TaxTMI 
TaxTMI 
2020 (9) TMI 1074
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....re Forty Seven Lakh Fifty Nine Thousand and Ninety Six Only) as on 21.09.2018, including interest. 2. Brief facts of the case, as mentioned in the Company Petition and summary, which are relevant to the issue at hand, are as follows: (1) The Petitioner/Operational Creditor has an Identification No. /Pan AALPG8718Q and his address is No. 08/11, SBI Colony, Geetapuram, Srirangam, Trichy, Tamil Nadu 620006. (2) The Respondent/Corporate Debtor is a Company incorporated in India on 12.05.1998 under the provisions of the Companies Act 1956 with CIN: U51394KA1998PTC023723 and has its registered office at Prestige Trade Tower, # 46, 10th Floor, Palace Road, High Grounds, Sampangi Ram Nagar, Bangalore 560001. (3) It is stated that the Petitioner joined the Respondent company as AGM, as evidenced by his Employment Letter bearing Reference No. REIPL/HRD/08-09 dated 08.04.2008. The Corporate Debtor, among forms of remuneration promised the Petitioner certain numbers of Performance Shares. (4) It is stated by the Petitioner that 510, 549, 485 Performance Shares were granted to the Petitioner/Operational Creditor on 02.12.2015, 22.09.2016 and on 03.10.2017 ....
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.... Petitioner and the Respondent herein. (2) It is stated that the Demand Notice dated 08/08/2019 issued by the Petitioner is against the provisions of law as it was addressed to the President- Essilor India Pvt. Limited, CEO- Essilor India Pvt. Limited, and not to Essilor International, the entity which had issued the Performance Shares. Since there is no privity of contract between the parties to the present petition with respect to the least Performance Shares transactions, the Respondent cannot be classified as a Respondent/Corporate Debtor and does not fall within the ambit of section 2(8) of the Code. In spite of this, the Respondent duly replied to the notice in good faith on 21/08/2019, denying the claims as baseless. (3) The Petitioner's claim is based on a flawed understanding of the Performance Shares Plan which was introduced by the then Essilor International (now Essilor Luxxotica) on 02/12/2015 in favour of non-French residents as a retention mechanism for its employees, and was open to only selected employees. There were certain qualifying criteria before the right of any employee to claim any Performance Shares arises. This also does not form par....
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.... that he was working without any agreement/contract is completely false. His appointment letter dated 08/04/2008 got extended in the light of the extension in the retirement age wide notice dated 27/07/2016. Hence his rights and liabilities also continued to be governed by the same Agreement beyond the age of 58 years. The Petitioner would have turned 60 years of age only in the month of May, 2019 but admittedly he had tendered his resignation even before the age of retirement, i.e. on 21/09/2018 and hence the contention that he remained in employment to the age of 60 years is false. (6) It is submitted that on the basis of complaints against the Petitioner, he was suspended from work vide letter of suspension dated 04/07/2018, pending investigation, for breach of Essilor Group Policies relating to some suspicious and improper payments surmounting to bribery and corruption. These investigations were carried out in accordance with his employment agreement in consonance with the Essilor Groups relevant policies and procedures on ethics and compliance. Even as these investigations were pending, the Petitioner submitted his handwritten letter of resignation dated 21/09/2018 wh....
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....silor Luxottica and the chosen beneficiaries. These Rules apply to the beneficiaries chosen by Essilor Group who are non-French residents on the grant date, according to French laws and International Tax Treaties and who have not declared that they would become French residents in the 3 months following the grant date. A grant date means the date of the Board of Directors meeting in which it was decided to make a conditional grant of Performance Shares to one or several beneficiaries. Also, the set Performance Shares Plan is governed by the provisions of articles EI.2 to 5 - 197 -1 to EII. 2 to 5 - 197 - 6 of the French commercial Code relating to free share grants. (9) It is submitted that the beneficiaries of the Performance Shares do not get automatic ownership over the Performance Shares when they receive notice of information of allocation/award of the Performance Shares. The said notice of allocation sent to a beneficiary is only an intimation to the allottee by Essilor Luxxotica informing them of their eligibility. The right of ownership however, as laid down under the conditions of the Performance Shares Plan is subject to fulfilment of certain future conditions co....
