ORDER
1. Heard the Ld. Counsel for the Petitioner.
2. CP is dismissed vide separate order.
3. File be consigned to records. -Sd- -Sd-
RADHAKRISHNA SREEPADA SUNIL KUMAR AGGARWAL
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
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IN THE NATIONAL COMPANY LAW TRIBUNAL, BENGALURU BENCH
(Exercising powers of Adjudicating Authority under The Insolvency and Bankruptcy Code, 2016) CP (IB) No.97/BB/2023
U/s. 9 of the IBC, 2016 read with Rule 6 of the IBC (AAA) Rules, 2016
IN THE MATTER OF:
Mr. Mukund Maheshwari Residing at Flat No.401, Janpriya Prameela Enclave, Umanagar, Begumpet, Hyderabad. Mrs. Neeta Shrinivas Zanvar Residing at Flat No.401, Janpriya Prameela Enclave, Umanagar, Begumpet, Hyderabad. .… Petitioners/Operational Creditors Versus
Tablespace Technologies Private Limited
Having its registered office at No 8/2, Ground floor, BREN Optimus, Dr. M.H. Marigowda Road,
Bangalore, Karnataka, - 560029 …Respondent/Corporate Debtor Last date of hearing: 09.06.2025
Order delivered on: 16.06.2025
CORAM: 1. Hon'ble Shri Sunil Kumar Aggarwal, Member (Judicial)
2. Hon'ble Shri Radhakrishna Sreepada, Member (Technical) Parties/Counsels Present:
For the Petitioner : Shri C.K. Nandakumar, Sr. Counsel with Sh. Arun Ajay For the Respondent : Shri Prashanth V.G.
O R D E R
1. The present Petition was e-filed on 05.01.2023 under section 9 of the Insolvency and Bankruptcy Code, 2016 ("IBC/Code") read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by Mr. Mukund Maheshwari and Mrs. Neeta Shrinivas
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Zanvar ("Operational Creditors/Petitioners") seeking to initiate Corporate Insolvency Resolution Professional Process ("CIRP") against Tablespace Technologies Private Limited (hereinafter referred as "Corporate Debtor/Respondent") on the ground that the Corporate Debtor has committed a default in payment of an outstanding amount of Rs.3,10,25,853/- (Rupees Three Crore Ten Lakhs Twenty-Five Thousand Eight Hundred and Fifty-Three Only) on 15.06.2019. The Record of Default in Form D issued by NeSL and an Affidavit U/s 9(3)(b) of Code regarding there being no pre-existing Dispute and Demand Notice under Section 8(1) of Code in Form 3 are also filed with the Petition.
2. Relevant brief facts of the case are as follows:
a) The Petitioners/Operational Creditors are the owners and possessors of property with super built-up area admeasuring 10,000 sq. ft out of total 44,733 sq. ft on the 1st Floor in the commercial building known as
"Western Aqua" which comprising 3 basements + Ground + 12 Upper floors) together with 22 car parking slots and 22 two wheeler parking slots, constructed on plot nos. 1, 2, 3 and 4/Part in Survey No.8 situated at Kondapur Village, Serllingampally, RR District, Hyderabad (hereinafter referred to as "Property"). The Respondent/Corporate Debtor is an entity incorporated on 03.03.2017 under the Companies Act, 2013 and involved in the business of the providing co-working space on lease to various Multi- National Companies.
b) In the Month of May, 2019 the Corporate Debtor approached the petitioners to lease out the property and the Operational Creditors after considering their request agreed for the same and the parties executed a lease deed dated 10.05.2019 ("Lease Deed") under which the Property was leased out to the Respondent for an initial period of 10 years from the "Lease Commencement Date" as defined under the Lease Deed for a monthly rent of Rs.5,40,000/- excluding GST, to be paid in advance by 15th of every month.
