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TMI Blog2021 (12) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... en Kumar (Liquidator, R2) Kamalkant Chhabra (for Tamilnadu Mercantile Bank) JUDGMENT Jarat Kumar Jain: J. The Applicant "Mrs. Prerna Singh" has filed the Application seeking initiation of Contempt proceedings against the Members of Committee of Creditor (CoC) and Resolution Professional (RP) of M/s Xalta Food and Beverages Pvt. Ltd. for wilful and deliberate disobedience of the order dated 31.01.2019 passed by this Appellate Tribunal in CA (AT) (Ins) No. 104 of 2019 for recovery of arrears of rent due. 2. Brief facts of this case are that the Corporate Insolvency Resolution Process (CIRP) was initiated on 25.07.2018 against the Corporate Debtor "M/s Xalta Food and Beverages Pvt. Ltd." The Corporate Debtor was running a business of production of beverages and allied products, was functioning from two warehouses leased to it by the Applicant. The current rate of these two warehouses is Rs. 35,73,270/- including GST. After initiation of CIRP the Corporate Debtor under the management of CoC and RP, continued to occupy the lease premises but ceased paying rent thereof. 3. Ld. Adjudicating Authority allowed the Applicant's Application vide order dated 21.12.2018 and directed the CoC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period w.e.f. date of commencement of CIRP, the total outstanding as on date is Rs. 4,75,26,547/-. None of the members of the CoC of the Corporate Debtor have made complete up to date payment of rent and continuing to defy the orders passed by this Appellate Tribunal. 7. The Applicant has taken loans to the tune of Rs. 27,30,00,000/- for construction of leased premises, which were secured against the rent receivable. The Applicant has to meet her liability to pay the EMIs amounting to Rs. 34,46,376/- for loans availed by her and also has to remit GST of Rs. 5,24,193/- on the rent receivable each month since this liability accrues irrespective of actual payment of rent. The Applicant has been compelled to meet the said liabilities through other sources putting her in a debt trap for no fault of her. As now it is become impossible for the Applicant to continue to meet her liabilities. 8. The Contemnors in terms of order dated 31.01.2019 passed by this Appellate Tribunal was required to pay the entire arrears of rent by 28.02.2019 and thereafter for each subsequent months by 15th of the next month. However, the Contemnors have wilfully and deliberately flouted the aforesaid direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Law Appellate Tribunal, Rules, 2016. This Appellate Tribunal in the case of Gireesh Kumar Sanghi Vs. Mr. Ravi Sanghi & Ors. CA (AT) (Ins) No. 156 of 2019 held that Section 425 of the Companies Act empowers the Tribunal and Appellate Tribunal to punish for contempt of its own order. Thus, the Application under Section 11 is not maintainable and deserves to be dismissed in limine. It is also submitted that vide order dated 14.06.2019 the Adjudicating Authority directed for initiation of Liquidation of the Corporate Debtor and the Respondent No. 2 is currently acting as its liquidator under Section 34(1) of the IBC. The same order dated 14.06.2019 has been further clarified vide order dated 11.06.2021. Once liquidation is initiated, creditors have to submit their claims in terms of Regulation 16 of Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. The Respondent No. 2 has issued a public announcement on 14.06.2021 and has also sent an email dated 03.07.2021 to the Applicant. Pursuant to which the liquidator has also received the claim from the Applicant. The payment of any outstanding rental dues which occurred during the CIRP period being an I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 31.05.2019 whereby the CoC ceased to the moratorium to ended on 31.05.2019. The lender banks were not liable to pay any rent as CIRP costs for any period thereafter. Thus, the Application is liable to be dismissed. 13. Ld. Counsel for the Respondent No. 12 representing "M/s Delhi Safe Despite Company Ltd." submitted that the rent is a direct costs and as such rent is the amount of default like any other Operational Debt. Thus, the Applicant become Operational Creditor. The Hon'ble Supreme Court had observed in the Judgment of Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. (2018) 1 SCC 353 that the lessor is an Operational Creditor, here the Applicant is pursuing the pressure tactics by initiating Contempt proceedings instead of filing claim as Operational Creditor. It is further submitted that the CoC Member should not be burden with additional expenses towards the rent. The CoC members are already struggling to recover the money from the Corporate Debtor. The Applicant should file his claim before the Liquidator. Respondent No. 12 is not liable to pay the rent to the Applicant, as CIRP Regulations 31 to 34 do not provide rent to be included in the Insolvency Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied by the Board; 19. Section 14(1) (d) provides that during the moratorium period the lessor or an owner of the property cannot recover the possession of the property from the Corporate Debtor. Regulation 31 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016 is as under:- 31. Insolvency resolution process costs. "Insolvency resolution process costs" under Section 5(13)(e) shall mean- (a) amounts due to suppliers of essential goods and services under Regulation 32; (b) amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under section 14(1)(d); (c) expenses incurred on or by the interim resolution professional to the extent ratified under Regulation 33; (d) expenses incurred on or by the resolution professional fixed under Regulation 34; and (e) other costs directly relating to the corporate insolvency resolution process and approved by the committee. 20 As per Regulation 31 Insolvency Resolution Process costs under Section 5(13) (e) mean defined in clause (a) to (e). for the present case, Regulation 31 (b) is relevant which provides that amounts due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (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 insolv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder for liquidation of corporate debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. 28. Ld. Counsel for the Applicant has advanced the argument that as per the Section 33(5) of the Code, the moratorium exists both at the stage of Insolvency Resolution Process and also upon passing of liquidation order as per Section 33 (5) of the Code. Thus, moratorium continues till date. 29. Section 14(4) is quite clear and there is no ambiguity that from the date of initiation of the liquidation order under Section 33, the moratorium shall cease to have effect, so far as the Section 33(5) is concerned, it provides that subject to Section 52 when a liquidation order has been passed no suit or other legal proceedings shall be instituted by or against the Corporate Debtor, provided that suit or other legal proceedings may be instituted by the Liquidator on behalf of the Corporate Debtor with the prior approval of the Adjudicating Authority. It means after initiation of liquidation order no suit or other legal proceedings shall be instituted by or against the Corporate Debtor. However, during the liquidation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavit disputing the facts and the amount stated in additional affidavit of the liquidator (Respondent No. 2). Thus, it is proved that the Applicant has received total amount of Rs. 3,02,11,464/- after passing of the order dated 31.01.2019. 35. As per the Applicant the current rate of two warehouses is Rs. 35,73,270/- including GST. As per the order of this Appellate Tribunal the Applicant is entitled rent 01.12.2018 up to moratorium period i.e. 13.06.2019 just before initiation of liquidation. It comes to Rs. 2,29,88,037 for 6 months 13 days. The Applicant has already received the amount of Rs. 3,02,11,464/- as shown in the Affidavit of the Respondent No. 2. Thus, the Applicant has already received the rent as per the order of this Appellate Tribunal. 36. It is not out of context to refer that during the course of argument. It is informed that the suspended board of directors of the Corporate Debtor have assailed the order dated 11.06.2021 passed by the Adjudicating Authority in CA (AT) (Ins) No. 438 of 2021 before this Appellate Tribunal and in this Appeal the Judgment is reserved. In the present matter, we have reserved the Judgment on 25.11.2021. Subsequently, the Coordinate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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