Shree Shyam Avenues Pvt Ltd vs Vaxtex Cotfab Ltd

ORDER

c)

The present application has been preferred by the Applicant under Section 9 of the Code for the purported non-payment of debt arising out of a sub-lease agreement between Respondent and Hillary Fashion Coftab Limited. The Applicant being the Lessor, does not fall within the meaning of ‘Operational Creditor’ as provided under section 5(20) read with section 5(21) of the ‘Insolvency and Bankruptcy Code, 2016 as the Applicant has never provided the Respondent with any goods or services or any such employment, as is required under the statutory scheme of the code. Hence, the present Application is preferred with the mala fide intent to abuse the process of law.

The Respondent has relied upon the decision given by Hon’ble NCLAT, New Delhi in the matter of Mr. M. Ravindranath Reddy Versus Mr G. Kishan & Ors., Company Appeal (AT) (Insolvency) No. 331 of 2019.

d)

It is stated that the present company petition has been preferred upon breach of terms of Settlement Agreement vide decree dated 11.01.2021 passed by the Hon'ble Fifth Additional Senior Civil Judge, Ahmedabad (Rural), at Ahmedabad, Mirzapur. The breach of settlement agreement cannot be a ground to trigger CIRP against the Respondent under the purview of IBC and the remedy for the same may lie elsewhere i.e. execution proceedings and it is further stated that this Hon'ble Tribunal is court of rehabilitation and not a court of execution. Reliance is placed on the decision given by Ld. NCLT, Allahabad Bench in the matter of M/s Delhi Control Devices (P) Ltd Vs. M/s Fedders Electric and Engineering Ltd., Company Petition (IB) No.343/ ALD/2018.

e)

It is stated that a “decree-holder” cannot be considered an Operational Creditor within the meaning as provided under section 5(21) of the Code and thus cannot prefer an application under section 9 of the code seeking initiation of CIRP.

f)

It is stated that the Applicant is not entitled to any relief as there is pre-existing dispute between the parties with regards to the alleged claim. Further, the Applicant concealed the fact that the Respondent on 23.09.2022, had issued a notice qua the concealment of facts by Applicant pertaining to the closure notice issued by GPCB and that the Applicant had also changed the password due to which the Respondent was disabled from filing revocation application, the Respondent had to incur hefty losses. That to the said notice of the Respondent, the Applicant had also issued a reply, this shows that, the Applicant herein was well aware of the existing dispute and has approached this Hon’ble Tribunal with unclean hands.

g)

It is stated that there was no such agreement for payment of interest amount on delayed payment in rent dues however, the Applicant has added an interest @18% per annum to the alleged Operational Debt claim with an intention to meet the threshold of Rs. 1 Crore. Further, the Applicant has also included third party charges, in the alleged claim, such as electricity bill, NTIEM penal charges, NTIEM bill and Municipal Corporation Tax whereas as per the compromise agreement the Respondent was to directly pay the Electricity Bill and Municipal Corporation Tax and no amount was to be claimed by Applicant. Furthermore, certain charges which can be claimed only by M/s. Aggarwal Dyeing & Printing Limited are also clubbed to reach the threshold limit of Rs.1 Crore. Hence, the alleged Operational Debt claimed are in the nature of damages and has been mischievously adjusted to meet the threshold for the purpose of filing application under section 9 of the Code.

h)

It is stated that the Applicant has filed the present application with the primary object of recovery of its alleged dues and fails to consider that Respondent is a going concern.

i)

It is stated that there is substantial difference in the amount claimed in the Demand notice and the amount claimed in the present Petition which shows that Petition is filed for sole purpose of recovery.

j)

The Applicant has simultaneously initiated action against the Respondent for execution of decree passed by the Hon’ble Fifth Additional Senior Civil Judge, Ahmedabad (Rural), at Ahmedabad, Mirzapur.

a)

The Applicant states that possession of the processing house is not disturbed and the suit was filed seeking possession of the processing house, payment of rent and to restrain the Corporate Debtor from further sub-renting the processing house.

b)

