2021 (8) TMI 910 - AT - Insolvency and Bankruptcy

Tribunal dismisses appeals, extends limitation period, recognizes operational debt under IBC.

The Tribunal dismissed all appeals, finding they were not time-barred due to a Supreme Court order extending the limitation period. It held claims for ... Non-payment of salary is recurring cause of action - absence of any claim between the parties the Appellant - Time limitation - HELD THAT:- All the Appeals being hit by limitation is concerned that in view of order dated 23.03.2020 passed by Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No(s). 3 of 2020 [2020 (5) TMI 418 - SC ORDER] “in re –cognizance for extension of limitation” has held that “it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings.” Thus, all these Appeals filed by the Appellants are covered by the directions passed by the Hon’ble Supreme Court. There is no illegality in the impugned orders. The Ld. Adjudicating Authority have rightly dismissed the Applications under Section 9 of the IBC filed by the Appellants by observing that if for delayed payment applicant(s) claim any interest, it well be open to them to move before a court of competent jurisdiction for recovery of interest, but initiation of Corporate Insolvency Resolution Process is not the answer. There is no merit in these Appeals - Appeal dismissed. Issues Involved:1. Limitation of appeals.2. Non-payment of salaries and other dues.3. Applicability of the Insolvency and Bankruptcy Code (IBC) for recovery of dues.4. Interest on delayed payments.5. Gratuity claims.6. Procedural requirements under IBC.Detailed Analysis:1. Limitation of Appeals:The Respondent argued that the appeals were time-barred as they were filed beyond the statutory period of 30 days from the date of the impugned order. However, the Appellants relied on the Supreme Court's order dated 23.03.2020 in Suo Motu Writ Petition (Civil) No(s). 3 of 2020, which extended the period of limitation due to the COVID-19 pandemic. The Tribunal held that the appeals were not barred by limitation as they were covered by the Supreme Court's directions.2. Non-payment of Salaries and Other Dues:The Appellants, former employees of the Corporate Debtor, claimed unpaid salaries for various periods between 2013 and 2017, along with gratuity and interest. They argued that non-payment of salary constituted a recurring cause of action, relying on a judgment by the Himachal Pradesh High Court. The Respondent contended that the claims were time-barred and disputed the amounts.3. Applicability of IBC for Recovery of Dues:The Tribunal found that the Appellants' claims fell within the definition of 'Operational Debt' under Sections 5(20) and 5(21) of the IBC. However, it noted that the Appellants in some cases had not sent the mandatory demand notice under Section 8 of the IBC before filing applications under Section 9, which was contrary to the law laid down by the Supreme Court in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited.4. Interest on Delayed Payments:The Appellants claimed interest at the rate of 18% on the delayed payments. The Tribunal observed that the Adjudicating Authority had rightly dismissed the claims for interest, stating that the appropriate forum for such claims was a court of competent jurisdiction, not the IBC proceedings.5. Gratuity Claims:The Respondent argued that the claims for gratuity were not due and payable, and should be decided by the competent authority under the Gratuity Act. The Tribunal agreed, stating that the claims for gratuity did not fall within the purview of the IBC.6. Procedural Requirements under IBC:The Tribunal noted that in some appeals, the Appellants had not issued the mandatory demand notice under Section 8 of the IBC before filing applications under Section 9. This procedural lapse was contrary to the Supreme Court's ruling in Mobilox Innovations Private Limited vs. Kirusa Software Private Limited.Findings:The Tribunal held that the appeals were not barred by limitation due to the Supreme Court's order extending the period of limitation. It found that the claims for unpaid salaries and gratuity fell within the definition of 'Operational Debt' under the IBC. However, it noted procedural lapses in some appeals where the mandatory demand notice under Section 8 was not issued. The Tribunal also observed that claims for interest on delayed payments should be pursued in a court of competent jurisdiction, not under the IBC.Order:The Tribunal dismissed all the appeals, affirming the Adjudicating Authority's orders dated 18.02.2020. It held that there was no illegality in the impugned orders and that the Appellants should seek recovery of interest through appropriate legal channels. No order as to costs was made. The Tribunal directed the Registry to upload the judgment on its website and send a copy to the Adjudicating Authority.Separate Judgments:No separate judgments were delivered by the judges; the decision was unanimous.