TaxTMI 
TaxTMI 
2022 (1) TMI 1219
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....ication in brief are that: * the respondent (hereinafter referred to as 'Corporate Debtor') is a company incorporated under the Companies Act, 1956 for the purpose of establishment of cement plant. It is stated that Mr. Srinivasula Reddy is its Managing Director. It has its registered office at Hyderabad. * According to the applicant a Demand Notice dated 05.12.2018 (ANNEXURE-2) has been issued by the Operational Creditor to the Corporate Debtor stating that an amount of Rs. 7,50,00,000/- (Rupees seven crores and fifty lacs only) is due from Corporate Debtor towards the services rendered by the Operational Creditor in connection with the establishment of a cement factory by the company in Andhra Pradesh. The Operational Creditor in paras 2 to 5 of the said notice has stated the circumstances under which the applicant had agreed to work for the respondent/company on consultancy basis, besides that the salary agreed to be paid and the offer made by the respondent that the applicant will be entitled to Rs. 7.50 crores as sweat equity shares in the form of remuneration have been explained. It is stated in para 8 of the Notice that the Corporate Debtor despite ....
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....ation and thereby set the Corporate Insolvency Process in motion against the respondent/Corporate Debtor. Per contra, the Corporate Debtor in its Counter denied having made any offer of employment to the Operational Creditor under the Corporate Debtor or to have offered shares in the Corporate Debtor/company. It is further alleged that the e-mail communications annexed to the Notice dated 05.12.2018 are forged, hence no reliance can be placed on the said e-mails. 4. According to the respondent the applicant had offered to help the respondent/company in the work of establishment of cement factory in Andhra Pradesh. Reposing faith in the applicant Mr. Mule Srinivasula Reddy had handed over login details to the applicant. The applicant was also handed over letter-heads and other documents relating to the respondent/company. The applicant had voluntarily accompanied Mr. Mule Srinivasula Reddy occasionally. It is further claimed that the applicant invested a sum of Rs. 20,00,000/- in the respondent/company and within two months thereafter obtained refund of the same. Mr. Mule Srinivasula Reddy had never promised employment to the applicant. 5. As regards allotment of shares it is ....
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....ational Creditor: (i) The Police authorities have failed to investigate into various aspects of the complaint lodged and failed to conduct complete investigation into the illegalities and fraud committed by the petitioner. The respondent has filed a 'PROTEST' against the Police authorities and the same is pending before the Hon'ble Magistrate Court. (ii) That the closure of investigation does not warrant admission of the alleged debt. 12. The Operational Creditor filed Written Submissions contending, inter alia, that: * Respondent/company has resorted to a feeble legal argument that the applicant was never offered any employment nor remuneration. * Though the respondent denied legitimacy of the e-mail communications, they have failed to prove their claim by evidence. * By illustrating various communications exchanged between the applicant and the Corporate Debtor and those communications addressed to Operational Creditor on behalf of the respondent/company by various Government agencies/authorities and third parties, the applicant/Operational Creditor sought to prove his case. * Equitable jurisdiction, as availabl....
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....al Government, any State Government or any local authority;" (v) That mere sending e-mail from a particular e-mail address would not lead to the presumption that the e-mail was sent by the originator. Electronic evidence can only be admitted as secondary evidence, if all the requirements under section 65B of the Indian Evidence Act are satisfied. (vi) All the e-mails are not addressed to the personal e-mail of Mr. Mule Srinivasulu Reddy and were addressed only to msr(a)tejacement. com which was under the sole control of the applicant. The applicant is bound to establish that the said e-mails have in fact originated from Mr. Mule Srinivasulu Reddy by following the procedure established by law. (vii) There is no Board Resolution and approval by General Body of the company to appoint the petitioner as a Director. 15. In the light of the contest as above, the Tribunal framed the following points for consideration. (1) Whether application is barred by law of limitation? (2) Whether the applicant was not in the employment of the respondent? (3) Whether the applicant had obtained domain name "tejacement.com" without knowledge of the....
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.....2020 is well within three years of accrual of right to sue. Therefore, we hold that the claim as made under the demand notice as well as the application are within the period of limitation. POINT No. (2) : Whether the applicant was not in the employment of the Corporate Debtor? 19. According to the learned counsel for the applicant, the applicant agreed to work for the respondent on consultancy basis and it was further agreed that the applicant will be paid salary as per the offer made by the respondent that the applicant will also be entitled to Rs. 7.50 crores as Sweat Equity Shares in the form of remuneration. It is stated that as the respondent/company had failed to remunerate the applicant for all the services that the applicant he had rendered from 01.04.2010 to 31.12.2016, the applicant got a Demand Notice dated 05.12.2018 issued to the respondent and as the said notice did not evoke any response from the respondent the present application for initiation of Corporate Insolvency Resolution Process against the respondent has been filed. 20. In support of the said contentions, learned counsel for the Operational Creditor Mr. Mayur Mundra invited our attention to the f....
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....s) will be paid through shares of Teja Cement Limited for the work that has already been rendered and contribution made by you from April 2010 to July 2011. The shares will be issued at the rate of Rs. 10/- per share. The shares will be allotted to you on or before 31.03.2012. There will be a 3-year lock-in period for the above shares from the date of allotment of the shares. In case you want to sell the shares after lock-in period, the promoters of Teja Cement Limited shall have the Right of First Refusal. Your salary of Rs. 5,00,000/- (Rupees five lakhs) per month will be paid from the month of August 2011. You will receive salary and all other benefits forming part of your remuneration package, after deduction of taxes and other statutory deductions in accordance with applicable laws. I formally welcome you into the Teja Cement Limited family and I hope that you will have a long and fruitful relationship with us." (ii) Communication dated 29.01.2015 (ANNEXURE-7), is the computer typed letter purportedly addressed by said M. Srinivasula Reddy to the applicant signifying that the applicant will be paid remuneration in the form ....