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c) Subsequent to signing of Lease Deed, the Petitioners and the Corporate Debtor also executed a Fit-out Lease Agreement dated 29.05.2019 (hereinafter referred to as the "Fit-out Agreement") wherein it was agreed that the cost of installing furniture, fixtures and fitouts at the Property was on the Petitioners for the use and benefit of the Corporate Debtor against payment of monthly rental of Rs.4,60,000/- plus GST for the first 60 months (lock-in period) from the date of agreement and thereafter @ Rs.2,30,000/- per month plus GST, to be paid before 15th day of every month to the Petitioners. It is further submitted that the Corporate Debtor made an initial investment of Rs.2,00,00,000/- (Rupees Two Crores Only) as per the said Fit-out Agreement to meet the requirements of the Corporate Debtor, for construction of the furniture and fixtures.
d) The Petitioners submit that this Petition arises from the failure of the Corporate Debtor to make payment stipulated under the Fit-out Agreement as the Corporate Debtor has not paid a single amount towards the rent for the fit-outs for furniture and fixtures as per the agreement and thus violated the Agreement. It was also agreed in the fit-out agreement that a security of Rs.46,00,000/- (Rupees Forty-Six Lakhs Only) would be paid by the Corporate Debtor as an interest free refundable deposit. However, the said security was also not deposited by the Corporate Debtor as mandated under the Agreement.
e) The Petitioners submit that they made multiple requests to the Corporate Debtor for the payment of the rent as mandated under the fitout agreement but the Corporate Debtor failed to pay the rent that had fallen due and in fact the outstanding rent is not paid by the Corporate Debtor to the Operational Creditor till date. It is further submitted that Arbitration Proceedings are pending between the Petitioners and the Corporate Debtor relating to the Lease Deed. However, there are no Arbitration proceedings pending in relation to the fit-out agreement.
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f) The Petitioners also state that it is not in dispute that the Corporate Debtor continued using the property during the period of the Agreement. Once in possession and use of the property under the Fit-out Agreement, even though they have chosen to dispute the investment and furniture installation, they are liable to pay the rental as agreed in the Fit-out Agreement because the commercial property along with furniture and fixtures forming part of the Fit-out Agreement, were utilized during all this period. The Corporate Debtor cannot now seek to avoid liability after having enjoyed the benefit of possession and commercial use of the premises.
g) Thereafter, since the Corporate Debtor did not pay the outstanding amount due towards rent under the Fit-out Agreement, the Operational Creditors were forced to issue a statutory Demand Notice under Section 8 of Code read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 on 12.04.2022 for payment of accrued debt of Rs.3,10,25,853 to the Corporate Debtor. Tn their reply the Corporate Debtor while accepting the relationship between the parties denied the liability by raising false and baseless allegations to create a dispute.
3. On 03.10.2023, the Respondent filed its statement of objections, and contended as under: -
(a) That the Petition by Operational Creditors is not maintainable as the very basis of the instant claim is a purported Fit Out-Agreement executed between the parties which was never implemented by the petitioners as apparent from the fact that the Petitioners did not even perform first step of investing Rs.2 crores as was required to be done under the Fit-out Agreement. Further, subsequent steps as required to be done, to give effect to the Fit-out Agreement, was not done by the Petitioner as both the parties had abandoned the Fit-out Agreement after its execution. It is submitted that as per the terms of the Fit-out
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agreement, the Corporate Debtor had to appoint an architect and the vendors with the consent of the Petitioners after their making an investment of Rs.2,00,00,000/- (Rupees Two Crores Only). Since the petitioners did not comply with act of making an investment of Rs. 2,00,00,000 and decided to abandon the same, the Corporate Debtor had to install all the furniture and fixtures entirely at its own cost and the parties did not act on the Fit-out Agreement after its execution, it was never implemented between the parties.
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(b) The Corporate Debtor contends that the instant petition is barred by limitation because the date of default is mentioned as 15.03.2022 which is said to be continuing every month. As has been held by Hon'ble Supreme Court in B.K. Educational Services Pvt. Ltd. V. Parag Gupta, AIR 2018 SC 5601 that the period of limitation will be three years from the date of default for the purpose of IBC, since the period of three years expired before the date of filing of the instant petition, it has become barred by limitation.
