Current Electricals Limited & Anr. Vs. Mr. B. Ramana Kumar, IRP - Owing to the fact that since the terms of Lease Deed has already expired the property would fall to be within the estate of the Corporate Debtor and that has to be brought into within the Liquidation Proceedings as initiated against the Corporate Debtor.

 NCLAT (2024.04.22) in Current Electricals Limited & Anr. Vs. Mr. B. Ramana Kumar, IRP [Comp App (AT) (CH) (Ins) Nos.255 & 256/2022] held that;

• Admittedly, after the expiry of the period of Lease Deed on 31st of January 2018, it was never renewed and as a consequence of the non-renewal of the Lease Deed, as the appellant occupancy was in the capacity of being a tenant in terms of the Lease deed, the appellant legally loses his right to continue his occupancy over the property,

• Thus, in both the cases since the lease being in violation of Section 17 of the Registration Act, the said cannot be utilised as to be creating any subsisting legal right in favour of the appellant which would be enforced because the Lease deed could not have been read in evidence in judicial proceedings in favour of the Appellant,

• Owing to the fact that since the terms of Lease Deed has already expired the property would fall to be within the estate of the Corporate Debtor and that has to be brought into within the Liquidation Proceedings as initiated against the Corporate Debtor.

Excerpts of the order;.

# 1. These are the two Company Appeals preferred by the Appellant by invoking the provisions contained under Section 61 of the Insolvency and Bankruptcy Code, whereby they put a challenge to the Impugned Order dated 24th March 2021, as it has been passed by the Adjudicating Authority in MA No.49/CHE/2020 in IBA/1075/2019, which is the subject matter of consideration in Company Appeal (AT)(CH)(Ins) No.255 of 2022.

# 2. In the connected Company Appeal (AT)(CH)(Ins) No.256 of 2022 the challenge has been given by the Appellant to the Impugned Order dated 24th March 2021 as it was passed by the Adjudicating Authority in MA/49/CHE/2020 in IBA/1075/2019.

# 3. On account of the fact that in both the Company Appeals since they engage consideration of common question of fact and Law, they are decided together for the sake of brevity. Precisely, speaking the contention of the Learned Counsel for the Appellant in both the Appeals is that by virtue of the Impugned Order under challenge in the respective Appeals, the Appellant has been directed to vacate the premises i.e. the disputed (Shed) to which he contends that the same was let-out to them under the terms of the Lease Deed as it was executed in their favour by the Corporate Debtor.

# 4. As against the Corporate Debtor an Insolvency Proceedings was initiated by invoking the Provisions contained under Section 10 to be read with Rule 7 of the I & B Code and consequent to which, the Corporate Debtor was admitted to the CIRP proceedings by an order as pronounced on 22nd November 2019. As a result, thereto the IRP/RP namely Mr. V. Ramana Kumar was appointed, as an Administrator of the assets of Corporate Debtor, to facilitate and regulate the Resolution Process as per the Provisions of the Code. The Appellant contends that for him the cause of action to file the Interlocutory Application in the Company Proceedings, before the Adjudicating Authority has arisen because, the Resolution Professional during the process of CIRP Proceedings have called upon the Appellant to repay the rent arrears of Rs.1,18,02,307/- and further to execute a fresh Lease Deed to be brought into effect from 22nd November 2019.

# 5. The backdrop of the fact was that initially a Lease Agreement was executed between the Appellant and the Corporate Debtor as back as on 20th July 2009, for the purpose of permitting to occupy the property, that is the tenement shed which was supposed to be utilised exclusively for industrial purposes. Apparently, the Lease Deed was initially for a period of 24 months subject to its further renewal and which was even renewed from time to time until it ultimately got expired on 31st January 2018.

# 6. Admittedly, after the expiry of the period of Lease Deed on 31st of January 2018, it was never renewed and as a consequence of the non-renewal of the Lease Deed, as the appellant occupancy was in the capacity of being a tenant in terms of the Lease deed, the appellant legally loses his right to continue his occupancy over the property, which has now been made subject matter of CIRP proceedings being carried against the Corporate Debtor. Apart from it, it is contended by the Appellant, that owing to various defaults committed by the Principal Lessee i.e. the Corporate Debtor, there had been claims which has been raised against him i.e. the Corporate Debtor to remit the rent amount received under the lease agreement to meet up the statutory dues which were payable under Section 226(3) of the Income Tax Act and that of the dues payable under the Employees Provident Fund and Miscellaneous Act, 1952, and such other statutory dues payable by the Corporate Debtor. The issue as argued would be as to whether these dues would fall to be payable under the CIRP Proceedings to be culminated, is altogether a distinct issue which has to be decided independently by the Liquidator.

