Skip to main content

Insolvency: Lease premium amount and lease rent are not outside the purview of moratorium

Cause Title : Sunil Kumar Agrawal vs New Okhla Industrial Development Authority, Company Appeal (AT) (Ins.) No. 622 of 2022, National Company Law Appellate Tribunal Principal Bench

Date of Judgment/Order : 12.01.2023

Corum : Justice Rakesh Kumar Jain

Citied: 

Background

NOIDA entered into a lease deed dated 19.08.2011 with M/s GSS Procon Pvt. Ltd. (CD) for the purpose of constructing residential flats on some land. The lease deed was executed for a period of 90 years and the lessee was to pay the lease premium as well as lease rent according to a schedule mentioned therein. The premium was to be paid from 26.02.2014 to 27.07.2021. However, as the Lessee failed in its commitment, an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was filed. The RP being appointed, NOIDA submitted a letter dated 04.06.2021 to the RP highlighting its dues towards lease premium calculated from 11.10.2019 to 30.06.2021 of a sum of Rs. 15,54,52,427/- and lease rent of the year 2020- 21 and 2021-22 of Rs. 60,74,170/-. The Authority had requested the RP to make the payment of the dues which comes to Rs. 16,15,26,597/- within a period of 15 days. When RP did not reply in time, Section 60(5)(c) read with Rule 11 of the NCLT Rules, 2016 which was allowed by the Adjudicating Authority based on the law laid down in Section 14(1) of the Insolvency Code and lead to filling of appeal by the RP.

The Appellant submitted that Section 14(1)(d) of the Code  is not applicable at all since the explanation provided under Section 14(d) permitting license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority to continue irrespective of the insolvency process does not apply to lease rent and premium while the Respondents said that lease and premium shall fall within the words “similar grant or right” mentioned the said explanation.

Judgment

Section 14: Moratorium.
14. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:—
.......
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
[Explanation.—For the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;]

The NCLAT allowing the appeal decided that while during the moratorium period under Section 14 of the Code,  there is prohibition against recovery of any property by a lessor, the explanatory note under Section 14(1)(d) says that a license, permit, registration, quota, concession, clearance or a similar grant or right either given by the Central Govt., State Govt. local authority, sectoral regulator or any other authority constituted under any other law shall not be suspended or terminated on the grounds of insolvency provided that there is no default in payment in dues of such license, permit, registration, quota, concession, clearance or a similar grant or right during the moratorium period. 

The NCLAT held that the similar grant or right has to be read in respect of the licence, permit, registration, quota, concession, clearance but it cannot be read as the premium amount or lease rent.


Comments

Post a Comment

Most viewed this month

Appellate authorities under Special Statutes cannot be asked to condone delay

Madras High Court in R.Gowrishankar vs. The Commissioner of Service Tax has held that Appellate authorities cannot be asked to condone the delay, beyond the extended period of limitation A Division Bench comprising of Justices S. Manikumar and D. Krishnakumar, made this observation while considering an appeal filed against Single Bench order declining to set aside the order made in the condone delay petition filed by the petitioner to condone 223 days in filing the appeal before the Commissioner of Service Tax (Appeals). Article referred: http://www.livelaw.in/appellate-authorities-special-statutes-cannot-asked-condone-delay-beyond-extended-period-limitation-madras-hc/
Post a Comment
Read more

'Seize assets to pay damages to accident victim'

Her story might be an inspiration for the physically challenged but justice has remained elusive for her. In 2008, a bus accident left research engineer S Thenmozhi, 30, paraplegic. In April 2013, the motor accident claims tribunal directed the Tamil Nadu State Transport Corporation (TNSTC) to provide her a compensation of 57.9 lakh. However, TNSTC refused to budge and on Tuesday a city court ordered attaching of movable assets of the transport corporation. Thenmozhi was employed in C-DOT, a telecom technology development centre in Bangalore. On July 21, 2008, she was coming to Chennai in a private bus. Around 2am, the bus had a flat tyre and the driver parked it on the left side of the road near Pallikonda in Vellore district on the Bangalore-Chennai highway. While the tyre was being changed, a TNSTC bus of Dharmapuri division hit the stationary bus. The rear part of the bus was smashed and passengers were injured. Thenmozhi who had a seat at the back of the bus suffered...
Post a Comment
Read more

Mumbai ITAT rules income of offshore discretionary trust is subject to tax in India

The Mumbai Income Tax Appellate Tribunal (ITAT) has recently determined the following issue in the affirmative in the case of Manoj Dhupelia: Should the income of an offshore discretionary trust be subject to tax in India, if no distributions have been made to beneficiaries in India? The question arose from appeals filed by individual beneficiaries in relation to a Lichtenstein-based trust, the Ambrunova Trust and Merlyn Management SA (the Trust) with the ITAT. It is important to note that the individuals in this case were amongst those first identified by the Government of India (GOI) as holding undeclared bank accounts in Lichtenstein. The ITAT ruling raises the following issues: Taxation of Trust Corpus: ITAT classified the corpus of the trust as "undisclosed income" and declared it taxable in the hands of the beneficiaries. Taxation of Undistributed Income: ITAT refused to draw a distinction between the corpus and undistributed income from the trust and declared i...
Post a Comment
Read more