The Applicant denies the receipt of letter dated 23.09.2023 and also denies that any reply was given vide letter dated 29.09.2023. It is stated that Applicant received an email dated 30.08.2022 from Pratapsingh Zala on behalf of Respondent requesting to share login credentials of applicants account with the Gujarat Pollution Control Board (“GPCB”). The Applicant rejected the said request vide email dated 30.08.2022 in view unpaid dues of the Respondent. Thereafter, the Respondent tried to access Applicants account without authorization. The said fact was intimated by Applicant to GPCB however, no action was taken. The Applicant then took action in accordance with law and the management of GPCB took cognizance of the offence committed by the Respondent. The Respondent conceded to the allegation and tendered an apology in view of which no penalty or punishment was imposed against the Respondent. Thus, there exists no pre-existing dispute as alleged by the Respondent.

c)

The Applicant submits that dues of the Applicant are towards unpaid license fee which is fully covered within the meaning of ‘operational debt’ under section 5(21) of the code arising out of the leave and license agreement dated 01.10.2015 and also fortified by the consent decree dated 11.01.2021.

d)

The Applicant denies that the application is filed on the basis of breach of terms of settlement and submits that it has been preferred towards non-payment of its operational dues arising out of the Respondents possession of the processing house and its failure to pay dues towards statutory authorities.

e)

The Applicant submits that original debt is merged in the decree and the person who was originally a creditor became a decree-holder afterwards, it does not in any way destroy the Applicants character of the money due to him from the Respondent as a debt and therefore, the Applicant has rightly preferred the present petition in the capacity of an Operational Creditor.

f)

The Applicant states that the Respondent is attempting to raise moonshine defense under the garb of a pre-existing dispute without placing on record any evidence supporting the same. The Respondent by way of settlement agreement has admitted its liability under the settlement agreement and the same is a testament to the fact that there is no pre-existing dispute between the parties and the Corporate Debtor is liable to pay the debts owed to the Applicant.

g)

The Applicant is an MSME and the provisions of Micro, Small and Medium Enterprises Act, 2006 are applicable to the Applicant on the basis of which an interest at the rate of 18% per annum has been imposed on non-payment of dues from the Respondent within the prescribed period of time. Further, the account utilized by Respondent with government authorities and service providers are associated with the Applicant thus, the Applicant is responsible for ensuring that the dues of these institution are paid on time to avoid any penal interest and closure of accounts. Therefore, the Applicant is the rightful claimant of the dues. Even if the said charges are not considered still the amount payable toward rent and applicable interest is greater than Rs. 1 Crore thus making present petition maintainable.

h)

The Applicant states that Corporate Debtor has failed to pay its dues towards the Applicant pertaining to the possession of the processing house and even failed to make the payment of requisite dues towards Statutory Authorities therefore, the Applicant has preferred the present application for resolution of Corporate Debtor.

i)

The Applicant states that there is no substantial difference in the amount claimed in the demand notice and in the present petition. The additional amount of Rs.8,47,087/- has become due and payable for the month of October, 2022 after the demand notice was issued and therefore the amount sought for in the application is greater than what is mentioned in the demand notice.

j)

The Applicant states that Applicant has preferred a petition for execution of decree passed by the Hon’ble Fifth Additional Senior Civil Judge, Ahmedabad (Rural), at Ahmedabad, Mirzapur only for the limited purpose of obtaining possession of the processing house. The Hon’ble Fifth Additional Senior Civil Judge, Ahmedabad (Rural) have approved the execution of decree vide order dated 25.01.2023 and directed the Respondent to hand over the vacant possession of the processing house to the Applicant.

“(1)

Judgement 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.”

“Considering the fact that the Appellant/Operational Creditor in the Company petition in IB 185/ND/2019 before the National Company Law Tribunal, the Principal Bench had come out with a plea that the Respondent/Corporate Debtor owes a sum of Rs. 8,85,000/- and for which a demand notice dated 11.3.2019 was issued to the Respondent/Corporate Debtor for which no reply was issued by the Respondent/Corporate Debtor to the Appellant/Operational Creditor and this Tribunal taking note of the prime fact that the Appellant/Operational Creditor is a 'Decree Holder' as per the 'Consent Decree' passed on 25.10.2018 in Civil Suit No. 6912 of 2016 by the Learned Additional District Judge, Saket Court, New Delhi, this Court comes to an irresistible and inescapable conclusion that a 'Decree Holder' is no way excluded from the purview of the ambit of the term 'Operational Creditor' as per Section 5(20) of The Insolvency and Bankruptcy Code 2016 and the contra view taken by the 'Adjudicating Authority' in the impugned order is clearly held by this Tribunal as an unsustainable one in the eye of Law.”