The City Development Authority (CDA / Lessor) entered into a lease deed with ABC Private Limited (the Corporate Debtor/Lessee) in respect of a piece of land for the purpose of constructing residential flats according to

CS Professional · Insolvency and Bankruptcy - Law and Practice · PYQS · December 2025
The City Development Authority (CDA / Lessor) entered into a lease deed with ABC Private Limited (the Corporate Debtor/Lessee) in respect of a piece of land for the purpose of constructing residential flats according to the setbacks and building plan approved by the lessor. The lessee was to pay the lease premium of ₹ 24.29 Crore, out of which 10% i.e. ₹ 2.42 Crore was paid by the lessee to the lessor with a moratorium of 24 months from the date of allotment and after the expiry of moratorium period, the balance 90% premium i.e. ₹ 21.86 Crore of the plot along with interest was to be paid in the manner provided in the lease deed. In the meantime, an application filed under Section 7 of the Code against the Corporate debtor was admitted on 10.10.2019. The CDA put up its claim of ₹ 32.96 Crore assessed on 10.10.2019 to the RP on 31.12.2019. The RP invited for Expression of Interest (EOI) and Resolution Plans were submitted by few Resolution Applicants. Resolution Plan submitted by the consortium of home buyers' association, namely, Crossroad Welfare Society was approved by the CoC and thereafter, the RP filed an application before the Adjudicating Authority seeking its approval. The said application is pending. Meanwhile, CDA submitted a letter dated 04.06.2021 to the RP highlighting its dues towards lease premium calculated from 11.10.2019 to 30.06.2021 amounting to ₹ 16.15 Crore, which is payable within a period of 15 days. However, the said dues were not paid within the stipulated period, therefore, the CDA presumed that the RP has declined the same and filed the application before the Adjudicating Authority on 27.09.2021. The Adjudicating Authority stated that in terms of explanation of Section 14(1) of the Code, the applicant is entitled to get lease premium amount as well as lease rent arising for the use or continuation of the lease during the moratorium period and in case of non-payment the moratorium benefit will not apply for the suspension or termination of lease. The Adjudicating Authority ordered that the Resolution Professional has failed to pay the lease premium and lease rent due to the CDA, therefore, the Resolution Professional is directed to make the payment of the lease amount within 6 months or else include the said amount as Insolvency Resolution Process Cost under Regulation 31 of the IBBI (Insolvency Resolution Process of Corporate Person). On the above background, state whether the Adjudicating Authority has rightly applied the explanation under Section 14(1)(d) of the Code for the purpose of directing the Resolution Professional to pay the lease premium amount and the lease rent to the CDA?

Answer & Explanation:

The facts of the case are similar to the case of Sunil Kumar Agrawal (Appellant) Vs. New Okhla Industrial Development Authority (Respondent) 12th January, 2023, National Company Law Appellate Tribunal, Principal Bench, New Delhi Company Appeal (AT) (Ins.) No. 622 of 2022 . The Hon'ble National Company Law Appellate Tribunal inter-alia observed that Section 14 of the Code deals with the moratorium and Section 14(1)(d) of the Code says that there would be a prohibition from the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. However, explanation appended to Section 14(1)(d) says that with the prohibition of recovery of any property by an owner or lessor, a license, permit, registration, quota, concession, clearance or a similar grant or right either given by the Central Govt., State Govt. local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency but there would be a condition for its continuation if there is no default in payment of the dues of that license, permit, registration, quota, concession, clearance or a similar grant or right during the moratorium period. The similar grant or right has to be read in respect of the licence, permit, registration, quota, concession, clearance but it cannot be read as the premium amount or lease rent which has been so ordered by the Adjudicating Authority to be paid by the Appellant to the Respondent. Regulation 31(b) of CIRP Regulations provides for Insolvency resolution process costs. "Insolvency resolution process costs" under Section 5(13)(e) shall mean amounts due to a person whose rights are prejudicially affected on account of the moratorium imposed under section 14(1)(d). Therefore, the Adjudicating Authority has rightly applied the explanation under section 14(1)(d) of the Code in the given question for the purpose of directing the Resolution Professional to pay the lease premium amount and the lease rent to the CDA.

Topics: Insolvency and Bankruptcy Code, 2016 (IBC)

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