{"id":269863,"date":"2022-07-09T10:00:26","date_gmt":"2022-07-09T04:30:26","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=269863"},"modified":"2025-05-15T12:04:32","modified_gmt":"2025-05-15T06:34:32","slug":"can-lease-rental-come-under-the-purview-of-operational-debt-nclat-elucidates","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2022\/07\/09\/can-lease-rental-come-under-the-purview-of-operational-debt-nclat-elucidates\/","title":{"rendered":"Can Lease Rental come under the purview of \u2018Operational Debt\u2019? NCLAT elucidates"},"content":{"rendered":"
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National Company Law Tribunal, New Delhi:<\/span> The Bench of Ashok Bhushan J., Chairperson, Rakesh Kumar Jain and Rakesh Kumar, JJ, Judicial Members, and Barun Mitra and Naresh Salecha, Technical Members, have held that lease rentals for business purposes fall under the definition of ‘Operational Debt' as per Section 5(21)<\/a> of the Insolvency and Bankruptcy Code, 2016<\/a> (IBC).<\/p>\n

Background of the case<\/p>\n

The Appellant, corporate creditor entered into a license agreement with the Respondent, corporate debtor for five years. As per the agreement the appellant granted a license to the respondent to use a building for business purposes with a total super area measuring 31000 sq. ft. The license fee was agreed to be Rs 4,00,000\/- plus government taxes on monthly basis.<\/p>\n

The respondent made payment to the appellant through two cheques of amount Rs 20,00,000\/- each dated 07-05-2018 and 08-10-2018 respectively. Both the cheques were dishonored. On 03-05-2019, the Appellant sent a demand notice under Section 8 of IBC, to which no reply was given by the respondent. Hence, on 09-05-2019, the appellant filed an application for initiation of the Corporate Insolvency Resolution Process against the respondent under Section 9 of IBC.<\/p>\n

The Adjudicating Authority dismissed the application under Section 9 of IBC stating that the claim arising out of a grant of license to use the immovable property does not fall in the category of goods or services, thus, the amount claimed in Section 9 Application is not an unpaid operational debt. Therefore, the appellant filed a company appeal before a larger bench.<\/p>\n

The issue before the bench<\/p>\n