(c) Further, this Petition is not maintainable as the purported claim amounting to Rs.3,10,25,853/- (Rupees Three Crore Ten Lakhs Twenty-Five Thousand Eight Hundred and Fifty-Three Only) falsely alleged to be due from the Respondent does not qualify as a 'claim' under the provisions of section 3(6) of the Code. For the instant petition to be maintainable, the amount claimed must qualify as
"operational debt" under section 5 (21) of the Code. It is submitted that as per the definition of operational debt the 'claim' has to be in respect of provision of goods or services but in the instant matter no goods or service are provided by the petitioners to the Corporate Debtor Thus, the claim made by the petitioners, fails to qualify as an
"operational debt" under the provisions of Code and therefore, the petition deserves to be dismissed.
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(d) The Corporate Debtor submits that the petitioners have failed to raise invoices on the Corporate Debtor relating to payment of rent due to Corporate Debtor and therefore in the absence of invoices raised under the Fit-out agreement no debt was due to the petitioners by the Corporate Debtor.
(e) It is contended that although the Fit- out agreement had a lock in period of 60 months from the date of agreement yet SARFAESI Proceedings were initiated by Axis Bank on the Property of the petitioners due to which the Corporate Debtor had to vacate it in October, 2022 during the lock-in Period. It is further submitted that Corporate Debtor had suffered monetary losses on account of vacating the premises due to SARFAESI Proceedings initiated by Axis Bank when it was constrained to uninstall and remove the installed furniture, fixtures, etc. on account of the compulsion to vacate the Premises. Therefore, it is absurd and contrary to logic that the petitioners have raised a claim against the Corporate Debtor in the instant petition.
(f) The claim made in the petition is highly disputed because it involves a pre-existing dispute relating to non-execution of Fit-out agreement and the lease deed itself is under Arbitration and cannot therefore be the basis of any order of admission by this Authority. The Petitioners with an intention of putting pressure on the Corporate Debtor in the arbitration proceedings relating to lease deed have chosen to initiate these proceedings under the provisions of the Code.
4. On 12.12.2023, the Petitioners had filed their rejoinder contending as under:
(a) On Non-implementation of Fit-Out Agreement for Non-Investment of ₹2,00,00,000/-: - The plea is termed false and wholly untenable because possession was given pursuant to the Lease Deed and Fit-out Agreement and the Corporate Debtor continued commercial use of the premises till October 2022, without vacating. Moreover, once use and
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possession of the property is admitted, the agreed rental under the Fit- out Agreement becomes payable irrespective of any technical disputes regarding investment as the Corporate Debtor has not placed any documentary proof on record to substantiate their claim that they themselves had installed the furniture and fixtures whereas the fact that the petitioners have made the initial investment of ₹2,00,00,000/- in furnishing the premises is evident from the Fit-out Agreement itself. The admitted use and benefit drawn by the Corporate Debtor triggers a corresponding obligation to pay the agreed consideration, irrespective of any dispute regarding investment. Therefore, the Corporate Debtor's assertion questioning the non-implementation of Fit-out Agreement and Non-Investment of ₹2,00,00,000 is without merit and legally unfounded.
