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Sarla Tantia v/s Ramaanil Hotels And Resorts P. Ltd.

    C. P. (IB) No. 335/KB of 2018

    Decided On, 23 July 2018

    At, National Company Law Tribunal Kolkata

    By, THE HONOURABLE MR. K.R. JINAN
    By, JUDICIAL MEMBER

    For the Appellant: Sanjay Kumar Baid, M. Chowdhury, Advocate. For the Respondent: Jishnu Saha, Senior Advocate, Sulagna Mukherjee, Advocates.



Judgment Text

1. This is an application filed by Sarala Tantia applicant/operational creditor under section 9 of the Insolvency and Bankruptcy Code, 2016 (in short, I & B Code) for initiating Corporate Insolvency Resolution Process (in short, CIRP) against the respondent/corporate debtor, Ramaanil Hotels & Resorts Private Limited alleging that an amount of Rs. 37,14,333/- with interest of Rs. 3,81,962/-calculated @ 18% per annum from the due date till 31/12/2017 aggregating to a sum of Rs. 40,96,295/- is due from the corporate debtor. Despite demand the respondent did not repay, hence filed this application under section 9 contending in brief is the following:-

2. As per License Agreement dated 01/01/2016, (Annexure - B) the applicant rent out Southern portion of 3rd Floor of the building owned by the applicant measuring about 2,281 Sqft. super built up area fixing Rs. 88/- per Sqft. per month to be calculated on super built up area and all other municipal rates and taxes, service taxes along with the maintenance charge and generator back up charge and electricity charges as per the terms stipulated in the License Agreement. Upon execution of the Agreement between the petitioner and the respondent the respondent took possession of the building and started business in Restaurant from 26/02/2016 onward. The respondent took the possession and paid rent as agreed upon as per the License Agreement for the period from January, 2016 to November 2016. At the time of making the accounts, it was found that there was a short payment of Rs. 61,449/- in the month of April, 2016 and Rs. 50/-in the month of August, 2016.

3. From December, 2016 till the date of notice the corporate debtor has continuously defaulted in making payment on account of rent, maintenance, power back up and electricity. Only an adhoc amount of Rs. 3,19,019/- was paid by the corporate debtor to the operational creditor thereby corporate debtor as on date is liable to make payment of principal sum of Rs. 37,14,333/- to the operational creditor along with the interest of Rs. 3,81,962/- calculated at 18 per cent per annum from the due date till 31/12/2017 aggregating to a sum of Rs. 40,96,295/- with further interest @ 18% from 01/01/2018 till actual payment. The applicant then issued demand notice under Section 8(1) the I & B Code dated 01/01/2018 (Annexure -A) to the respondent. The notice was served upon the corporate debtor, respondent herein, on 02/01/2018. The respondent did not care to send a reply. The applicant, therefore, filed this application along with an affidavit as required under section 9/3)(b) and Bank Certificate as required under section 9(3)(c) of the I & B Code and proposed the name of Insolvency Professional, Sri Hrisikesh Dasgupta, E-mail, Regn. No. IBB I/I PA/I P -N 000 82/2017-2 018/10 705, P.O. Sapuipara, Vill. Santinagar, Dist. Howrah 711227 and produced the Form 2 and written communication certifying that no disciplinary proceedings is pending against Shri Hrikesh Dasgupta. Upon the said contentions the applicant prays for admitting the claim.

4. The respondent entered appearance and filed reply affidavit in opposition contending in brief is the following :-

5. Petition is not maintainable either in fact or in law. The petition suffers from suppression of material facts. There is pre-exiting dispute with regard to the claim of arrears of rent as demanded by the applicant. The dispute covered by the instant application is in the nature of rent dispute which is amenable to the exclusive jurisdiction of a Civil Court under the provisions of the West Bengal Premises Tenancy Act. The Licence Agreement is being executed for a period of 9 years with a clause of further renewal for another period of 9 years. It is a compulsorily registrable deed under section 17 and 49 of the Registration Act and, therefore, unless and until the Stamp Duty and penalty is paid the Deed is inadmissible in evidence.

