal Ghisulal Jain vs Amar Universal Pvt. Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 1324 of 2019
Ratio decidendi
The rule this decision rests on
A direction to a Resolution Professional to hand over possession of a third-party property, and to pay a sum claimed by the owner, is not a ground for adjudication under the Insolvency and Bankruptcy Code merely because the owner's claim was never decided by the Resolution Professional; the Tribunal declined to interfere with that direction in this case because the Resolution Professional had not determined the claim and communicated no decision to the landlord, and the premises were held only under a licence rather than a lease with no workshop shown to exist on the land. Under Section 14 of the Insolvency and Bankruptcy Code, claims that accrued before the commencement of the Corporate Insolvency Resolution Process cannot be paid to Operational or other Creditors; accordingly, any sum payable to the landlord must be confined to the amount due for the period after initiation of the Corporate Insolvency Resolution Process, and a direction to pay the pre-commencement claim amount is to be read down to that extent. A monetary cost imposed on a Resolution Professional, where the case did not warrant it, is liable to be set aside on appeal.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Vishal Ghisulal Jain ...Appellant
Vs
Amar Universal Pvt. Ltd. ....Respondent
Present: For Appellant: Present but appearance not marked. For Respondent: ORDER
20.11.2019: In the Corporate Insolvency Resolution Process of 'S. K.
Wheels Pvt. Ltd.', 'Amar Universal Private Limited' - 1st Respondent, who is
landlord filed Miscellaneous Application for direction on Resolution
Professional to handover the land to said landlord - 'Amar Universal Private
Limited' being a third party property.
2. The Appellant - Resolution Professional, raised objection relating to claim
made by the 1st Respondent on the ground that 'Amar Universal Private
Limited' has no complete right over the premises of land or has dues
outstanding.
3. The Adjudicating Authority noticed that a civil suit is pending before the
Court of Law and based on the agreement, the tenancy/ license fee was to be
paid on 7th of every month by the Corporate Debtor, which entitles the owner of
the land (1st Respondent) to reclaim the property if the rent is not paid.
Company Appeal (AT) (Insolvency) No. 1324 of 2019 -2-
4. The Adjudicating Authority (National Company Law Tribunal), Mumbai
Bench, by impugned order dated 16th October, 2019 observed that the
Resolution Professional may be for the said reason not have been sitting over
the claim filed by the 1st Respondent - Landlord. In view of the same,
Miscellaneous Application filed by 1st Respondent - 'Amar Universal Private
Limited' was allowed with direction to the Resolution Professional to handover
the land to the 1st Respondent including the claim amount within one week
with further direction to the Resolution Professional to pay a cost of Rs.1 Lakh
to the 1st Respondent.
5. Learned counsel appearing on behalf of the Appellant submitted that the
premises is essential and necessary for the Corporate Debtor for operating in
the vicinity of the Corporate Debtor. The Automobile Industry is a unique type
and requires a large space of open land alongwith workshop area and
accessibility to the residential area. The Corporate Debtor has already incurred
huge expenditure for repairs and for capital expenditure on the subject
premises. However, it is not disputed the in terms of the Agreement, the
Resolution Professional on behalf of the Corporate Debtor has not paid the
current rent during the Resolution Process and for such non-payment in terms
of the agreement the land is to be returned.
Company Appeal (AT) (Insolvency) No. 1324 of 2019 -3-
6. Learned counsel appearing on behalf of the Appellant submits that the
Resolution Professional has agreed to pay the rent. However, we are not
inclined to give any direction to the Respondent of such. It is not disputed that
the claim of the Respondent No. 1 was not decided by the Resolution
Professional and no decision was communicated to the Landlord.
7. Further we find that as per Agreement, the Corporate Debtor was holding
the vacant land for the purpose of keeping the automobiles pursuant to the
license and not any Lease Agreement. There is nothing on record to
substantiate existence of workshop on said land.
8. In that view of the matter, we are not inclined to interfere with
substantive part of the order. However, we are of the view that it was not the
case to impose any cost on the Resolution Professional. Therefore, we are
inclined to interfere with such part of the impugned order.
9. Further we make it clear that the Resolution Professional who has been
asked to pay the dues and hand over the possession of the land, will be paying
the current rent of the period of Resolution Process, as in terms of Section 14
of the I&B Code, earlier claim amount cannot be returned to any Operational
Creditor or other Creditors. Therefore, the Direction at para 19 should be read
Company Appeal (AT) (Insolvency) No. 1324 of 2019 -4-
as "pay the claim amount as raised by the Applicant for current period after
initiation of the Corporate Insolvency Resolution Process".
10. The Resolution Professional will determine the claim of the
1st Respondent and communicate the same to the 1st Respondent and may
approach the 1st Respondent - 'Amar Universal Private Limited' for
renegotiation and settlement of any grievance in terms of earlier agreement.
'Amar Universal Private Limited' in such case may reach new Terms of
Settlement uninfluenced by the order passed by the Adjudicating Authority or
this Appellate Tribunal.
11. For the reason aforesaid, the impugned order so far as it relates to
imposition of cost of Rs.1 Lakh is set aside. The said order stands modified.
The appeal stands disposed of with aforesaid observations and directions.
[Justice S. J. Mukhopadhaya] Chairperson
[Justice Bansi Lal Bhat] Member (Judicial)
[Justice Venugopal M.] Member (Judicial) am/sk
Company Appeal (AT) (Insolvency) No. 1324 of 2019
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