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....#39; of the policy on rights to Performance Shares was not met by the Petitioner and there was no claim of any amount whatsoever. (11) It is also submitted that the vesting period of the Performance Shares only begins with the final delivery date and the actual ownership of the same also begins then. Therefore in the light of the vesting period, the said 510 Performance Shares awarded to the Petitioner on 02/12/2015 will only practically materialise on the final delivery date that is on 02/12/2019 which is further subjected to several conditions in respect of the same. Since the Petitioner had already tendered his resignation on 21/09/2018 and the same had been accepted, the Petitioner now has no right whatsoever in respect of the said Performance Shares awarded to him. Similarly, the vesting period of the 549 Performance Shares awarded on 22/09/2016 will only practically materialise on the final delivery date i.e. on 22/09/2020, subject to several conditions as per the above, that is after the date of his resignation on 21/09/2018 and hence the Petitioner acquires no right whatsoever to claim the same. (12) It is submitted that in the Petitioner's notice, at ....
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....orfeited as the vesting period could not be completed. (16) In its reply dated 21/05/2019, the Respondent has already disputed and clearly denied the very basis of the claim of the Petitioner herein. All the dues of the Petitioner in respect of his employment have already been paid and there exists no debt or claim. Reference in this regard has been made to the decision in the case of Mobilox Innovations Pvt. Limited reported in 2018 (1)SCC, 353. This application is not maintainable and is liable to be dismissed since the Respondent has already communicated the dispute with regard to the Petitioner's claims on 21/08/2019 and hence there exists no debt. Further, since admittedly as per the Letter of Acceptance of Resignation dated 21/09/2018 full and final settlement was computed amounting to Rs. 29, 78, 929/-, and this has already been paid on 31/12/2018, and which has also been acknowledged by the Petitioner. Hence, there exists no claim between the parties herein. (17) It has also been submitted that clause XIV of the Plan clearly ousts the jurisdiction of Indian courts. In respect of the present dispute, the governing law is the French law and in the light ....
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....work for the same without any further negotiations with regard to Performance Shares, as these were factored in the Agreement. The Law of Contract in India requires that in order to create a binding relationship between two parties, privity of contract must be shown, whereas privity of consideration is not required. Therefore, how the Respondent was going to compensate the Petitioner and from which source/funds, is not material to the Petitioner in his contractual relationship with the Respondent. (3) With regard to the Respondent's contention that the Petitioner was not eligible for the Performance Shares as he did not meet the conditions of Performance and Presence, it is submitted by the Petitioner that as per Clause 16, the services of the Petitioner shall stand automatically terminated on the attainment of the age of 58 years and the Company, at its discretion can employ the Petitioner as a consultant on contractual basis. The Petitioner's case is that he retired on the attainment of 58 years and was therefore working with the Company only on the basis of good faith. As regards the notice dated 27/07/2016, extending the retirement age up to 60 years, it is sta....
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.... signed any contract with Essilor International and the respondent has failed to prove the claim of the Petitioner that vested in him at the time of his retirement. He is deriving his rights to the Performance Shares as offered to him by virtue of his employment with the respondent Company. Hence this clause of jurisdiction was not binding upon him. Also, the dispute is not over the "interpretation, execution or implementation" of the Rules governing the Performance Shares. The jurisdiction of this Hon'ble Tribunal is not ousted by foreign jurisdiction clauses in private contracts, since this Tribunal is not adjudicating civil disputes in the nature of recovery of money but is here to serve the larger purpose of resolution and asset maximisation while operating within the confines of the Code. (6) In addition to the written arguments filed on 06.02.2020, the Petitioner in further written arguments filed on 14.02.2020 has again reiterated that as the alleged notice/circular dated 07/07/2016 extending his retirement age was not brought to the notice of the Petitioner, the original employment agreement stands un-mended to this date. As the Petitioner had completed 58 year....