6. The respondent further submits that the License Deed was procured by fraud and misrepresentation inasmuch as respondent was given an impression that the demised property measuring 2,281 Sqft. Whereas the same was subsequently discovered and found measuring only 1,665 Sqft. Upon discovery of the real measurement of the area License Agreement to the respondent there was a mutual understanding and arrangement in between the petitioner and the respondent and the petitioner agreed to limit the rent on the basis of the actual carpet area of the demised property and the excess payment previously made by the respondent for the period up to May 2017 would be adjusted or settled by the party upon mutual reconciliation of accounts and thereby the actual area is reduced to 1,665 Sqft. of carpet area from 01/06/2017. However, the applicant though reduced the area to 1,665 Sqft. From 2,281 Sqft. the total amount of rent is calculated on the basis of the disputed 2,281 Sqft, whereas the applicant has to reduce the rent @ 88/- per Sqft for 1,665 Sqft and proportional reduction in respect of the maintenance charge, power consumption charge are to be given. Despite the understanding the petitioner declined to reduce the rent and thereby a dispute arose in between the applicant and the respondent and there was a protest from the side of the respondent and some others also raised protest against the applicant and the applicant then preferred a complaint under section 144(2) of the Cr.P.C , 1973before the Executive Magistrate, Kolkata and the Executive Magistrate, Kolkata vide order dated 21/02/2018 dismissed the complaint directing the applicant to approach Civil Court as the dispute is related to demand of arrears of rent.

7. The respondent has paid the rent which according to the respondent liable to pay for the actual area in its occupation and there is no rent due. So also the claim of electricity bill in respect of meter rent, transmission loss at 10 per cent, MVCA charges and demand charges and charges for load-factor in addition to the electricity charge liable to be paid by respondent is also disputed by the respondent. The applicant is making profit out of demanding excess electricity bill amount which the respondent is not liable to pay. The respondent is, therefore, entitled to refund of a sum of Rs. 6,08,814/- which the respondent has paid in its good faith and which has been illegally charged by the applicant and raised a counter claim. So also contended that the applicant is illegally withholding a sum of Rs. 36,34,628/- without any right the applicant was paid a security deposit on Rs. 13,73,134/- and that amount is also holding by the applicant. The applicant disconnected the electricity and water supply to the rented portion and filed a criminal complaint before the Executive Magistrate. Therefore, the respondent suffered damages for which the applicant is liable to compensate the respondent. The respondent also contends that the claim of the applicant is not an operational debt and, therefore, the application is liable to be rejected with costs to the respondents.

8. Heard both sides, perused the records and the citation referred to on the side of the applicant and on the side of the respondent. Upon hearing the arguments and consideration of the contentions raise on both sides the points that arise for consideration are the following:-

(1) Whether the applicant is an operational creditor and the amount claimed is an operational debt?

(2) Whether there arises bona fide dispute in respect of the claim of arrears of rent as alleged?

(3) Reliefs and costs.

9. The applicant herein is a landlady who licensed out a portion of the 3rd floor allegedly measuring super built area of 2,281 Sqft on executing a License Agreement (Annexure -B) for a period of 9 years. In pursuance of the License Agreement the respondent occupied the premises and started running restaurant from 26/02/2016 onward and was paid rent in terms of the License Deed till November, 2016 and thereafter defaulted and an adhoc amount of Rs. 3,19,019/- alone was paid and remaining amount is in arrears is still due and, therefore, the applicant filed this application under section 9 of the I and B Code.

10. The respondent firstly contends that debt claimed by the operational creditor is neither a debt and nor any operational debt, which the respondent owes to the applicant. According to the respondent the applicant does not fall within the meaning of operational creditor and the respondent cannot be described as a corporate debtor. Accordingly, the application is liable to be dismissed.

11. The applicant herein in the instant case is a landlord who has licensed a portion of her premises to the respondent on the basis of a License Agreement. The application is filed by her claiming arrears of rent allegedly defaulted by the respondents. The claim for arrears of rent no doubt comes under the purview of operational debt as defined under Section 5 (21) of the Insolvency and Bankruptcy Code 2016. It reads as under:

"operational debt" means a claim in respect of the provision of goods or services including employment or a debt In respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority.

12. From a reading of the above definitions it appears to me that arrears of rent arising out of the Agreement to licensee no where exclude from its purview. Ld. Counsel for the applicants referred to Para 5.2.1 of Judgement (2018) 1 Supreme Court Cases 352 -Mobilox Innovations (P) Ltd. vs. Kirusa Software (P) Ltd., so as to stress the argument that a licensee to whom the premises is let out by a landlord is an Operational Creditor to whom the licensee owes monthly rent on a nine year licence period. She stressed the paragraph No.5.2.1 of the above said judgement. It is good to read Para.5.2.1. It reads as follows:

"5.2.1. Who can trigger IRP?

