2021 (9) TMI 1381 - Tri - Insolvency and Bankruptcy

Dismissal of Company Petition for CIRP due to Non-Payment of Service Benefits

The Tribunal dismissed the Company Petition seeking Corporate Insolvency Resolution Process (CIRP) against a government company for non-payment of service ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - service benefits payable to the petitioner on his superannuation - existence of debt and dispute or not - HELD THAT:- It is the very case of the petitioner that the amount of Rs. 16,80,877/- is due towards “gratuity”, “leave encashment”, and “LTC”, on account of superannuation that amounts to “service benefits” and not services and will not qualify under the definition “Operational Debt”. It is not the case of the petitioner that the above amount is due towards “salary” for the service rendered by him to the corporate debtor while he was in service. Of course, service benefits accrues out of rendering service but the intention and object of code is not “recovery” and is only “resolution” - the words “goods” and “services” used in the definition of “Operational debt” cannot be stretched to service benefits arising out of service. The words “goods” and “services” shall be interpreted to mean those that are necessary to keep the company as a going concern. This is also evident from exempting “goods” and “services” from the purview of moratorium declared under section 13 of the code. Therefore, the company petition is liable to be dismissed as the amount claimed by the petitioner does not qualify as on “Operational Debt”. It is also clear from the submissions of the corporate debtor which was not disputed by the petitioner that the petitioner did not accept the gratuity amount offered by the corporate debtor in the pending writ petition before the Hon’ble Bombay High Court when it was offered along with the other petitioners which is his own fault and therefore the question of resolution of Operational Debt does not arise, as no person shall be entitled to take advantage of his own wrong as per law. This bench is of the considered opinion that the there are no merits in the company petition and the same is liable to be dismissed - Petition dismissed. Issues:Initiation of Corporate Insolvency Resolution Process (CIRP) against a government company for non-payment of service benefits.Analysis:The petitioner, an Operational Creditor, filed a Company Petition against the Corporate Debtor, a government company, under section 9 of the code seeking CIRP for non-payment of service benefits upon superannuation. The Corporate Debtor opposed the petition on various grounds, including maintainability. The petitioner claimed an amount of Rs. 16,80,877 for gratuity, EL encashment, and LTC, which the Corporate Debtor allegedly failed to pay despite a statutory notice. The Corporate Debtor argued that CIRP cannot be initiated against a government company, highlighting a previous case where a similar petition was dismissed by the Tribunal.The Tribunal analyzed the case and found that the amount claimed by the petitioner did not qualify as 'Operational Debt' under the code. It emphasized that service benefits do not fall under the definition of goods or services necessary to maintain a company as a going concern. The Tribunal noted that the petitioner had obtained an order from the gratuity commissioner, and his remedy was to enforce that order. Additionally, the petitioner did not accept the gratuity amount offered by the Corporate Debtor during a writ petition before the High Court, which was deemed his own fault.Based on these findings, the Tribunal concluded that the Company Petition lacked merit and dismissed it on the grounds that the claimed amount did not constitute Operational Debt and the petitioner had alternative remedies available. The judgment highlighted the principle that one cannot benefit from their own wrong under the law. Thus, the petition for CIRP against the government company for non-payment of service benefits was dismissed.