The Hyderabad bench of the National Company Law Tribunal (NCLT) has ruled in favor of the State Bank of India (SBI) in a case related to lease dues incurred during the corporate insolvency resolution period. The SBI had filed an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking direction to the Successful Resolution Applicant (SRA) to pay the lease amount of Rs 74,56,673 for the period from August 1, 2023, to October 13, 2023.
The case involves M/s Srikanth International Private Limited, a corporate debtor that had availed financial assistance of Rs 33.50 crores from the SBI. The corporate debtor had offered its marine processing plant as security, and a lease agreement was executed between the SRA and the corporate debtor for a period of six years. The lease rentals were payable directly into the SBI’s account.
However, due to default in repayment of the loan, the corporate insolvency resolution process was initiated against the corporate debtor, and the SRA was appointed as the resolution professional. The SRA had approved the resolution plan, which was accepted by the SBI, but the lease rentals for the period from August 1, 2023, to October 13, 2023, remained unpaid.
The SRA contended that the lease rentals were not payable as they had been transferred to the SBI after the vesting date. However, the SBI disputed this interpretation, arguing that the lease amounts claimed pertained to the CIRP period, prior to the vesting date, and were therefore payable to the SBI.
The NCLT bench, comprising Justice Rajeev Bhardwaj and Sanjay Puri, observed that the obligation to pay lease rentals during the CIRP period continues until the date of approval of the resolution plan and is not extinguished merely due to a change in legal status from lessee to Successful Resolution Applicant. The bench held that the SRA had retained its status as a resolution applicant during the period in question and was obligated to pay rentals to the corporate debtor under the lease terms.
The tribunal ruled that the obligation to pay lease rentals accrued during the CIRP period continues until the vesting date and that the SRA is liable to pay the corresponding rentals. The NCLT directed the SRA to pay the admitted liability of Rs 74,56,673 to the SBI for the period from August 1, 2023, to October 13, 2023. The ruling sets a precedent for similar cases, clarifying the liability of SRAs to pay lease rentals during the CIRP period.