(b) Ground of limitation- The submission of the Corporate Debtor is without merit because the claim constitutes a recurring monthly liability, with each month's unpaid rent giving rise to a separate and continuing cause of action. It is further submitted that the Hon'ble Supreme Court In Re: Cognizance for Extension of Limitation, (2021) 18 SCC 250 has held that the period from 15.02.2020 till 28.02.2022 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi-judicial proceedings. Furthermore, the Hon'ble Supreme Court in Prakash Corporates (S) v. Dee Vee Projects Limited (S)., (2022) 5 SCC 112 emphasized that the orders passed in Suo moto extension of limitation are to be given full effect and not interpreted narrowly. The Hon'ble Supreme Court had allowed exclusion from limitation to obviate hardships faced by the litigants during the Covid-19 pandemic and hence, such exclusion enlarges the time available for initiating proceedings. Thus, period from 15.02.2020 till 28.02.2022 would stand excluded in computing the period of limitation. It is further submitted that the petition is well within the period of limitation period as set out in Article 137 of the
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Limitation Act, 1963. Each month's rent constitutes a separate cause of action and the limitation period is calculated from the due date of each month's rent. Even after exclusion of certain amounts and period outside limitation, the liability from January 2020 onwards is within the limitation and above ₹1,00,00,000/- which satisfies the threshold for initiation of CIRP. At least the dues pertaining to the period from 05.01.2020 to 05.01.2023 as the present petition was e-filed on 05.01.2023, which means the rental dues for the period January 2020 to December 2022 would be within the permissible time frame and the total debt that accrues even after the exclusion of 7 months amounts to Rs. 1,56,40,000/- (Rupees One Crore Fifty-Six Lakhs Forty Thousand Only), which is still above the threshold amount of Rs. 1,00,00,000/- (Rupees One Crore Only).
(c) Whether pre-existing dispute between the parties. - The Petitioners submit that the Corporate Debtor raised the issue of non-implementation of the Fit-out agreement and Non-investment of Rs.2,00,00,000 for the first time on service of demand Notice dated 12.04.2022 without bringing on record any substantial evidence merely to distract the attention of this Authority and evade the consequences under the Code.
(d) Absence of Invoices It is submitted that the contention of the Corporate Debtor that no invoices were raised is factually incorrect and baseless as invoices were raised for June, July and August, 2019 and TDS was deducted on these invoices, thereby establishing the acknowledgement and acceptance of liability. Even otherwise absence of invoices for subsequent months does not negate the liability when use and occupation of property is admitted. The liability arises from use and not from the invoices.
(e) Regarding Absence of Goods or Services and license fee being not an Operational Debt:- The contention of the Corporate Debtor that license fee under an agreement is not a debt, has no legal basis as it is a
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settled that license fee or rental amounts for use of commercial premises and fit-outs fall within the ambit of "Operational Debt" as defined under Section 5(21) of the IBC as held by Hon'ble NCLAT in Jaipur Trade Expocentre Pvt. Ltd. v. Metro Jet Airways Training Pvt. Ltd., (2022) ibclaw.in 209 NCLAT. Therefore, the Corporate Debtor's objection that the present claim does not fall within the definition of 'Operational Debt' is completely untenable and contrary to judicial pronouncements.
5. On 23.01.2024, the Respondent had filed its Sur-rejoinder replying to the contention raised by the Petitioner as under:
a) The Respondent has not admitted any liability of debt due and absence of invoices: In the rejoinder, the Petitioners have made a frivolous attempt to contend that the Corporate Debtor had admitted the alleged liabilities to pay in relation to the Fit-Out Agreement, by way of crediting TDS in respect of the two invoices dated 30.06.2019 and 31.07.2019, of Rs. 46000/- each pertaining to June and July, 2019 and to claim that the same were in respect of the tax invoices dated 30.06.2019 and 31.07.2019 raised by them. Based on the abovementioned reasons, the petitioners seek to claim that the Corporate Debtor admits liability to pay invoices under the fit-out agreement. The Corporate Debtor denied the abovementioned assertions of the petitioners by stating that the two entries reflected in the Form 26AS of Rs. 46,000/- each were inadvertent credit entries made by the Corporate Debtor, which were reversed and adjusted in the following months against amounts paid under a Lease Deed executed between the parties as the monthly lease rental was a sum of Rs. 2,70,000 and from May 2019 till 31.3.2020, the total lease rentals was a sum of Rs. 29,70,000 and the TDS to be credited on the said amount. The net effect has been that no TDS whatsoever has been credited in respect of the fit-out agreement in question. Further, after raising the initial two invoices, the Petitioners themselves did not raise any further invoice. The Petitioners, had to issue invoices to receive any
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rental under the fitout agreement and absence of any subsequent invoices also points out to the fact that there is no debt due.
