Application to Set Aside Resolution Retraction Dismissed - Committee of Creditors' Approval Required

The Adjudicating Authority dismissed the application under Section 60(5) of the IB Code, 2016 seeking to set aside the retraction of the resolution for remuneration approval. The Authority noted the necessity for Committee of Creditors' approval for Central Government remuneration approval, which was not obtained before the Corporate Debtor went into liquidation. The Applicant was directed to seek relief from the Liquidator regarding remuneration approval, bringing an end to the legal proceedings in this matter at the National Company Law Tribunal, Hyderabad Bench.

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Issues:
1. Application under Section 60(5) of the IB Code, 2016 seeking to set aside retraction of resolution for remuneration approval.
2. Compliance with Committee of Creditors' directions for remuneration approval.
3. Reimbursement of legal expenses incurred by the Applicant.

Analysis:

1. The Applicant, an employee of the Corporate Debtor, filed an application seeking to set aside the retraction of the resolution to approach the Central Government for remuneration approval, declaring it arbitrary and illegal. The Applicant's appointment details, salary increments, and approvals for remuneration were outlined, highlighting the sequence of events leading to the dispute. Despite approvals and directions from the Committee of Creditors, the Applicant faced non-payment of salary, leading to the application before the Adjudicating Authority.

2. The Resolution Professional (RP) countered the Applicant's claims, stating the necessity for Central Government approval due to the remuneration exceeding the prescribed amount under the Companies Act, 2013. The RP detailed the steps taken to obtain approvals, including the COC's involvement and subsequent rejections of resolutions for remuneration approval. The RP emphasized the lack of support from the COC for the required approvals, leading to the rejection of resolutions in multiple meetings.

3. After hearing both sides and reviewing the records, the Adjudicating Authority noted that the application was filed during the Corporate Insolvency Resolution Process (CIRP) and that any action for Central Government approval required COC's majority approval, which was not obtained. Subsequently, the Corporate Debtor went into liquidation, prompting the Authority to direct the Applicant to approach the Liquidator for relief regarding remuneration approval. The Authority closed the instant application with the liberty for the Applicant to seek recourse from the Liquidator, signaling the end of the legal proceedings in this matter.

This detailed analysis of the judgment from the National Company Law Tribunal, Hyderabad Bench, showcases the legal complexities surrounding the dispute over remuneration approval and the eventual direction for the Applicant to seek resolution through the Liquidator in the context of the Corporate Debtor's liquidation.

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