Lease Dues Incurred During CIRP Prior To Vesting Date Are Payable To Financial Creditor, Do Not Belong To Successful Resolution Applicant: NCLT Hyderabad

The National Company Law Tribunal (NCLT), Hyderabad Bench, comprising Justice Rajeev Bhardwaj (Member-Judicial) and Sanjay Puri (Member-Technical), has held that the lease dues incurred during the corporate insolvency resolution period prior to the vesting date are payable to the financial creditor and don't belong to the Successful Resolution Applicant (SRA). Background of the Case The State Bank of India advanced a loan of Rs. 33.5 Cr. to the corporate debtor. As security for the transaction, the corporate debtor leased its marine processing unit to Sumit Marine Exports Pvt. Ltd. by way of a lease agreement and MoU. The lease was for 6 years with monthly rentals of ₹200,000 and processing fees of ₹4,300,000, both with 5% annual escalation payable directly into the SBI account. The lease rentals and the processing fees were credited into the account of the SBI and were duly adjusted against dues until June 2022. Due to the default in the repayment of the loan by the corporate debtor, a CIRP order was passed and an IRP was appointed by the adjudicating authority. Thereafter, the resolution professional opened an account in the SBI in the name of the corporate debtor, wherein the lease payments were made till July 2023. After the commencement of the CIRP, the resolution plan was approved by the CoC and later on by the NCLT, on date 13.10.2023 (vesting date). Sumit Marine Exports Pvt. Ltd turned out to be the successful resolution applicant (SRA). SBI filed an application seeking payment of Rs. 74,56,673 for lease dues between the period of 01.08.2023 and 13.10.2023. Contention of the Parties The applicant contended that the lease amount pertains to the CIRP period and is payable to it. It highlighted that the obligation to make payment continues till the approval of the plan, and it will not change by virtue of a change in the legal status of the lessee. The SBI submitted that the resolution plan states that the balance in the account of the corporate debtor belongs to the financial creditor. Hence, allowing the SRA to withhold this payment would be unjust enrichment, defeating the objectives of the IBC. It also highlighted that the respondent also has acknowledgment in the affidavit. Per contra, the respondent argued that after the approval of the resolution plan by the NCLT, all the balances left in the account of the corporate debtor belong to the SRA. It also highlighted that the lease rentals asked by the appellant were not mentioned in the plan, and as per the resolution plan and the NCLT order, all dues not explicitly mentioned in the plan stand extinguished. Relying on the ruling of Ghanshyam Mishra & Sons vs. Edelweiss Asset Reconstruction Company (Civil Appeal No. 8129 of 2019), the respondent submitted that undecided claims post-approval are not maintainable. Observations of the Adjudicating Authority The tribunal observed that the resolution plan provides that the balance in the corporate debtor's account as of the vesting date is to be transferred to the SBI. It observed that the amount claimed by the appellant should have been credited before the vesting date. Hence, they belong to the SBI and not to the SRA. It ruled that the non-payment of the dues before the vesting date doesn't extinguish the liability of the SRA, especially when it has admitted the dues in the affidavit. Relying on the rulings of Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, (2019), and JSW Steel Ltd v. Mahender Kumar Khandelwal & Ors, (2020), the bench reiterated that the profits made during the CIRP shall be distributed as per the provisions of RFRP. Further, it observed that if the contention of the respondent is accepted, then it would lead to situations where the income arising during the CIRP period could be postponed by the manipulation. Hence, the bench denied to accept the submission of the respondent that unpaid lease rentals for the CIRP period do not belong to the financial creditor. Case Name: State Bank of India v. Summit Marine Exports Pvt. Ltd. & Ors. Case No.: IA (IBC)/1025/2024 in CP (IB)/320/9/HDB/2021 Bench: Justice Rajeev Bhardwaj (Member-Judicial) and Sanjay Puri (Member-Technical), Order Date: 19.08.2025 Click Here To Read/Download The Order

Lease Dues Incurred During CIRP Prior To Vesting Date Are Payable To Financial Creditor, Do Not Belong To Successful Resolution Applicant: NCLT Hyderabad

Mohd.Rehan Ali

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Lease Dues Incurred During CIRP Prior To Vesting Date Are Payable To Financial Creditor, Do Not Belong To Successful Resolution Applicant: NCLT Hyderabad

Mohd.Rehan Ali

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