AA’s Order Allowing Lessor’s Recovery from RP During Moratorium Deemed Illegal & Set Aside u/s 14(1)(d)

Case Details: Sunil Kumar Agrawal v. New Okhla Industrial Development Authority - [2023] 150 taxmann.com 351 (NCLAT-New Delhi)

Judiciary and Counsel Details

• • Rakesh Kumar Jain, Judicial Member & Naresh Salecha, Technical Member
  • Rakesh Kumar, Ankit Sharma, Dhruv Gupta & Lav Dhawan, Advs. for the Appellant.
  • Rachit Mittal, Parish Mishra, Adarsh Srivastava, Pooja Kapur & Kumar Mihir, Advs. for the Respondent.
  • Rachit Mittal & Ritika Dawalia, Advs. for the Applicant.
  • Sunil Kumar Agarwal, Rakesh Kumar, Preeti Kashyap & Ankit Sharma, Advs for the Respondent.

Facts of the Case

In the instant case, the Respondent Development Authority (Lessor) entered into a lease deed with the corporate debtor for the purpose of constructing residential flats. The said lease deed was executed for a period of 90 years and the premium was to be paid by the corporate debtor from 2014 to 2021.

Meanwhile, an application u/s 7 of the IBC was admitted against the corporate debtor and RP (i.e. appellant) was appointed. The Respondent put up its claim to the RP and requested RP to make payment of dues within 15 days.

Since the same was not paid by the RP, presuming that the RP had declined payment of dues, an application was filed before the Adjudicating Authority (NCLT) and the same was allowed vide the impugned order.

Aggrieved by the said order, the appellant filed an instant appeal before the National Company Law Appellate Tribunal (NCLAT).

NCLAT Held

The NCLAT observed that Section 14 of the IBC deals with the moratorium and section 14(1)(d) of the IBC states that there would be a prohibition from the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

The NCLAT held that, in terms of the explanation appended to section 14(1)(d), the right has to be read in respect of licences, permits, registrations, quotas, concessions, and clearances but it should not be read as including lease premium amount or lease rent, which had been ordered by the Adjudicating Authority. Therefore, the impugned order was patently illegal and deserved to be set aside.

List of Cases Reviewed

• • New Okhla Industrial Development Authority v. Sunil Kumar Aggarwal (RP) [2023] 150 taxmann.com 350 (NCLT – New Delhi) (para 11) reversed [See Annex]