b) The Corporate Debtor also contends that the petitioners by filing of this petition have maliciously raised claims under Fit-out agreement against the Corporate Debtor because the lease deed is under Arbitration. Moreover, there is no proof that even the very first step, namely investment of Rs.2,00,00,000 was done by the Petitioners which could substantiate their claim of debt due from the Corporate Debtor, as monthly rental under the fit-out agreement was payable to the petitioners only against investment to be made by petitioners for purchase and installation of the furniture and fixtures by following the procedure as set-out in the Fit-out Agreement. It is further submitted that in the absence of the petitioners' making any investment for purchase and installation of the furniture and fixtures and following the steps as set out in the Fit-out Agreement, there is no question of the Corporate Debtor having any liability to make any payments to the petitioner.
c) In the light of all the aforesaid, it is clear that the petitioners have sought to indulge in making of misleading and even false statements, thereby trying to wrongfully support their false claims against the Respondent. This may be taken note of strictly by this Authority and the petition may be dismissed with exemplary costs.
6. We have heard the Learned Counsels for parties and carefully perused the record.
7. This Petition was filed on 05.01.2023 without specifying any definite Date of Default in Form No. 5 albeit it was stated to be 15thof every month from 15.06.2019. In the revised Form 5 filed on 31.07.2023, the date of default was mentioned as 15.03.2022 On clarification being sought vide order 03.10.2023, another memo was filed on 26.02.2024 stating that Date of Default is 15.06.2019 when the first rental payment under Fit-out
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Agreement became due. The revised Form 5 was sought to be discarded as the date provided therein contained inadvertent typographical error. We proceed on that premise hence.
8. As has been asserted, the rental dues began accruing on 15th June 2019 and each month rent constitutes a separate cause of action, the limitation period for the rent due on 15th June 2019 would end on 15th June 2022. In view of the precedent on the point, referred to above, on exclusion of Covid period specified by Hon'ble the Apex Court, the petition has been filed within the prescribed period of limitation. Even if part of the rental claim is considered, at this juncture, to have become barred by limitation, counting backwards from the date of filing of petition, at least the dues for period from January 2020 onwards are within the period of limitation as has been explained by Hon'ble the Apex Court in M/s Next Education India Pvt. Ltd. V M/s K12 Techno Services Pvt. Ltd., Civil Appeal No. 1775/2021 decided on 27.03.2023. The cumulative principal liability for the said truncated period is above the threshold of ₹1,00,00,000/- (Rupees One Crore Only) for initiation of CIRP
9. The fact that the Corporate Debtor was in Possession of the property subject to Fit-out agreement from June 2019 to October, 2022, is not in dispute. The argument of Non- Implementation of Fit-out Agreement has been raised by the Corporate Debtor in reply to the Demand Notice. It is stated that the license fee under an agreement does not count as an 'Operational debt' and since there is a pre-existing dispute regarding Non- Implementation of Fit- out Agreement which is the basis of debt due, the petition is barred under Section 8 of the IBC, 2016.
10. It was held by a Special 5-member Bench of Hon'ble NCLAT in Jaipur Trade Expocentre (supra) that the claim of Licensor for payment of license fee for use of demised facility for business purposes is an 'operational debt' within the meaning of Section 5(21) of the Code. Applying the proposition
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to the facts of this case, it cannot be supported that unpaid lease rent for furniture & fixtures, termed as licence fee, would fall outside the purview of an 'operational debt.'
11. Along with petition, the petitioners have filed copies of two invoices issued to the respondent for fit-out rent for the months of June & July, 2019. The copy of Form 26AS of petitioner no.1 showing TDS deducted by the respondent on the rent, has also been filed. There is however no subsequent document brought on record to dispel the assertion of respondent that said TDS was adjusted against the rent of property being paid under Lease Deed dated 10.05.2019. Neither the petitioners raised invoices for period August, 2019 onwards nor protested the unilateral adjustment of TDS against other liability. In fact, fit-out rent was never claimed/demanded until issuance of statutory notice precursor to this petition. It has been argued that the non- issuance of invoices is of no consequences as liability arises from use (of facility) & not from invoices alone. That however not only compromises the payment terms enshrined in the Fit-out agreement but also raises an unanswered question as to why would Lessors/Owners just keep waiting for rent @ Rs.4,60,000/- p.m. for more than two & half years.
