RP have right to Terminate Leave & Licence Agreements in Absence of RERA Proceedings: NCLAT [Read Order]
Mere fact that appellant was ready to pay the licence fee for the period for which leave and licence agreement was granted cannot preclude the RP to exercise his right under clause 10 and 19 to terminate the Leave and licence agreement in appropriate case.
The New Delhi bench of the National Company Law Appellate Tribunal ( NCLAT ) has held that the Resolution Professional (RP) has the right to terminate the leave and license agreement in the absence of RERA proceedings.
The appellants, Mr. Shanod Sameer Das, and Mr. Chandan Ravishankar Madan, entered into deed of partnership dated 01.10.2022 to 30.09.2025 for a period of three years to carry out business in premises taken by Mr. Chandan Ravishankar Madan, from Gigeo Construction Company Pvt. Ltd., to carry on business.
Mr. Chandan Ravishankar Madan, has entered into agreement of leave and licence dated 01.10.2022 with the Corporate Debtor for terrace above 4th floor of ‘Pulse Care Building’ for area of approximately 17,000 sq. ft,. The said was for licence fee of 50,000/- per month Leave and licence agreement mentioned that licensee has paid Rs. 1.5 Lacs in advance towards security deposit.
Another leave and licence agreement entered with Corporate Debtor with Mr. Shanod Das, dated 01.05.2023, with the area around 2250 sq. ft. at 4th Floor of the same premises for kitchen, staff accommodation. Leave and licence agreement dated 01.05.2023 was for a period of three years which also referred to the licence dated 01.10.2020 for the terrace above 4th Floor. The licence fees was fixed at Rs. 45,000/- per month.
M/s Home Grid, also entered into leave and licence agreement dated 01.07.2023 with the Corporate Debtor for an area of 12,000 sq. ft. on the 4th floor of the premises ‘Fortune Mall & Pulse Care hospital’. The said leave and licence agreement was for three years from 01.07.2023 to 30.06.2026 for licence fee of Rs. 60,000/- per month.
All the appellants in pursuance of the leave and licence agreement were handed over possession of the premises, and started their commercial activities. The CIRP against the Corporate Debtor commenced by order dated 04.06.2024 for CP (IB) No. 1180/MB/Court-VI/2022. The respondent no.1 was appointed Resolution Professional in the CIRP. The
Resolution Professional accepted licence fee for certain period up to September 2024.
Resolution Professional wrote Email to the appellants to vacate the premises. On 28.10.2024 resolution professional sent notices to all the appellants to vacate the premises which were taken on leave and licence from the Corporate Debtor, the said notice dated 28.10.2024 were separately issued to all the appellants. Notice dated 28.10.2024 was formerly notice of termination of leave and licence agreement and appellants were asked to vacate the premises within a period of one month i.e., 28.11.2024. The appellant replied to the notice by separate letters dated 15.12.2024, 28.11.2024 & 25.11.2024 respectively.
The appellant submitted that there was no prayer made in the application with regard to payment of any licence fee, Whereas, Adjudicating Authority in the impugned order while directing for vacation of the premises within 30 days has also directed that appellant shall also be liable to pay for the licence fee remaining unpaid for the period premises was under occupation of the respondent. It is submitted that the said directions were beyond the jurisdiction of the Adjudicating Authority. There being not even prayer to that effect.
The appellants were handed over the premises on leave and licence agreement and they have made investment in the premises and were entitled to continue till the period of leave and licence agreement. Appellants were ready to pay the licence fee. Hence, the RP was liable to allow the appellants to continue till the period for which leave and licence agreement was granted.
It is submitted that the basis for direction for eviction is that only first and second floor were for commercial purpose as per plan approved by RERA. Neither RERA authority nor any other authority has issued any notice or taken any proceeding against the appellant or Corporate Debtor for alleged violation of sanctioned plan. No proceeding having been initiated by RERA or any authority, it was not open for RP to direct for vacation on the above ground. When the appellant was ready to pay the licence fee, it was not open for RP to direct for vacation of the premises.
Furthermore, Section 20(2)(b) of IBC, 2016 provides that the Resolution Professional has the authority to enter into contracts on behalf of the Corporate Debtor or to amend or modify contracts or transactions which were entered into before the commencement of the CIRP.
It is further stated that without prejudice to any of the Resolution Professional's rights and contentions with regard to the facts stated above, the Resolution. Professional is initiating termination of the said Agreement in terms of Clause 10 read with Clause 19 of the Leave and License Agreement considering the fact that the agreement has been in force for more than 6 months.
The bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Member-Technical) viewed that the mere fact that appellant was ready to pay the licence fee for the period for which leave and licence agreement was granted cannot preclude the RP to exercise his right under clause 10 and 19 to terminate the Leave and licence agreement in appropriate case.
It was evident that a valid reason was given by the RP for issuing notice for termination. The tribunal held that the adjudicating authority did not commit any error in directing vacation of the appellant and upheld the decision of the adjudicating authority.
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