When Lessor was not in receipt of rent on CIRP commencement date and Arbitral Award was still under execution, the lease rental subsequent to the commencement of the CIRP cannot be treated as CIRP cost under CIRP Regulation 31(b) | This case does not fall under Section 14(1)(d) of the IBC, rather it is covered by Section 14(1)(a) – Mr. A. Guhan and Anr. Vs. Ms. Sunita Umesh Liquidator, Deltronix India Ltd. – NCLAT New Delhi

Hon’ble NCLAT held that: (i) On the date when CIRP commenced, Appellant was not receiving any rent from the Corporate Debtor and claim of rent/damages and possession of the assets was under consideration in the Execution Proceedings. (ii) After enforcement of Moratorium under Section 14 by virtue of Section 14(1)(a) the Appellant could not have prosecuted the Execution Proceeding against the Corporate Debtor. When the Appellant could not have proceeded with the execution of Arbitral Award, there was no occasion to recover the rent and assets from the Corporate Debtor. (iii) The claim of Appellant as per Arbitral Award to receive damages and occupation from Corporate Debtor cannot be treated as Insolvency Resolution Process cost under Section 31(b). (iv) The fact that plant and machineries are attached/available at the site cannot be read to mean that the premises were being used as a going concern by Corporate Debtor (v) In the present case, when the Appellant was not in receipt of rent from December 2014, and Arbitral Award obtained by the Appellant was still under execution, the lease rental subsequent to the commencement of the CIRP cannot be treated as CIRP cost.

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