{"id":237450,"date":"2020-10-15T09:06:59","date_gmt":"2020-10-15T03:36:59","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=237450"},"modified":"2020-10-30T11:34:56","modified_gmt":"2020-10-30T06:04:56","slug":"nclat-can-lease-rentals-arising-out-of-use-and-occupation-of-a-cold-storage-unit-be-categorised-as-operational-debt-under-s-521-ib-code-find-out-tribunals-ruling","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2020\/10\/15\/nclat-can-lease-rentals-arising-out-of-use-and-occupation-of-a-cold-storage-unit-be-categorised-as-operational-debt-under-s-521-ib-code-find-out-tribunals-ruling\/","title":{"rendered":"NCLAT | Can lease rentals arising out of use and occupation of a cold storage unit be categorised as ‘Operational Debt’ under S. 5(21) I&B Code? Find out Tribunal’s ruling"},"content":{"rendered":"

National Company Law Appellate Tribunal (NCLAT):\u00a0<\/strong>A Coram of Venugopal M. (Judicial Member) and Shreesha Merla (Technical Member), while addressing the present company appeal observed that,<\/p>\n

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“…subject lease rentals arising out of use and occupation of a cold storage unit which is for Commercial Purpose is an \u2018Operational Debt\u2019 as envisaged under Section 5 (21) of the I&B Code<\/a>.”<\/p>\n<\/blockquote>\n<\/div>\n<\/div>\n<\/div>\n

National Company Law Tribunal, Mumbai’s Order has been challenged in the present appeal.<\/p>\n

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Leave & License Agreement<\/span><\/h4>\n

National Agriculture Co-operative Marketing Federation of India Ltd.\/Operational Creditor and the Corporate Debtor entered into a Leave and License Agreement for the usage of cold storage facilities for a period of 3 years.<\/p>\n

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As per Clause 1.14 of the said Agreement, in case of default in payment of any monthly licence fee, the Corporate Debtor would be liable to pay an interest @ 21% p.a. for the delayed period.<\/p>\n

Default in Payment<\/span><\/h4>\n

The first respondent stated that the Corporate Debtor defaulted in the payment of monthly rentals. Further, the first respondent stated that the Corporate Debtor acknowledged and confirmed the ‘outstanding debt’ but despite a number of reminders and eviction notice, the debt was not paid.<\/p>\n

In view of the above, a demand notice<\/strong> under in Form 3 under Section 8 of I&B Code, 2016 was issued.<\/p>\n

Corporate Debtor denied all the above-stated claims and sought the renewal of Leave and License Agreement.<\/p>\n

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Counsel for the Appellant vehemently argued that the \u2018Adjudicating Authority\u2019 had passed an \u2018Ex-Parte Order\u2019 without giving it a sufficient opportunity to be heard.<\/p>\n<\/div>\n<\/div>\n<\/div>\n

Tribunal | Decision Analysis<\/span><\/h3>\n

Opportunity of being heard<\/span><\/p>\n

Tribunal found force in appellant counsel’s submission that the appellant was in custody during the period and hence the minimal delay of 9 days ought to be condoned.<\/p>\n

Tribunal noted that letters dated 15-07-2019 and 18-09-2019 were received by the Advocate for the Corporate Debtor which establish that the Corporate Debtor was aware of the proceedings.<\/p>\n

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Additionally, the Corporate Debtor is a Private Limited Company and it cannot be stated that it could not have been represented by any other person merely because the Director of the Corporate Debtor Company, was in custody.<\/p>\n

Hence in view of the above-stated reasons, tribunal opined that sufficient opportunity was given.<\/p>\n

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