Hire Charges Cannot Be Calculated In CIRP Costs When Asset Is Not Used by Corporate Debtor: NCLAT New Delhi

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, consisting of Justice Ashok Bhushan (Chairperson), Barun Mitra (Member - Technical), and Arun Baroka (Member - Technical), dismissed an appeal arising from an order by the NCLT Mumbai. The tribunal held that the hire charges for the assets not used by the corporate debtor during the CIRP cannot be classified as CIRP costs under Regulation 31(b) of the CIRP Regulations. Background CIRP of the corporate debtor started in February 2024. However, the winding-up process of the corporate debtor commenced in 2017-18 itself. The appellant's cranes were in the possession of the corporate debtor, and for the same, the appellant issued invoices for the hire charges. The last invoice issued by the appellant was in the month of June 2018. As the resolution professional was appointed, the appellant filed his claim with him. Initially, the resolution professional did not respond to the claims of the appellant but subsequently admitted the partial claim in July 2024. The Adjudicating Authority rejected the contention of the appellant and ruled that the hire charges cannot be accepted as CIRP costs. Aggrieved by the order of the adjudicating authority, the appellant has preferred the appeal before this NCLAT. Contention of the Parties The appellant contended that due to the imposition of the moratorium, the appellant was unable to take back the possession of the cranes; hence, their rights have been prejudicially affected. The appellant also submitted that by virtue of Section 14(1)(d) read with sub-clause (b) of Regulation 31 of the CIRP Regulations 2016, they are entitled to hire charges as CIRP costs. The respondent argued that cranes were never in use since the plant of the corporate debtor was already closed. It also highlighted that no invoices were raised after June 2018 by the appellant. NCLAT's Judgment The tribunal held that the mere fact that moratorium commenced after February, 2024, the appellant's right cannot be said to be prejudicially affected by moratorium. Hence, the submission of the appellant that the hire charges should be treated as CIRP costs under Regulation 31(b) cannot be accepted. The tribunal emphasized that the moratorium under Section 14(1)(d) of the IBC does not enable the operational creditor to such costs when their asset is not being utilized by the corporate debtor. The tribunal lastly observed that the process of returning the crane is already on, and a few cranes had been handed over. It directed that the process returning the cranes should be completed expeditiously. Case Title: Starlog Enterprises Ltd. v. Pulkit Gupta Case Number: Company Appeal (AT) (Insolvency) No. 558 of 2025 Tribunal: National Company Law Appellate Tribunal, Principal Bench, New Delhi Judge: Justice Ashok Bhushan (Chairperson), Barun Mitra (Member - Technical) and Arun Baroka (Member - Technical) For Appellant: Mr. Kshitij Sharda, Mr. Shubhanker Sharda, Advocates For Respondent: Mr. Viraj Parekh, Mr. Navneet R, Ms. Alankrita Sinha, Advocates for R1. Date of Order: 03.04.2025 Click Here To Read/Download The Order

Hire Charges Cannot Be Calculated In CIRP Costs When Asset Is Not Used by Corporate Debtor: NCLAT New Delhi

Mohd.Rehan Ali

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Hire Charges Cannot Be Calculated In CIRP Costs When Asset Is Not Used by Corporate Debtor: NCLAT New Delhi

Mohd.Rehan Ali

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers