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TMI Blog2023 (3) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order, the Adjudicating Authority has admitted the petition under Section 9 of the IBC and allowed the initiation of Corporate Insolvency Resolution Process ('CIRP' in short) of the Corporate Debtor. Aggrieved by this impugned order, the present appeal has been preferred by the suspended director of the Corporate Debtor. 2. The brief factual matrix of the case which is necessary to be noted for deciding this appeal is as follows: - The Appellant is the erstwhile director of the Corporate Debtor/Respondent No.2, namely, Coppertun Brewing Pvt. Limited, which is engaged in the business of restaurant/micro-brewery. The Respondent No.1/Operational Creditor, namely, Pardesi Construction Private Limited is the owner of the premises which has been given on rental basis to the Corporate Debtor/Respondent No.2 for carrying out its business. The Corporate Debtor took physical possession of the licensed premises, hereinafter referred to as the "said premises", and entered into a Leave and License Agreement ('LLA' in short) with the Operational Creditor dated 05.10.2015. The Corporate Debtor and Operational Creditor also entered into a Service Agreement ('SA' in short) dated 03.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor which prevented the Corporate Debtor from procuring the requisite license and permission to start business on the said premises. The Operational Creditor thereafter filed a Section 9 petition of IBC before the Adjudicating Authority on 10.09.2021 leading to the impugned order dated 12.05.2022 admitting the Corporate Debtor to the rigours of CIRP. The impugned order has been challenged by the suspended Director of the Corporate Debtor on the ground that there is no admitted claim and that there is a genuine pre-existing dispute. 3. Making his submissions, the Learned Senior Counsel for the Appellant stated that relying on an assurance given by the Operational Creditor that it owns a building with all requisite sanctions in place for commercial business purposes, the Corporate Debtor took physical possession of the said premises in the said building located on the 6th Floor to run a microbrewery/restaurant. It is submitted that the LLA which was entered into between the two parties clearly stated that all permissions/sanctions were in place. In addition, an SA was also entered into between the two parties by which the Operational Creditor was to provide certain services suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business operations, yet it sent a notice to the Corporate Debtor on 12.12.2016 to vacate the premises on the ground that they had not paid the rentals and other charges. The notice to vacate was replied to by the Corporate Debtor on 16.02.2017 stating that the Corporate Debtor was never able to use the said premises for which LLA and SA had been entered into, hence it was not obligated to make any payments under the said agreements. The Operational Creditor issued further notices on 16.05.2017 and 19.05.2017 to the Corporate Debtor seeking payment of the outstanding dues along with interest or to vacate the premises. These two notices were also replied by the Corporate Debtor on 13.06.2017 stating that the Operational Creditor had misrepresented the facts relating to requisite sanctions/approvals and for having fraudulently induced them to enter into the LLA and SA. It was further pointed out that since the Corporate Debtor had made huge expenditure on installation of furniture/equipment and in the absence of license to operate the brewery they suffered huge financial loss and a counter claim of Rs.7 cr was made by the Corporate Debtor. 7. Attention was also drawn to the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental dues from lease agreements do not qualify as operational debt is not tenable in view of the orders of this Tribunal in the matter of Jaipur Trade Expocentre Pvt. Ltd. V. Metro Jet Airways Training Pvt. Ltd. in Company Appeal (AT) (Ins.) No. 423 of 2021 wherein it has been held that the claim of the licensor for payment of license fee for use of premises for business purpose is an operational debt. 11. It has been further contended that there was no pre-existing dispute prior to the issue of demand notice since the Operational Creditor had been issued an Occupancy Certificate dated 22.01.2016 and NoC from Fire Department dated 03.08.2016. Moreover, the Corporate Debtor had executed the LLA and SA after inspecting the said premises and only after having satisfied themselves had occupied the said premises. The Corporate Debtor because of their own lapses failed to obtain license for running their business and have tried to wrongly shift the blame upon the Operational Creditor. Further the LLA and SA clearly state that the premises which find mention in the Agreements are the "Fifth Floor-Level 6" and Corporate Debtor by repeatedly mentioning about the absence of the building sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating authority under Sections 9(1) and 9(2)........." ****** ***** ***** 51. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Licensee for running its business. 5. Based on the aforesaid representations the Licensee has agreed to take the Licensed Premises on Leave and License basis from the Licensor(s) for the purpose of carrying on the Business in accordance with the Term, payment of the License Fee and Security Deposit and upon the terms and conditions herein specified." (Emphasis supplied) It has been contended that these sanctions had actually not been received from the competent authorities and consequentially the Corporate Debtor could not obtain the BRL License for manufacturing of beer which was essential for running the microbrewery. Hence, as the Corporate Debtor could not use the premises for the purpose for which the LLA and SA were entered into, the question of payment of license fees and service/maintenance charges did not arise. 17. We also notice that the Learned Senior Counsel for the Appellant has emphatically asserted that liability to pay the dues claimed by the Operational Creditor had been consistently denied by the Corporate Debtor while furnishing their replies to the notice to vacate the said premises; in their reply to the notice for arbitration as well as in their reply t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... point of dispute between the two parties. We are reluctant to agree with the Adjudicating Authority on this score for reasons elucidated in the succeeding paragraphs. 19. It is an undisputed fact that Clause 13 of the LLA and Clause 17 of SA provide for resolution of disputes by mutual negotiation failing which by arbitration. It is also clear from the facts on record that a notice invoking arbitration under Clause 17 of SA was invoked by the Operational Creditor on 06.08.2020 as seen at page 157 of APB and this has not been controverted by the Respondent. It would be useful at this stage to extract relevant portions from this notice of arbitration as under:- "........We have not received any amount of license charges, penal damages or service charges in respect of our two agreements with you. We observed that, whenever we raised the issue of your debts, you raised several alibis (like your inability to get license for your business due to illegal construction) to deny or delay the payments. The allegations were absurd, frivolous, imaginary and were coined to achieve some purposes. We are peeved at by your malignant behaviour of dragging the dispute to police by lodging a fri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aurant/brewery. Mention was also made of NMC having informed the Operational Creditor on 29.01.2014, 05.11.2015 and 19.07.2018 to seek formal approval of the revised building map after fulfilling certain prescriptions including fire safety as placed at page 82, 122 and 155 of the APB respectively. Mention was made of a letter dated 13.01.2017 issued by the Excise Department to the Corporate Debtor rejecting issue of Beer manufacturing license for the reason that certificate from the Fire Department was not available. This has been countered by the Learned Counsel for the Respondent as frivolous and baseless by stating that the Operational Creditor was in possession of Occupancy Certificate dated 22.01.2016 and NoC from Fire Department dated 03.08.2016 and Revised/First NOC on 31.03.2021. This has been challenged by the Learned Senior Counsel for the Appellant by pointing out that even the Revised/First NOC is conditional and 33 fresh conditions were imposed which are unmet. Further, it has been contended by the Learned Senior Counsel for the Appellant that a RTI response received from NMC substantiates that completion certificate for the concerned premises is not available; that pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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