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TMI Blog2019 (5) TMI 1959X X X X Extracts X X X X X X X X Extracts X X X X ..... lication is at Pages 19 to 20 of the application. Vide Board Resolution dated 14.08.2018 the Operational Creditor authorized Sh. Chandan Sand Sr. VP (Legal) & Company Secretary in respect of matters relating to the Corporate Debtor. Sh. Chandan Sand was also authorized to delegate the power. Vide authority letter dated 03.10.2018, Sh. Chandan Sand Sr. VP (Legal) & Company Secretary authorized Sh. Vijay Kumar Roy Deputy General Manager (Legal). 2. The Master Data of the Corporate Debtor is at Annexure-A3 of the application. The Corporate Debtor was incorporated on 04/05/2011 and its CIN is U45400DL2011PTC218553. The registered address is 227, Square One, Saket District Centre, Saket, New Delhi, 110017. Therefore, the jurisdiction lies with this Bench of the Tribunal. 3. It is stated in Part-IV of form No.5 that the Corporate Debtor is in real estate construction and development business and that the Operational Creditor is in the business of operating scheduled private airlines for passengers and cargo. It is stated that the Corporate Debtor and Operational Creditor executed a letter of intent on 31/07/2015 (LOI) for construction, furnishing and signing of Servicing Lease Agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Professional (IRP) has been proposed. 4. Vide order dated 12.10.2018, the Operational Creditor was given opportunity to bring on record the documents proving the nature of debt in order to pursue the application under Section 9 of the Code. The additional documents were filed by diary dated 11.02.2019. Vide order dated 14.11.2018, the Corporate Debtor was directed to file the reply and rejoinder if any, was also to be filed. The reply was filed by diary no.9275 dated 26.11.2018 and the rejoinder was filed by diary dated 15.01.2019. Application for condonation of delay in filling the application under Section 9 of the Code was filed by the Operational Creditor by diary dated 15.01.2019. 5. In the reply, the Corporate Debtor has submitted that the debt, as alleged, is not an Operational Debt in terms of Section 5(21) of the Code and that under Clause 7 of the LOI, interest free security deposit (IFSD) was to be given by the Operational Creditor to the Corporate Debtor for the purpose of entering into a lease deed and the deposit of three months' rent of Rs.48,00,000/- per month (minus maintenance charges of Rs.8,00,000/- per month) coming to Rs.1,20,00,000/- was to be paid at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication is barred by limitation as it is filed after the expiry of three years from the date when the alleged date fell due. It is also stated that the basis of the alleged debt i.e. the LOI dated 21.07.2015 was only conditionally accepted by the Corporate Debtor and that the reason for accepting the LOI conditionally was the unacceptance of the Clause containing the provision of refund and this understanding was also in the knowledge of the Operational Creditor and that is the precise reason for which the Operational Creditor never demanded a refund during the period of 3 years within limitation. 6. In the rejoinder, it is submitted that the sum received under the LOI dated 31.07.2015 is in the nature of Operational Debt since Clause 15 of LOI shows that the LOI was for providing architectural, design and furnishing service to the Operational Creditor and that the Corporate Debtor in its reply to the demand notice under Section 8 has admitted in unequivocal terms that it provided services to the Operational Creditor. Reference in this regard has been made to the Memorandum of Understanding dated 15.06.2015 stated to be executed by the Corporate Debtor with Jan Sewa Trust and en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Goods and Services by the Corporate Debtor. Thus, it fell within the definition of Operational Creditor, to whom an Operational Debt was owed by the respondent Corporate Debtor. The Learned Counsel for the Corporate Debtor has relied on the reply and has submitted that the business of the Corporate Debtor is of renting out of properties and that no invoice was raised on the Operational Creditor. It is submitted that the amount of Rs.1,20,00,000/ - is security deposit and not an advance and the amount may be a debt but not an Operational Debt. 8. We have carefully considered the submissions of the Learned Counsel for the Operational Creditor and the Corporate Debtor and have also perused the record. As per Part-IV of Form 5, the principal amount due stated to be Rs.1,20,00,000/- and the date on which the amount became due is stated to be 21.09.2015. it is stated in Part-V that as per the terms of the LOI, interest free deposit inter alia of three months rental was payable within 7 days of signing the LOI and that pursuant to the condition, the Operational Creditor deposited a sum of Rs,1,20,00,000/- as deposit with the Corporate Debtor, being equivalent to three months ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods and rendering of services and the Appellants claim was in respect of such provision of goods and services. Viewed in this perspective, it can be stated without any hesitation that the appellant having advanced 10% of the contract value to Respondent- sub-contractor as advance payment had a claim in respect of provision of goods or services bringing him within the definition of Operational Creditor, to whom an 'Operational Debt' was owed by the respondent- Corporate Debtor". 12. The Learned Counsel for the Operational Creditor has referred to Clause 15 of the LOI which reads as under:- Section 15 Fit-outs Rent Free Timelines To be offered fully fitted out as per client specification and as per attached layout, Annexure 2. Will attach the fit out layout. The below timeline is agreed. 1. Signing of LOI and exchange of 3 months of initial deposit. 2. Lessor to finalise design as per lessee architect team and complete fit out in 3 months from design and BOQ finalization. 3. 30 days of rent free post lessor completing Fit-outs and offering possession to the lessees for a fully furnished facility as per the specification of the Lessee. Rent commencement from the 31st day f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consultancy for Spice Jet Office". The description is only for the purpose of specifying the nature of the work done. The invoice is issued by the Architect in the name of the Corporate Debtor. As already discussed above, the expenditure is for the purposes of fulfilling the obligations under the LOI of the Corporate Debtor. 14. It has been pleaded by the Learned Counsel for the Corporate Debtor that they are engaged in the business of renting out the properties and that no invoice regarding any services was raised on the Operational Creditor. In Part IV of form no. 5, the Operational Creditor has accepted that the Corporate Debtor is in real estate construction and development business. The reference by the Corporate Debtor in reply to the demand notice is with relation to the business activity of leasing of fully furnished premises. The engagement and payment to the Architect is only for providing fully furnished premises under the LOI for the purpose of receiving rental per month of Rs.48 lacs including Rs.8 lac toward maintenance charges (refer Clause V of the LOI). The Operational Creditor has not proved that any architectural design and furnishing services, independent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 5(21) of the Code. The judgment is applicable to the facts of the present case where the LOI provides for a proposed lessor and proposed lessee relationship between the Corporate Debtor and the Operational Creditor and payment of rental per month for the fully furnished premises. Therefore, the IFSD of Rs.1,20,00,000/- does not have any relation to any Operational Debt. 18. The Corporate Debtor has referred to the addendum (Annexure- A6 of the application). However, during the course of the arguments the Learned Counsel for the Operational Creditor has not been able to refer to any clause of the addendum which would substantiate his plea that consultancy, Architectural design and furnishing service were provided by the Corporate Debtor and the amount of Rs.1,20,00,000/- is not IFSD. Therefore, the issues raised with reference to the addendum, including the addendum not being signed by the Corporate Debtor, are not been examined. 19. The Learned Counsel for the Corporate Debtor has referred to clause 21 of the LOI and has stated on termination of LOI, the amount paid by the Operational Creditor to the Corporate Debtor is to be promptly refunded by the lessor. On the other h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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