Non-Payment of Outstanding Lease Rent Amounts to Operational Debt: NCLT

The New Delhi bench of the National Company Law Tribunal (NCLT) has ruled that the non-payment of outstanding lease rent by a corporate debtor constitutes an "operational debt" under the Insolvency and Bankruptcy Code (IBC), 2016. The tribunal initiated the Corporate Insolvency Resolution Process (CIRP) against a company that had defaulted on its lease rental payments amounting to over Rs 1.84 crore. The NCLT observed that the lease agreement and the corresponding invoices provided clear evidence of a business transaction and a legally enforceable debt arising from the use of the leased premises. This classification of lease rentals as operational debt is significant as it allows lessors and landlords to utilize the IBC framework to recover their dues from defaulting corporate tenants. The ruling reinforces the rights of property owners and provides them with a potent legal remedy against corporate defaulters.