Here, the Code differentiates between financial creditors and operational creditors. Financial Creditors are those whose relationship with the entity is a pure financial contract, such as a loan or a debt security. Operational creditors are those whose liability from the entity comes from a transaction on operations. Thus, the wholesale vendor of spare parts whose spark plugs are kept in inventory by the car mechanic and who gets paid only after the spark plugs are sold is an operational creditor. Similarly, the lessor that the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-year lease. The Code also provides for cases where a creditor has both a solely financial transaction as well as an operational transaction with the entity. In such a case, the creditor can be considered a financial creditor to the extent of the financial debt and an operational creditor to the extent of the operational debt. "

13. The above referred observation in the above cited judgement squirely applicable in the case in hand. Therefore, the objection that the claim of the applicant is not an operational debt is not sustainable under the provisions of the Code and is found devoid of any merit.

Point No.2

14. The applicant here in this case allegedly claimed an amount of Rs. 40,96,295/-as the amount due as arrears of rent inclusive of 18% interest per annum. The claim is on the basis of rental arrangement on the strength of a license deed - Annexure-B. The respondent though received demand notice that sent by the applicant did not care to file a reply. However, contested the application seriously raising disputes in regard to the area of premises let out to the respondent as well as the rate of electricity charges claimed by the applicant. It is contended by the respondent that as per the terms of the License Agreement the respondent agreed to pay for the area measuring approximately 2281 Sq. Ft. of the licensed premises. Subsequent to the occupation and running of business by the respondent, the respondent discovered that the licensed premises does not cover the entire 2281 Sq. Ft. but lesser sq. ft. and that the carpet area in use by the Corporate Debtor does not exceed 1665 Sq. Ft. and there was a mutual understanding and arrangement in between the petitioner and the respondent and the petitioner agreed to adjust the bill with effect from 01.06.2017 and give a set of the amount in excess the corporate debtor has paid to the applicant.

15. According to the Ld. Sr. Counsel appearing for the respondent, despite the understanding, the applicant issued rent bill by reducing the area of licensed premises to 1665 Sqft. from 2281 Sqft., the applicant did not reduce the rent from 2281 to 1665 (1665x88) and according to him electricity charges also has been demanded by adding rate of meter rent at Rs. 200/- transmission loss @10% electricity MCVA Charges and electricity duty which the respondent is not liable to pay. Referring to the terms of agreement at Annexure-D, Ld. Counsel for the applicant submits that as per the Agreement for license the applicant agreed to pay license fee of the licensed premises at Rs. 88/- per Sq.ft. per month to be calculated on super built up area and all other municipal rates and taxes and service tax and all other statutory liabilities as applicable will be payable extra.

16. Admittedly, this term was agreed in between the parties. However, according to Ld. Sr. Counsel for the respondent at the time of occupying the licensed premises by the respondent, the fact of actual area was not brought to its notice and subsequently they came to know that the total carpet area which was occupied by the respondent is less than the super built area referred to in the Agreement and that fact was brought to the notice of the applicant and upon measurement, the area was reduced to 1665 Sq.ft. To strengthen that there was a mutual understanding for reduction of rent limit to the carpet area, the Ld. Sr. Counsel referred to Annexure-A, a copy of letter issued by the applicant to the Urban Development Department of Government of West Bengal, Kolkata dated 04.09.2017. It is an undisputed letter admittedly issued to the Urban Development Department by the applicant for sanction to let out the premises. A reading of the letter shows that the applicant addressed to the authority that the applicant proposed to rent out the place of 1665 Sq.ft. carpet area on the 3rd floor of M/s Ramani Hotels and Resorts Private Limited I Corporate Debtor for carrying on business of restaurant. Admittedly, the agreement for license has been executed on 1st day of January 2016 and the letter dated 04.09.2017 i.e. Annexure-A shows that they have not obtained legal permission to rent out the premises from the Urban Development Department and they have proposed to rent out the space limited to 1665 Sq.ft. carpet area and not 2281 Sq.ft. of super built up area. No valid explanation forthcoming as to why there is a difference in the reduction of sq. ft. in the letter for permission sent by the applicant to the authority which would have send before leasing out the premises to the respondent. It is an indication that there was a deliberation in between the applicant and the respondent in respect of the area in use by the respondent. It is a circumstance strengthening that there was a mutual understanding for reduction of the area in use by the respondent.

