Tribunal admits CIRP application for unpaid salary claims, dismisses debtor's objections

The Tribunal admitted the application for the initiation of Corporate Insolvency Resolution Process (CIRP) against the corporate debtor based on unpaid salary claims. It found the applicant, an operational creditor, had met the procedural requirements under the Insolvency and Bankruptcy Code. The Tribunal dismissed objections raised by the corporate debtor, including allegations of forum shopping and non-compliance with Section 9(3)(c) of the Code. It issued a moratorium under Section 14, prohibiting legal actions against the debtor and asset transfers. The burden of proof was emphasized to lie with the party making allegations.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Claim of unpaid salary and interest
3. Jurisdiction and territorial authority
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC)
5. Objections raised by the corporate debtor
6. Existence of a dispute
7. Allegations of forum shopping
8. Compliance with Section 9(3)(c) of the IBC
9. Burden of proof on allegations made by the corporate debtor
10. Issuance of moratorium

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of CIRP against the corporate debtor. The applicant, an operational creditor, claimed unpaid salary dues and interest.

2. Claim of Unpaid Salary and Interest:
The applicant was employed by the corporate debtor and alleged that salary payments were irregular and partial since 2008, resulting in accumulated dues of Rs. 46,77,124/-. The applicant also claimed interest at 18% per annum on the outstanding amount. The corporate debtor admitted an outstanding amount of Rs. 28,84,160/-.

3. Jurisdiction and Territorial Authority:
The Tribunal confirmed its jurisdiction over the matter as the corporate debtor's registered office is in Delhi, aligning with Section 60(1) of the Code.

4. Compliance with Procedural Requirements:
The applicant sent a demand notice under Section 8 of the Code and filed the application under Section 9 in Form-5. The applicant also provided bank certificates confirming no salary deposits since January 2017, complying with Section 9(3)(c) of the Code.

5. Objections Raised by the Corporate Debtor:
The corporate debtor raised several objections:
- The claim was barred by limitation.
- Existence of a dispute before the Deputy Labour Commissioner.
- Allegations of forum shopping.
- Non-compliance with Section 9(3)(c) of the Code.
- Allegations regarding the applicant's conduct and software development.

6. Existence of a Dispute:
The Tribunal found no pending dispute before the Deputy Labour Commissioner, as the complaint was not entertained. The corporate debtor failed to provide evidence of any prior dispute regarding salary dues, rendering the objection unsustainable.

7. Allegations of Forum Shopping:
The Tribunal dismissed the forum shopping allegation, stating that an unpaid employee can seek remedies under the IBC if the default exceeds Rs. 1 lakh.

8. Compliance with Section 9(3)(c) of the IBC:
The applicant satisfactorily complied with Section 9(3)(c) by providing certified bank statements and certificates from Bank of India and Deutsche Bank, confirming no salary payments from the corporate debtor.

9. Burden of Proof on Allegations Made by the Corporate Debtor:
The corporate debtor's allegations regarding the applicant's conduct and software development were unsupported by documentary evidence. The Tribunal emphasized that the burden of proof lies on the party making the allegations.

10. Issuance of Moratorium:
The Tribunal admitted the application and issued a moratorium under Section 14 of the Code, prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transfer or disposal of the corporate debtor's assets.
- Actions to enforce security interests.
- Recovery of property occupied by the corporate debtor.

The Tribunal directed the Insolvency and Bankruptcy Board of India to recommend an Interim Resolution Professional, as no proposal was made by the applicant. The moratorium would be effective until the completion of the CIRP as per Section 14(4) of the Code.

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