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TMI Blog2023 (5) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... :- (i) The Appellant is engaged in the business of coworking and/or providing flexi office space i.e. a working arrangement where different corporate bodies come together to work for a single business center run and maintained by the Appellant. The Appellant developed the premises with all required amenities, facilities conducive to run/operate a fully functional office with day to day service/support service as per requirement of each and every client. Appellant makes provision of goods and provision of services as per clients' requirements. The Appellant entered into an Agreement with the Respondent-Corporate Debtor. Agreement was called "Services Providers Agreement". The Agreement do not create any right or title or interest in the property immovable or movable. Under the Agreement, the Corporate Debtor was to make monthly office fee of Rs. 3,52,000/. Period of Agreement was from 01st October, 2018 to 30th September, 2021. Agreement provided for lock-in period of 36 months. (ii) The Corporate Debtor in pursuance of the Agreement started using the premises. On 04th June, 2019, the Corporate Debtor wrote email to the Operational Creditor informing that Corporate Debtor intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of services as per client's requirements. The agreement entered with Corporate Debtor had a lock-in period of 36 months. During the lock-in period, the Corporate Debtor had no authority to terminate the agreement and termination of agreement is breach of contract which entitles the Appellant to right to remedy. The right of Appellant is a claim within the meaning of Section 3(6) of the Code. The claim in respect of provision of goods and services is debt. The view of the Adjudicating Authority that license fee is not operational debt is erroneous. Learned Counsel for the Appellant relied on judgment of larger bench of this Tribunal in Jaipur Trade Expocentre Private Limited v. Metro Jet Airways Training Private Limited, C.A. (AT) Insolvency No. 423 of 2021 where it was held that debt pertaining to unpaid license fee is covered within the meaning of operational debt. Appellant's claim or right of appellant arises out of breach of contract which is debt within the meaning of I&B Code, 2016. It is submitted that Agreement dated 17th August, 2018 did not require any registration since no right was created in any immovable property in favour of the Corporate Debtor. West Bengal St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest Either in The Property (Immovable or Movable) Nor Any Other Form of Right to Asset Any Claim Save And Except Availing Of Services Being Rendered By Smartwork. This Agreement is in person to the Client and is non-heritable and cannot be transferred or assigned to anyone else. This Agreement is composed of the cover page describing the Service(s), the service charges and the tenure with the escalation (if any), the present 'Terms and Conditions', the house rules and service price guide as published and made applicable from time to time by Smartwork." 9. Clause 1.4 deals with cancellation which provides as follows: "The agreement can be terminated with 30 (Thirty) day(s) notice in advance in writing by the client without assigning any reason after the lock in period (if any). However, the Provider has no right to terminate the agreement during the validity of the agreement except in the circumstances of material breach of any of the terms of this agreement or the client is in default as more specifically mentioned hereinafter." 10. The above clause provides that client that is the Corporate Debtor can terminate agreement with 30 days notice after the lock in period wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regional Director (East) ........." 12. The Operational Creditor thereafter issued notices to the Corporate Debtor demanding payment in respect of unpaid operational debt and ultimately a Demand Notice under Section 8 was issued on 18th August, 2020. 13. As noted above, the Adjudicating Authority framed three points for determination. The first point which was framed for consideration is as to whether the debt claimed by the Appellant was an Operational Debt. 14. In IBC, Section 3 of the Code is definition clauses. Section 3(6) defines "claim" in following words: "3(6). "Claim" means- (a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured; (b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;" 15. Section 3(6)(b) of the code clearly provides a right to remedy for breach of contract is a claim. The debt is defined under Section 3(11) which is to the following effect: "3(11) "debt" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the judgement of the larger bench held that debts pertaining to unpaid license fees is fully covered within the meaning of 'operational debt'. Para 39 is as follows: "39. The observation of this Tribunal in the above case in respect of definition of 'service' under Consumer Protection Act, 2019 and Central Goods and Services Tax Act, 2017 are not covered by Section 3(37) of the Code, with regard to which observation, no exception can be taken. However, in the facts of the present case, where Agreement itself contemplate payment of GST for the services under the Agreement, on which GST is payable, the definition of 'service' under Central Goods and Services Tax Act, 2017 cannot be said to be irrelevant. More so, even if an expression is not defined in the statute, the meaning of expression in general parlance has to be considered for finding out the meaning and purpose of expression. After making above observation in Promila Taneja's case (supra), this Tribunal did not dwell with the question as to what is the meaning of expression of 'service' used in Section 5(21) of the Code. Reference to Section 5(8)(d) regarding 'financial debt' by this Tribunal in the above case also was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title, or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;" 21. When we look into the agreement as noted above, it is clear that agreement does not purport or operate to create, declare, assign, limit or extinguish any right, title or interest in immovable or movable property. The Agreement was clearly not required to be compulsorily registered under Section 17(b). The above determination by the Adjudicating Authority was also fallacious. 22. Now we come to the 3rd Point determined by the Adjudicating Authority that agreement was originally engrossed on an unstamped paper. Question framed clearly indicates that agreement as filed contained stamp paper but Agreement was written on plain papers. The case of the Respondent is that on the paper when agreement was written both the parties have signed but on the paper where stamp paper was mentioned there was no signature of the Corporate Debtor. The Reply has been filed to Section 9 Application by the Corporate Debtor. In paragraph 6 of the Reply, following has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f crops, service or any other thing of value. At page-48, the total amount payable is Rs. 3,52,000/- which squarely falls under the ambit of 'money', as provided in Section -105. The consideration is payable periodically or in specified occasions. At page-48, read with Clause -7 of the Lease Agreement; the payment of the consideration amount has been specified to be monthly. The consideration is payable by the transferee to the transferor. At Page-48, read with Clause -7 of the Lease Agreement, the consideration is payable to the corporate debtor. Hence, from the above averments it can be safely concluded that, the above agreement is only a lease agreement. Hence, as the above agreement is a lease agreement; it must be compulsorily registered as per Section-17(1)(d) of the Registration Act, 1908. Moreover, as per Section -49 (c), if a document required to be compulsorily registered, is not registered then the said document cannot be received as evidence of any transaction affecting such property." 24. The Reply of the Corporate Debtor and the fact that Corporate Debtor in pursuance of the Agreement took the possession of the premises, also paid monthly office fee upt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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