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TMI Blog2023 (1) TMI 946X X X X Extracts X X X X X X X X Extracts X X X X ..... Ins) No. 04 of 2022 have been filed under section 61 of Insolvency and Bankruptcy Code, 2016 (in short 'IBC') by the Appellants, who are aggrieved by order dated 6.8.2021 (hereinafter called 'Impugned Order') in CA (IB) No. 58/2022 respectively, passed in the three interlocutory applications filed in CP (IB) No. 223/ALD/2019 by the Adjudicating Authority (National Company Law Tribunal, Allahabad Bench). The Adjudicating Authority has dealt with the three applications, namely, IA No. 199/2020, C.A. No. 57/2020 and CA No.58/2020 through the common order, which is the Impugned Order. 2. CA NO. 57/2020 and CA No. 58/2020 were filed by Jhunjhunwala Oil Mills Limited (in short 'JOML') praying for direction to the Resolution Professional (in short 'RP') of the corporate debtor JVL Agro Industries Pvt. Ltd. (in short 'JVL Agro' ) to pay the rent alongwith interest of the premises owned by JOML which was used by JVL Agro and also to vacate the premises of JOML. IA No. 199/2020 was filed by the liquidator of JVL Agro with prayer for direction to Respondents No. 1 to 5 in IA No. 199/2020 to open the padlocks inserted at the entry gate of the office premises of the corporate debtor situated a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restoration of physical possession of the 'said premises' to the corporate debtor/RP. He has further added that in its reply to IA 199/20, JOML for the first time brought on record an undated and unstamped letter purportedly indicating acceptance for payment of rent for the 'said premises' by the corporate debtor, which, it is alleged, is a manufactured document created as an afterthought to show purported rent agreement between JVL Agro/corporate debtor and JOML, whereupon Impugned Order was passed on 6.8.2021, leading to the filing of appeal being CA(AT)(Ins) No. 794/2021 by the Appellant JVL Agro.. 5. The Appellant JOML with regard to its appeal CA (AT) (Ins) No. 04/2022 has claimed that the corporate debtor JVL Agro shifted is registered office in the said premises in the year 2018, when a monthly rent of Rs. six lakhs plus GST was orally agreed for payment by the corporate debtor, with an understanding that an agreement would soon be entered into between the two parties to this effect. The Appellant JOML has further stated that JVL Agro had earlier issued an acceptance letter in February 2018, whereafter its registered office was shifted in the 'said premises', but a formal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Adjudicating Authority, and the Impugned Order, without assigning any reason, has disposed of the Appellant's IA No. 199/2020. She has pointed out in particular to the fact that IA No. 199/2020 specifically sought order for restoring the possession of the 'said premises' to the corporate debtor/Resolution Professional since the 'said premises' was in possession of the corporate debtor at the time of initiation of CIRP, and no recovery of the 'said premises' could have been made as per the provisions of section 14(1)(d) of the IBC. She has further argued that the corporate debtor has continued to be in procession of the 'said premises' since the year 2007 and the registered office of the corporate debtor was shifted there in February 2018 as per an arrangement between the two companies viz. JVL Agro and JOML belonging to the same group of companies. 8. The Learned Counsel for Appellant has further argued that the arrangement between the two companies JVL Agro and JOML regarding the use of 'said premises' was in accordance with a 'no objection' granted by JOML regarding use of JOML's premises situated at Village Tilmapur, Gazipur Road, Ashapur, Varanasi and the no objection lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o contended that if there is a contractual dispute regarding payment of rent and vacation of 'said premises', the Adjudicating Authority had no jurisdiction to pass an order related to the contract (even though there was none), which is not directly related to insolvency resolution of the corporate debtor. In this connection, she has referred to the judgment of Hon'ble Supreme Court in the matter of Rajendra K. Bhutta vs. Maharashtra Housing and Area Development Authority and another, [(2020) 13 SCC 208] to claim that if there is any conflict between a state legislation (MHADA Act in the Rajendra K. Bhutta case) and the IBC, the provisions of IBC must prevail. She has further referred to para 28 of the judgment in Rajendra K. Bhutta case (supra) to contend that recovery of property occupied by the corporate debtor does not refer to rights or interests created in property but only actual physical occupation of the property. The Learned Counsel for appellant has also referred to the judgment of Hon'ble Supreme Court in Tata Consultancy Services Ltd. v. SK Wheels (P) Ltd. [(2022) 2 SCC 583], wherein it is clearly held that the residuary jurisdiction of NCLT cannot be invoked if the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Adjudicating Authority to entertain or dispose of any claim made by or against the corporate debtor, which is the present case. 13. In connection with CA No. CA(AT)(Ins.) No. 04/2022, wherein JOML has raised the issue of the quantum of rent payable, the Learned Counsel for JOML has pointed out that the calculation made by the District Magistrate in assessing the rental value is not correct as the assessment was made by the officials of the Public Works Department and not by the District Magistrate. He has further pointed out that since the monthly rent of Rs. six lakhs plus GST was agreed to be paid by the corporate debtor, there is no question of any reassessment of the rental value and furthermore he has presented assessment of rental value done by an independent valuer, wherein the present fair rental valuation of the property as Rs.4,46,000/- per month is assessed and the assessment report has been submitted by him in the rejoinder to corporate debtor's reply filed by JOML in CA NO. 04/2022. He has referred to the judgment of Hon'ble Supreme Court in the matter of Tata Consultancy Services Ltd. (supra) to claim that NCLT has jurisdiction to adjudicate disputes, which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jection to the 'said premises' being used as registered office of JVL Agro. Both these letters have not been disputed by the Appellant, JOML. 16. Therefore, on the basis of above stated letters, we are of the clear view that the 'said premises' were definitely in possession of JVL Agro from 14.2.2018, if not earlier, and was definitely in the possession of the corporate debtor on 25.7.2018 when the CIRP of the corporate debtor was initiated. 