2020 (2) TMI 1551 - Tri - Insolvency and Bankruptcy

Court ruling on salary dispute under Insolvency and Bankruptcy Code

Hansa Dutt Sati Versus Karan Motors Pvt. Ltd.

The court considered a petition under the Insolvency and Bankruptcy Code regarding salary withholding by the Corporate Debtor, legal notices for salary ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - HELD THAT:- The total outstanding as overdue salary amount is ₹ 8,66,464/- plus interest @18% P.A. from 14.02.2019 till the realisation of outstanding amount is ₹ 4,65,355/-. Petitioner was employed with the CD in-charge of production in the Foundry. While in employment, the OC indulged in the activities deliberately and intentionally, to cause losses suffered by CD with respect to quality and loss of business of several lacs besides loss of repetition in international market which is entirely on account of the Petitioner. Issues:1. Petition filed under Section 9 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process initiation.2. Allegations of salary withholding by Corporate Debtor leading to financial hardship for Operational Creditor.3. Legal notices sent for outstanding salary recovery.4. Total outstanding salary amount and interest claimed.5. Counter-allegations by Corporate Debtor regarding Operational Creditor's actions causing losses.Issue 1: Petition under Section 9 of Insolvency and Bankruptcy Code:The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, by the Operational Creditor, 'Hansa Dutt Sati,' seeking the initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor Company, 'M/S. Karan Motors Private Limited.'Issue 2: Allegations of Salary Withholding:The Operational Creditor was employed as the General Manager-Foundry under the Corporate Debtor and faced salary withholding starting from delays in payment, which escalated to months of non-payment. Despite requests to clear the outstanding salary, the Corporate Debtor continued to withhold payments, causing extreme financial hardship to the Operational Creditor.Issue 3: Legal Notices and Outstanding Amount:Legal notices were sent by the Operational Creditor through counsel for the recovery of the outstanding salary amount. The total outstanding overdue salary amount was stated to be Rs. 8,66,464/- plus interest at 18% per annum from 14.02.2019 until the realization of the outstanding amount, totaling Rs. 4,65,355/-.Issue 4: Counter-Allegations by Corporate Debtor:The Corporate Debtor, in its reply, alleged that the Operational Creditor deliberately caused losses to the company in terms of quality, loss of business, and reputation in the international market. The Corporate Debtor contended that the Operational Creditor's actions were intentional and led to substantial financial losses for the company.In conclusion, the judgment involved the consideration of a petition under the Insolvency and Bankruptcy Code, highlighting allegations of salary withholding by the Corporate Debtor, legal actions taken for outstanding salary recovery, and counter-allegations by the Corporate Debtor regarding intentional actions by the Operational Creditor causing financial losses. The detailed analysis of each issue provided a comprehensive overview of the legal proceedings and the circumstances leading to the dispute between the parties involved.