NCLT erred in admitting CIRP plea due to lack of evidence for MD’s non-payment claim: NCLAT

Case Details: Omega Laser Products B.V. v. Anil Agrawal - [2022] 145 taxmann.com 302 (NCLAT- New Delhi)

Judiciary and Counsel Details

• • Justice Ashok Bhushan, Chairperson & Ms. Shreesha Merla, Technical Member
  • Arun Kathpalia, Sr. Adv., Sarojanand Jha, Karan Sharma, Suraj Malik & Vineet dwivedi, Advs. for the Appellant.
  • Rohit Sharma, Arju Chaudhary & Rounak Nayak , Advs. for the Respondent.

Facts of the Case

In the instant case, the respondent no. 1-operational creditor/managing director of the appellant-corporate debtor filed an application under section 9 for initiation of Corporate Insolvency Resolution Process (CIRP) against the corporate debtor on the ground that that he was entitled to Rs. 3 Lakhs per month as remuneration.

The payment was also short of the agreed sum for which it was stated that the shortfall in the salary of the MD would be paid when the financial position of the company would improve. Later, the MD was removed by the ‘corporate debtor’ without clearing his salary dues.

The NCLT by impugned order, admitted said application filed by the operational creditor. On appeal, the appellant contended that MD had sought to calculate the alleged shortfall in his salary by taking an imaginary figure which was neither approved nor agreed to nor was it supported by any documents such as an Employment Agreement or a Board Resolution.

The appellant further contended that the application filed under section 9 showed that the principal amount of alleged operational debt was the amount shown as due for the period 16-1-2010 to 31-7-2014, which amount was barred by limitation as the application was filed on 27-8-2021.

NCLAT Held

Hon’ble NCLAT observed that since the remuneration of the operational creditor was a disputed question of fact, it was not within the domain of NCLT under IBC to decide the issue of fixation of the salary of the operational creditor but to ascertain if there was any dispute regarding the issue.

It was further observed that since e-mails, correspondence relied upon by operational creditors did not give any definitive quantum of salary by way of any resolution by the board of directors, to fall within the ambit of the definition of acknowledgement of debt as contemplated under section 18 of Limitation Act, section 9 application filed on 27-8-2021 was barred by limitation as claims and amount pertained to period prior to 31-3-2016 and more than three years had lapsed since.

Further, it was held that since e-mails, correspondence and minutes on record, showed that the dispute raised was not a feeble legal argument nor it was a spurious one but it was supported by evidence, the impugned order passed by the NCLT was to be set aside and appeal was to be allowed.

List of Cases Reviewed

• Order passed by NCLT – NEW Delhi in Anil Agrawal v. Omega Icehill (P.) Ltd. [C.P. (IB) No. 529/ND/2021, dated 15-2-2022] (para 32) reversed.
• Mobilox Innovations (P) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37/[2018] 1 SCC 353 (para 30) followed.

List of Cases Referred to

• • Anil Agrawal v. Omega Icehill (P.) Ltd. [C.P. (IB) No. 529/ND/2021, dated 15-2-2022] (para 1)
  • Tushar Kant Jindal v. Anil Agrawal [Company Appeal (AT) (Insolvency) No. 195 of 2022] (para 1),
  • ‘Sakal Deep Sahai Srivastava’ v. Union of India [1974] 1 SCC 338 (para 10)
  • Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37/[2018] 1 SCC 353 (para 29)