17. We now consider the issue whether the insertion of padlocks on the gates of the 'said premises' was permitted in view of moratorium which was in force. For better appreciation of the issue, relevant provision in section 14 of the IBC is reproduced below:- "14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- Xx xx xx xx (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 Xx xx xx xx (2-A) Where the interim resolution professional or resolution professional, as the case may be, consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to JOML to continue renting of the 'said premises' to the corporate debtor. The 'said premises', therefore, should have lawfully been with the RP/ corporate debtor and continue in its lawful possession during the continuation of the CIRP of the corporate debtor. 20. The second issue to be considered is whether any rent was payable to the owner of the 'said premises' JOML by the corporate debtor during the period of subsistence of moratorium. 21. In this connection, we note the following no objection certificate given by JOML regarding the use of this premises to the corporate debtor, JVL Agro:- "It is hereby confirmed that we have no objection to the use of our premises situated at Village Tilmapur, Ghazipur Road, Ashapur, Varanasi - 221007 (U.P.) India as the registered office of the Company JVL Agro Industries Limited. Varanasi which has already been used by the M/s JVL Agro Industries Limited as its administrative office premises since past." We further note that this NOC does not mention payment of any monthly rent to the owner of the premises. 22. We also notice the e-mail dated 28.8.2018 of JOML, which is also referred in the context of payment of rent, which is as foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to RP do not indicate if any rent was being paid prior to date of sending of these e-mails. Therefore, on the basis of documents submitted both the parties, we are of the view that no rent was agreed upon to be paid by the corporate debtor to JOML nor any such payment was made for any period starting from 14.2.2018. It is clear that the issue of payment of rent was created by JOML only after the corporate debtor went into CIRP. 25. Thus, we are convinced by the arguments of the corporate debtor JVL Agro/RP that no rent was agreed upon to be paid for use of 'said premises' when the 'said premises' were offered to be used as registered office of the corporate debtor nor any rent was paid prior to the initiation of the CIRP of the corporate debtor. We also take note of section 14(2-A) of the IBC, which the landlord JOML has placed reliance upon regarding payment of rent during the moratorium period. A plain reading of this provision makes it clear that supply of certain goods and services has to be considered critical by IRP/IP to protect and preserve the value of the corporate debtor. Quite clearly in this case, the IRP/RP has neither recorded such a need nor requested the landlord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "69. ... NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of corporate debtor... The nexus with the insolvency of corporate debtor must exit." (emphasis supplied) Thus, the residuary jurisdiction of NCLT cannot be invoked if the termination of a contract is based on grounds unrelated to the insolvency of corporate debtor. 29. It is evident that the appellant had time and again informed corporate debtor that its services were deficient, and it was falling foul of its contractual obligations. There is nothing to indicate that the termination of the facilities agreement was motivated by the insolvency of corporate debtor. The trajectory of events makes it clear that the alleged breaches noted in the termination notice dated 10-6-2019 were not a smokescreen to terminate the agreement because of the insolvency of corporate debtor. Thus, we are of the view that NCLT does not have any residuary jurisdiction to entertain the present contractual dispute which has arisen dehors the insolvency of corporate debtor. In the absence of jurisdiction over the dispute, NCLT could not have imposed an ad interim stay on the termination noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we are of the clear view that while the insolvency resolution of the corporate debtor is going on and the moratorium is in force, the provision of section 14(1)(d) will be applicable and the owner cannot forcibly or otherwise recover the premises, which are in possession of the corporate debtor from a date prior to the date of initiation of CIRP. 32. In view of the detailed discussion on the issues framed by us, we hold the clear view that the Adjudicating Authority has gone beyond its jurisdiction in ordering payment of rent by the corporate debtor during the period of moratorium. We also find that the Adjudicating Authority did not adjudicate on the prayer made by the RP in IA No. 199/2020 for restoration of the possession of the 'said premises', which it should have done to settle the dispute early. In view of the fact that liquidation order with respect to the corporate debtor has already been passed by the Adjudicating Authority, no orders are now necessary in connection with IA 199/2020 in the present appeals. 33. We thus hold that the Impugned Order is erroneous, and therefore, liable to be set aside. We set aside the Impugned Order. The appeal is disposed of accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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