Case Law Details
Anup Sushil Dubey Vs National Agriculture Co-operative Marketing Federation of India Ltd. (NCLAT)
Conclusion: Lease rentals arising out of use and occupation of a cold storage unit which was for Commercial Purpose was an ‘Operational Debt’ as envisaged under Section 5 (21) of the Code.
Held: National Agriculture Co-operative Marketing Federation of India (NAFED)/Operational Creditor and the Corporate Debtor entered into a Leave and Licence Agreement for the usage of cold storage facilities for a period of three years. Agreement provides for the payment of licence fee payable on the 7th day of every calendar month with an increase of 10% in the monthly licence fee on or after the expiry of 12 months. As per clause of the agreement, in case of default in payment of any monthly licence fee, the Corporate Debtor would be liable to pay an interest @ 21% p.a. for the delayed period. NAFED stated that the Corporate Debtor defaulted in the payment of monthly rentals from September 2017 onwards and an outstanding amount of Rs. 2,14,14,560/- was due and payable together with interest, electricity and water charges. It also stated that the Corporate Debtor acknowledged and confirmed the ‘outstanding debt’, but despite several reminders and also issuance of eviction notice, the Corporate Debtor failed to make the necessary payments. Hence a Demand Notice under Section 8, was issued demanding payment which was stated to be due from September, 2017 onwards. The Corporate Debtor denied all the claims and sought for renewal of the Leave and Licence Agreement. The issue arose for consideration was whether dues, if any, arising from the ‘Leave and Licence Agreement’ was construed as an ‘Operational Debt’ and whether there was any ‘Pre-Existing Dispute’ prior to the issuance of the Demand Notice. It was held that the premises in the case on hand was leased out for ‘Commercial Purpose’, the cold storage owner/NAFED on collection was required to pay ‘service tax’ which was reflected in the tax invoices and ‘Ledger Accounts’ which was part of the record filed. Further, with regard to issue number second, it was noted that though the Agreement was terminated, yet the Corporate Debtor continued to be in possession of the said storage facility and even sought an extension for a further period of 2 years. Hence, Tribunal stated that ‘Debt’ was ‘ due and payable’. The subject lease rentals arising out of use and occupation of a cold storage unit which was for Commercial Purpose was an ‘Operational Debt’ as envisaged under Section 5 (21) of the Code. Applying the test of ‘existence of a dispute’ it was evident that a dispute did not truly exist in fact between the Parties and, therefore, Tribunal held that the communication on record specifically the letter dated 19.09.2018, addressed by appellant themselves prior to the issuance of the demand notice clearly established that there was a ‘Debt due and payable’ and there was no ‘Pre-Existing Dispute’. Thus, Tribunal held that there was no illegality or infirmity in the Impugned Order of the ‘Adjudicating Authority’ in admitting the Application.
FULL TEXT OF ORDER OF NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Please become a Premium member. If you are already a Premium member, login here to access the full content.
