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2025 Supreme(Online)(NCLT) 1076
NATIONAL COMPANY LAW TRIBUNAL
Shri. Rajeev Bhardwaj, J, Shri. Sanjay Puri, T
M/s.Impact Metals Limited – Appellant
Versus
Mr.Vakiti Vineeth Reddy – Respondent
IA (IBC)/799/2024 | CP(IB) No.254/7/HDB/2021
For the Appellants/Petitioners: Mr.Purushotamlaal, Mr.Ankith Sonthalia, Mr.Ayush Sonthalia
For the Respondents: Mr.Bendi Raviteja
Lease rentals and electricity charges do not qualify as CIRP costs unless incurred for running the corporate debtor as a going concern, supported by operational evidence.
Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 60(5) and Section 5(13) - National Company Law Tribunal Rules, 2016 - Claim for unpaid lease rentals and electricity charges during Corporate Insolvency Resolution Process (CIRP) - Applicant's claim for ₹66,93,626/- dismissed as it did not qualify as CIRP costs under applicable provisions. (Paras 11-19)
(B) CIRP Costs - Definition and requirements - Lease rentals and electricity charges do not qualify as CIRP costs unless incurred for running the corporate debtor as a going concern, supported by evidence of operational use. (Paras 11-17)
(C) Conduct of Parties - Applicant’s waiver of pre-CIRP dues and failure to file claims raises concerns regarding bona fides. (Paras 18-19)
Facts of the case:
The applicant filed a claim for unpaid lease rentals and electricity charges accrued during the CIRP of M/s. Impact Metals Limited. The claim was rejected by the Committee of Creditors (CoC) alleging collusion and the agreement being benami.
Findings of Court:
The Tribunal found that the claim did not meet the criteria for CIRP costs as defined under the IBC and related regulations.
Issues: Whether lease rentals and electricity charges for the post-CIRP period qualify as CIRP costs.
Ratio Decidendi: The court ruled that the claim did not qualify as CIRP costs as there was no evidence that the corporate debtor was operational during the CIRP, and the applicant's conduct raised questions about the legitimacy of the claim.
Result: IA (IBC)/799/2024 is dismissed.
| Table of Content |
|---|
| 1. lease agreement and unpaid dues context. (Para 1 , 2 , 3 , 4) |
| 2. applicant's claim for cirp costs. (Para 5 , 6 , 7 , 8) |
| 3. court's analysis of cirp cost definition. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 4. dismissal of the applicant's claim. (Para 19) |
ORDER
This is an application filed by the Applicant/Lessor seeking directions for payment of ₹66,93,626/- towards unpaid lease rentals and electricity charges allegedly accrued during the Corporate Insolvency Resolution Process (CIRP) period of the M/s Impact Metals Limited (Corporate Debtor/CD)
Background
1. The CD entered into a Leave and License Agreement dated 08.07.2022 with the Applicant for lease of premises measuring 20,000 sq. ft. on a monthly rent of ₹3,75,000/-, with annual enhancement of 7%. The CD also undertook to pay statutory charges like electricity from time to time.
A security deposit of ₹1,50,000/- was paid.
2. The CIRP was initiated against the CD vide order dated 25.05.2023. The Applicant claims that post-CIRP dues have accrued but remain unpaid. The Applicant offered a waiver of past dues through email dated 09.09.2023, subject to the CD vacating the premises within 7–15 days, which did not happen. A sum of ₹66,93,626/- towards rental and electricity dues post-CIRP is now claimed.
3. The CoC, in its 6th meeting held on 08.03.2024, rejected the claim, alleging collusion between the Applicant and the suspended management and termed the agreement benami in nature.
4. The Applicant claims that the said dues constitute CIRP costs under Regulation 31(a) and 31(b) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations).
Case of the Applicant:
5. The Applicant contends that post-CIRP lease rentals and electricity charges fall within the definition of “Insolvency Resolution Process Costs” under Section 5(13)(c) and (e) of the IBC, read with Regulation 31(a) and 31(b).
6. Therefore, the CD is bound to pay an amount of Rs.66,93,626/- towards the lease amount and electricity dues along with interest at the rate of 12% till the realisation of the CIRP costs.
Case of the Respondent No.1:
7. The execution of the agreement is not denied. It is also admitted that the machinery of the CD is lying in the leased premises and security personnel have also been deployed to guard the assets. However, it is submitted that this agreement is collusive between the Applicant and the suspended management. It is on account of this reason, the Applicant has not claimed pre-CIRP dues allegedly amounting to Rs.77,72,145/- w.e.f., 01.04.2022 till 07.05.2023.
8. We have heard the learned counsel for the parties, perused the written submissions and have gone through the entire records.
Findings
9. The existence of the lease agreement dated 08.07.2022 is not disputed. Clause 3(b) clearly obligates the tenant to share statutory payments including electricity and water. Rent escalation of 7% per annum is also provided.
10. The dues of ₹77,72,145/- for the pre-CIRP period have not been filed before the RP and are thus not considered here. The claim for the post- CIRP period is shown as Rs.66,93,626/- as per Annexure 4, covering the period from 07.05.2023 to 31.03.2024 and includes the rent escalation from 09.07.2023.
11. The core issue is whether lease rentals and electricity charges for the post-CIRP period are to be treated as CIRP costs under Section 5(13) of the IBC read with Regulation 31 of the CIRP Regulations.
12. Section 5(13) of the IBC defines “Insolvency Resolution Process Costs” to include:
a. The amount of any interim finance and the costs incurred in raising such finance.
b. The fees payable to any person acting as a resolution professional.
c. Any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern.
d. Any costs incurred at the expense of the Government to facilitate the insolvency resolution process, and
e. Any other costs as may be specified by the Board.
13. The cla