17. At this juncture, it is good to refer to a rent bill copy produced by the applicant claiming arrears of rent at page No.63 of the application. The carpet area in the demand rent bill shows 1665 Sq.ft. In the columns of rate of rent per month is kept as blank and the amount shown as Rs. 2,00,728/-. That means though carpet area is reduced proportional reduction of rent is not done as per the bill. The explanation forthcoming on the side of the applicant is that because the rate of rent was fixed as per the license deed is for super built area and not for carpet area and hence applicant is not liable to reduce the rent. Then why the reduced area as carpet area is shown in the bill no valid explanation. It is one another circumstances adding strength to the contention on the side of the respondent that there was an understanding but that understanding was not materialized from the side of the applicant and no valid reason advanced to substantiate her contention.

18. Similarly, Ld. Sr. Counsel refers to a copy of complaint lodged by the applicant before the Ld. Executive Magistrate, Kolkata. Annexure-I is the copy of the complaint filed under section 144 (2) of the Code of Criminal Procedure, 1973. A reference of said compliant, it is understood that in respect of the demand of license fee I rent in terms of license agreement, a dispute arose in between the applicant and the Respondent and there was a protest from the respondent and fearing breach of law and order situation, the applicant approached the authorities. The Ld. Executive Magistrate called for an Inspection report, a copy of the inspection report annexed at Page No.109 of the reply affidavit shows that there arises a dispute regarding the non-payment of rent from the month of December 2016 in view of license fee, electricity charges and utility service charges and other statutory fees and considering the objection on the side of the opposite party the respondent herein Ld. Executive Magistrate dismissed the application observing that it is a civil dispute and the remedy is to approach before the appropriate forum of the law. Immediately after the dismissal of the complaint, the applicant seen filed the instant case before the Adjudicating Authority. The above said circumstances leads to a conclusion that there exist a bonafide dispute regarding the area of demised premises and the rate of rent liable to be paid by the respondent prior to the date of issuance of demand notice. An understanding in between the applicant and respondent for reduction of rent in proportion of the area in use also cannot be ruled out from the peculiar circumstances brought out in the case in hand.

19. Ld. Sr. Counsel at this juncture referring to the Mobilox Innovations Private Limited vs. Kirusa Software P. Ltd. [(2018) 1 SCC 353] submits that this adjudicating authority may not go into the merits of the dispute but to see whether there is any further investigation is necessary for coming to the conclusion of the disputes set up on the side of the respondent. He relied upon paragraph No.51 of the above cited decision, it reads as follows:

"It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application."

20. The above sa

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id proposition squarely applicable in the case in hand. No doubt the following questions arises for having a fair and just conclusion of the dispute raised by the respondent. Whether there was an understanding in between the applicant to reduce rent on the basis of carpet area?; whether the applicant agreed to provide a sett-off the alleged excess rent paid by the respondent? Whether the respondent is entitled to claim damages on account of disconnection of electricity are some of the questions liable to be answered in the case in hand which could not be answered with out having larger evidence on either side. No doubt further investigation is necessary for a rightful conclusion of the dispute raised by the respondent. Existence of a bonafide dispute therefore stand established in this case. 21. One another argument on the side of the respondent is that no amount is due as license fee to the applicant as on the date of filing the application and that entire amount liable to be paid by the respondent was discharged. According to him, the respondent paid rent calculated @ 1665 Sqft. and set off the earlier arrears liable to be paid to the respondent and there is no current dues payable. To strengthen the said contentions, the respondent referred to Statement of Bank Accounts produced by the applicant as Annexure-H at page No.194 of the application. The details of the payment of rent credited to the applicant by way of cheque seen paid after the demand made by the petitioner. Alleging dispute regarding the rate of rent liable to be paid on the basis of carpet area, with out settling the dispute it cannot be hold that the adhoc amount admittedly paid by the respondent would discharge the entire liability towards rent arrears. However for the aforesaid reasons, the respondent being established per-existing dispute comes under Section 5(6) of the Code, an application of this nature is not found maintainable. Therefore, this petition is liable to be rejected. 22. In the result this petition is rejected. However, no order as to costs. 23. Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.
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