# 7. In the connected Company Appeal No.256 of 2022 the facts almost remains the same except for few minor factual particulars pertaining to the continuance of the Lease after the expiry of its period, because in the instant case the Lease Deed which was executed in favour of the Appellant by the Corporate Debtor on 18th September 2014 was initially for a period of 8 years, was the said term had expired thus, after the expiry of the period of 8 years, that would be on 17th of September 2022. Since, the same has not been renewed, as such the status of present Appellant too to the absence in any lease subsisting lease executed beyond the period of 8 years.

# 8. Thus, in both the cases since the lease being in violation of Section 17 of the Registration Act, the said cannot be utilised as to be creating any subsisting legal right in favour of the appellant which would be enforced because the Lease deed could not have been read in evidence in judicial proceedings in favour of the Appellant, as evidence in support of its contention so as to protect the occupancy for which he (the Appellant) has been directed to be evicted, by the Impugned Order passed by the Adjudicating Authority, due to non-compliance of the conditions stipulated in the earlier Order of the Adjudicating Authority dated 5th March 2021, consequently allowing of the application of the Resolution Professional under Sub Section 5 of Section 60 of directing of the eviction doesn’t suffer from any apparent error which would caught for an interference in the exercise of the Appellate Jurisdiction.

# 9. Ultimately, the dispute which finds consideration in the instant Company Appeals are emanating from the Impugned Order which would be limited to its implication, that the Resolution Professional had filed an application, under (Sub Section 5) of Section 60 of the Code, praying for payment of rent arrears payable w.e.f. January 2018 to January 2019, to the Respondent in the Company Petition and the subsequent rent which would be payable with effect from 5th of every month and further to execute Lease Deed with an effect from 22nd November 2019 between the Appellant and the Respondent and to vacate the premises and handover vacant possession. The prayer as sought for by the Appellant, the Adjudicating Authority while deciding MA/49/2020 allowed the Application and had directed the Appellant to handover the vacant possession of the tenement shed, on account of the fact that he i.e. the Lessee was a defaulter to the Corporate Debtor and owing to the fact that since the terms of Lease Deed has already expired the property would fall to be within the estate of the Corporate Debtor and that has to be brought into within the Liquidation Proceedings as initiated against the Corporate Debtor.

# 10. Besides, that the justification assigned by the Adjudicating Authority while passing the Impugned Order, it was to the effect that there was no justification for the Appellant to continue to occupy the premises, which would be property in CIRP proceedings for the reason being that, the appellant was provided with an opportunity by an order of 5th March 2021 to deposit Rs.25 lakhs into the Bank account of the Corporate Debtor, but the said order was not complied, with within the cut off time period which was prescribed by the order dated 5th March 2021. Owing to the said opportunity which was granted by the Adjudicating

Authority by the order of 5th March 2021 was not availed, the Appellant for all practical purposes loses his rights to continue to occupy the premises in relation to a property shed, that is the tenement over which his right to continue to occupy the same has already seized with the expiry of the terms of the lease and that too as back as in 2014. Thus, allowing of an application under Section 60(b) of the Resolution Professional directing the appellant to vacate the premises would not be illegal because there was no subsisting right of the Appellant to continue to occupy the premises, as after the expiry of the period of Lease Deed the property will automatically revert back and would become the estate of Corporate Debtor to be put under Liquidation and hence the first part of the Impugned Order, which has been only pressed by the Appellant regards remittance of rent cannot be granted under the given circumstances of the case because of the non-compliance of the order dated 5th March 2021. Thus, we do not find any apparent error committed by the Tribunal in passing the Impugned Order as there was no vested subsisting legal right of the Appellant which could have been protected by invoking the Appellate Provisions contained under Section 61 of the Insolvency and Bankruptcy Code, thus, the appeal lacks merits and the same is accordingly dismissed. No costs.

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