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.... on the case of Mobillox Innovations Pvt. Limited. Reliance has also been placed on the judgment of the Hon'ble apex court in Bhavnagar University (supra) where it was held that the timeline for Pvt. parties when imposed by the statutes is mandatory and for authorities/forums, it is generally understood to be directory. Therefore, no leniency is allowed to private parties, in this case the Respondent. Thus, the belated reply to Demand Notice cannot be looked into by this adjudicating authority. 5. The Respondent/Corporate Debtor has also filed written arguments dated 12/02/2020 and has mainly summarised the contentions made by it in its objections referred to earlier. The same are, briefly, as under: (1) The Operational Creditor states that he was forced and caused to resigned from the Company, however, he has not taken any action under sections 19, 19A and 64 of the Indian contract Act, 1872 for avoidance of the same. He continues to retain the benefits from the said settlement and having received the full and final settlement, no further claim would lie against the Respondent/Corporate Debtor. He is therefore now precluded from any further frivolous claims. ....
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.... till his final exit on 31.12.2018. By the extended retirement age, he would have retired in May 2019. 8. At the very outset we may state that the proceedings under section 9 of the Code are summary proceedings, where even if there was a debt, as defined in Section 3(11) of the Code the same should be clear and undisputed and the default, as defined under section 3(12) of the Code should also be clearly established. The Code does not envisage detailed investigation nor resolution of any dispute. Further, it is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Pvt. Limited Vs. Kirusa Software Pvt. Limited (2018)1 SCC 353 has, inter alia, held that I&B Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardize the financial health of an otherwise solvent Company by pushing it into insolvency. The Hon'ble Supreme Court in the case of K. Kishan Vs. Vijay Nirman Company Pvt. Ltd. clarified that the Petitioners cannot use IBC either prematurely or ....
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....f the Company as per section 8(2) of the Code, and hence there was a valid notice. Fourthly, as to the delay of 2 days in replying to the said Notice dated 08/08/2019, served on 09/08/2019, it is observed that in the case of Mobilox Investments (supra), referred to by the Petitioner, no reply was given by the Corporate Debtor, whereas in the instant case the reply raising the dispute over the eligibility of the Petitioner for final grant of the Performance Shares was sent on 21/08/2019. Since a substantive dispute has been raised in the Petition which is not illusory in nature or a feeble legal ruse by the Corporate Debtor to evade payment of alleged operational debt, the minor technical issue of delay of 2 days in replying to the Notice of Demand would not be material. 10. The core issue is the alleged default of the Corporate Debtor in not finally granting the "Performance Shares" to the Petitioner. The conditions as laid out in the Rules for the final grant and conveyance of such shares would indicate whether any right or claim arose in the hands of the Petitioner/Operational Creditor with regard to such Performance Shares. The "Rules of the Performance Share Plan", a copy of....
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....son whatsoever, to hold any employee or corporate officer position whatsoever within the ESSILOR GROUP, the beneficiary shall, except for the cases specifically referred to below, forfeit any right to the Performance Shares, without thereby being entitled to any indemnity. The date of forfeiture of the right to a definitive grant of the Performance Shares shall be the date of the definitive cessation of all employee or corporate officer functions." This clause also contains Exceptions relating to retirement. It states that the beneficiary shall remain entitled to the free grant of Performance Shares, in case of forced or voluntary retirement on account of either legal age applying in a particular country or agreements governing the employment conditions of the eligible beneficiary. Clause V "Performance Condition' stipulates the formula for working out the percentage of shares to be definitively delivered. 13. Coming to the facts of the Petitioner's case, it is seen that Performance Shares were awarded to the Petitioner on 02.12.2015, 22.09.2016 and 03.10.2017. As per Clause III of the Rules, the Vesting Period in the case of the Petitioner would have ende....
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....ginal Agreement and the same terms, remuneration and perks, including Provident Fund and Gratuity, as acknowledged by him in his communications with the Company. Thus the Petitioner cannot take the plea that he had retired in the normal course at the age of 58 years and was eligible for the Performance Shares by virtue of the Exception to Clause IV, being unaware of the extension letter. It is also seen from the Notice dated 27.07.2016 that it was circulated to all Regional and Branch Offices, all Notice Boards and All Employees. No material has been brought on record by the Petitioner to establish that the said Notice was fake, non-existent, an afterthought or issued only in his case to deny him the benefits claimed. 15. Further, a look at the Letter of Acceptance of Resignation dated 21.09.2018 reads at Clause 3 as under: "The full and final settlement amount stipulated in this letter is correct, adequate, sufficient and justified in respect of the terms and conditions mentioned herein and the same is acceptable to me. Upon receipt of the full and final settlement amount as stated in this letter, (i) no amounts are payable by Esselor India (and Esselor Group) to me in....