# In the matter of Promila Taneja Vs. Surendri Design Pvt. Ltd. CA(AT)(Ins)No. 459 of 2020

> NCLAT judgment dated 2020-11-10. Citation: TCN-2020-NCLAT-00050. The case involves an appeal against the Adjudicating Authority's decision to dismiss an…

- **Court:** NCLAT
- **Order date:** 10 Nov 2020
- **Citation:** TCN-2020-NCLAT-00050
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/promila-taneja-vs-surendri-design-pvt-ltd-ca-6ba148dd

## Summary

### Background

The case involves an appeal against the Adjudicating Authority's decision to dismiss an application filed under Section 9 of the Insolvency and Bankruptcy Code (IBC) by Promila Taneja, the Appellant, who is a landlord. The application pertained to unpaid rent by Surendri Design Pvt. Ltd., the Corporate Debtor. The Adjudicating Authority dismissed the application, citing a pre-existing dispute and holding that rent dues do not fall under the definition of Operational Debt as per Section 5(21) of the IBC. The Corporate Debtor claimed the lease agreement was terminated in July 2017 due to changed circumstances, including losses due to demonetization and changes in mall entry due to a Supreme Court judgment regarding liquor sales near national highways. The appellant

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## Facts

Promila Taneja, the Appellant, is the landlord of a property leased to Surendri Design Pvt. Ltd., the Corporate Debtor. The Appellant filed an application under Section 9 of the IBC seeking to initiate CIRP against the Corporate Debtor for unpaid rent. The Corporate Debtor claimed the lease agreement was terminated in July 2017 due to losses stemming from demonetization and changes in mall entry caused by a Supreme Court judgment restricting liquor sales near national highways. The Corporate Debtor unilaterally stopped making rent payments from February 1, 2016, despite a lock-in period of 36 months. The Adjudicating Authority dismissed the application, citing a pre-existing dispute and the view that rent does not constitute Operational Debt. The Appellant appealed

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## Issues and analysis

### Issue 1: Whether a pre-existing dispute existed between the Appellant (landlord) and the Corporate Debtor …

**Ratio:** A pre-existing dispute bars the initiation of CIRP under Section 9 of the IBC. The

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**Reasoning:** The Tribunal considered the Corporate Debtor's claim that the lease agreement was

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**Interpretation:** The term 'dispute' is interpreted broadly to include any disagreement or

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**Application:** The Corporate Debtor's communication of its intent to terminate the lease and

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## Parties

- **Judges:** A.I.S. C…; V. P. S…
- **Appellants:** Promila T…
- **Respondents:** Surendri Design…

## Timeline

- **2016-02-01 — Lease Agreeme…**: The lease agreement between the Appellant and Corporate Debtor commenced with a lock-in…
- **2016-02-01 — Rent Payment…**: The Corporate Debtor unilaterally…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 5(21) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-5)

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