12. Regarding implementation of Fit-out agreement, the submission on behalf of petitioners is that the factum of initial investment of Rs.2,00,00,000/- in furnishing the property is evident from the Fit-out agreement itself. They went on to say that the respondent having not filed any documents to show that they had incurred expenditure on furniture, fixtures, fit-outs & equipment cannot seek to avoid liability for outstanding rent under the agreement.
13. In their zeal to push the claim, the petitioners presented that rent which had become due till 15.12.2022 fell within limitation period, in the Memo filed on 20.08.2024. The initial onus to put forth essential facts for invoking the jurisdiction of this Authority is on the petitioner. Even after a specific
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objection was taken by the respondent about non-implementation of Fit-out agreement for non-investment by the petitioners in reply to the demand notice in May, 2022, mention whereof is not made in Form-5/Petition nor copy enclosed albeit admitted in Synopsis filed with the petition And in objections to the petition, the petitioners have not furnished impressive evidence of having actually invested a sum of Rs. 2,00,00,000/- in installing furniture/fixture etc in the property in terms of the agreement dated 29.05.2019, even if it was prior to or at the time of execution of document as per their own case. The submission that even respondent did not object to non-implementation of Fit-out agreement does not improve credibility of the petitioners. Even if they had not installed furniture etc on their own, they were saving the amounts that would have become payable, if agreement were given effect to.
14. The argument that the respondent never submitted finalized design & layouts for approval of Lessors reveals the fallacy of petitioners' version of committed investment evident from the agreement. The revelation becomes wide as one further peeps into the agreement which provides that the Lessee/respondent was to appoint Architect & Vendors with the consent of petitioners. The petitioners further had right to call for quotations from the Vendors apart from those obtained by Respondent. The petitioners were further obligated to insure the Fit-out etc for the entire lease term. The petitioners did not ask for the interest free refundable security deposit of Rs.46,00,000/- from the respondent at the time of alleged handover of fit- outs simultaneously with the agreement as it was subject to completion of Investment (by the petitioners). The recital of Fit-out agreement mentions about capturing the details of investment in the fit-out and fixtures that will be provided by the Lessor on the …. . Had it been a case of petitioners having already made the provisions, the agreement would not have provided for 'the Lease Commencement Date' which goes in consonance with the theory that the Fit-outs were to be installed by engaging Vendors,
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Fabricators, Carpenters etc after finalising the design & layouts, at the cost of petitioners with ceiling of Rs.2,00,00,000/- and only thereafter the Lease would have commenced.
15. Without discharging the initial onus, the petitioners cannot call upon the respondent to produce evidence for having made provision for furniture & fixture at their own cost. Even if their plea in this behalf is discarded while the respondent continued enjoying the occupation of property under Lease Agreement without itself spending any amount on Fit-outs, the entitlement of petitioners does not get crystallised.
16. The petitioners thus utterly failed to substantiate having invested any amount yet harped upon their baseless claim against the respondent. As canvassed by the respondent, the petition may well have been filed only to coerce them in pending arbitration proceeding emanated out of Lease Deed dated 10.05.2019.
17. The above analysis takes us to the conclusion that the subject matter on examination is found to have no edifice to hold. There is no question of pre- existing dispute when the case itself is found to have no foundation and substance or capable of being taken ahead.
18. The Company Petition bearing C.P (IB) No.97/BB/2023, therefore, is dismissed with costs.
19. Nothing observed hereinabove shall preclude the parties from taking recourse to or pursuing other legal remedies as may be available to them. -Sd/- -Sd/-
(RADHAKRISHNA SREEPADA) (SUNIL KUMAR AGGARWAL)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)