Invalid Initiation of CIRP Due to Procedural Defects

The Tribunal found that the notices issued by the respondents did not comply with the procedural requirements of the I&B Code, rendering the initiation of CIRP invalid. It set aside the NCLT's orders and dismissed the applications under Section 9. The Tribunal also clarified that the appellant should pay the respondents three years' arrears of salary and post-retirement benefits if due, as assured. The appeals were disposed of with no order as to costs.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code).
2. Validity of demand notices issued under Section 8 of the I&B Code.
3. Compliance with procedural requirements of the I&B Code and Adjudicating Authority Rules.
4. Timeliness and limitation of claims by ex-employees.
5. Appointment and actions of the Interim Resolution Professional (IRP).

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 of the I&B Code:
The respondents, ex-employees of the appellant, filed applications under Section 9 of the I&B Code for initiating CIRP against the appellant, alleging non-payment of arrears of salaries. The National Company Law Tribunal (NCLT) admitted the application of one respondent, Mr. D. Ramjee, and directed the other two respondents to approach the Interim Insolvency Professional (IRP) appointed in Mr. Ramjee's case to make their claims.

2. Validity of demand notices issued under Section 8 of the I&B Code:
The appellant contended that no proper notice under Section 8, read with Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, in Form-3/Form-4, was served on them. Instead, advocate notices were issued, which do not fulfill the requirements of the I&B Code. The Tribunal found that the notices issued by the respondents' advocate did not comply with the prescribed forms and procedures under Section 8.

3. Compliance with procedural requirements of the I&B Code and Adjudicating Authority Rules:
The Tribunal referred to a similar case, "Macquarie Bank Limited Vs. Uttam Galva Metallics Limited," where it was held that an advocate or lawyer, without proper authorization, cannot issue a notice under Section 8 of the I&B Code. The operational creditor must deliver the demand notice in Form-3 or Form-4, signed by a person authorized to act on behalf of the operational creditor. The Tribunal reiterated that the failure to comply with these procedural requirements invalidates the notices issued by the respondents.

4. Timeliness and limitation of claims by ex-employees:
The Tribunal noted that the claims of the respondents were barred by limitation, as they were made several years after the respondents retired. Despite this, the appellant expressed willingness to pay arrears of three years' salary and post-retirement benefits if due. The Tribunal did not delve into the limitation issue further, given the procedural non-compliance with Section 8 notices.

5. Appointment and actions of the Interim Resolution Professional (IRP):
The Tribunal set aside the NCLT's order appointing the IRP and declaring a moratorium, freezing accounts, and other related actions. It declared all actions taken by the IRP, including advertisements calling for applications, as illegal. The applications under Section 9 of the I&B Code were dismissed, and the appellant was allowed to resume normal operations through its Board of Directors.

Conclusion:
The Tribunal concluded that the notices issued by the respondents did not comply with the procedural requirements of the I&B Code, rendering the initiation of CIRP invalid. It set aside the NCLT's orders and dismissed the applications under Section 9. The Tribunal also clarified that the appellant should pay the respondents three years' arrears of salary and post-retirement benefits if due, as assured. The appeals were disposed of with no order as to costs.

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