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.... the Operational Creditor. It is also averred that the Operational Creditor had voluntarily accompanied Mr. Mule Srinivasulu Reddy occasionally. 25. That apart, under Annexure-6, the Corporate Debtor has stated as follows: "Mr. Nanda Gopal has degree in Mechanical Engineering from University of California, San Deigo, USA and Law degree from Osmania University, Hyderabad, India. After returning to India, he started and headed companies in the fields of Computer Aided Designing, IT Enabled Services, Satellite Communications, and Publishing & Mining and has vast experience in starting and successfully managing an enterprise. He has been with Teja Cement Limited for over 4 years and is actively involved in all aspects of the company." 26. The above statement was purportedly made made by the respondent/Corporate Debtor in "Techno-Economic Feasibility Report" submitted in connection with setting up of a cement plant by the respondent- company. The reason for mentioning the credentials of the applicant including the applicant's active involvement in all aspects of the company for the last four years, obviously to strengthen the feasibility report for setting up a cement....
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....s. 30. A perusal of the letters under Annexures 5, 7 and 9 referred to above discloses that the same are computer typed letters and the same contained a signature, purportedly that of Srinivasula Reddy. The signature on these typed letters since denied by the Corporate Debtor, we resorted to the exercise of comparison of the admitted signatures of Srinivasula Reddy at Annexures 8 and 10 with signatures on Annexures 5, 7 and 10 and we found that the signatures on both the above annexures are one and the same. 31. Moreover, the complaint lodged by the Corporate Debtor against the applicant in FIR No. 04/2018 dated 21.12.2018 (Page 35 of this Reply) before the CID, TS, Hyd Police Station has been investigated by Police and Final Report under section 173 of the Code of Criminal Procedure has been submitted stating that: "... As such the allegations against I.V. Nanda Gopal are not established with clinching evidences. It is, therefore, the case is closed as 'UNDETECTABLE. UN' and the Hon'ble Court is prayed the Final Report may be approved and necessary proceedings may be issued." 32. The Corporate Debtor has challenged the same vide Criminal MP N....
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....r certain statutory clearances required for setting up a cement plant. Thus, when these letters are for the benefit of the respondent, we are unable to find any force in the contentions of the learned senior counsel for the respondent that the above referred e-mails/letters are forged by the applicant. That apart, while answering the second point we have, in detail, discussed the plea of forgery put forth by the respondent and come to the conclusion that the said plea is baseless and unfounded. So much so, we hold that the correspondence and letters relied upon by the applicant herein are the letters and correspondence made in the capacity of employee of the respondent. As such the plea of misuse of e-mail ID of Srinivasula Reddy by the applicant is totally unfounded and mischievous. Hence we hereby reject the same. Point No. (3) is answered accordingly. POINT No. (4) - Whether there is no operational debt and default? 36. To determine whether there is an operational debt and default, we need to look at section 5(21) of the I&B Code, 2016, which is reproduced hereunder: "5(21). 'operational debt' means a claim in respect of the provision of goods or services ....
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.... work and contribution made in the last 6 and half years. You have also agreed to that amount. How to compensate you that amount is the domain of financial professionals and I need a little more time to see how best it could be done." 40. We are therefore, of the opinion that the petitioner's claim does commensurate with the definition provided under section 3(6) of the I&B Code, 2016. Thus, there is no need to emphasize that we have not even remotely considered the principles of equity. Thus, Issue No. (iv) is answered in negative. 41. The claim of the petitioner is continuous spanning over the years. Looking at the peculiar facts of the present case, we are of the view that there is ample and irrefutable evidence of association of the Operational Creditor with the Corporate Debtor/Company and the services rendered by Operational Creditor for the Corporate Debtor/company. While appreciating the covenants/contracts entered into between individuals in private sector, it is to be borne in mind that the perfection as is available in public sector/government sector in the matter of appointments cannot be expected in private sector. Private sector is a group of individuals, wh....
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....nated or suspended or interrupted during moratorium period. (D) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (E) Notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period. (F) That the order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process or until this Bench approves the Resolution Plan under Sub-Section (1) of Section 31 or passes an order for liquidation o....
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....cant was coordinating It is denied that the applicant was with one M/s B.S. Envitech Pvt Ltd instrumental in obtaining all approvals procure environmental as claimed under para 10 of Rejoinder Clearance and Consents from A.P. and the applicant is put to strict proof Pollution Control Board. It is submitted that the applicant, after voluntarily and intermittently procuring the above approvals was supported Mr. Mule Srinivasula also instrumental in issuance of Reddy for the purpose of coordinating of the same. The applicant had only Document 3 GO MS No.46 in April 2012, for limestone mining lease. (para 10) with officials and technical associates of the respondent/ company. As regards the averment that the applicant was going to be made a Director of the respondent/ the respondent/ company only upon company only after making making substantial investment into the substantial investments, it is respondent/ company. However, the submitted that the applicant applicant while intermittently working invested time and money in the with the respondent/ company had company and was working in the started introducing himself to others a....
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....ed is eating me. I have taken all responsibilities in Hyderabad on my shoulders and handied all the work with diligence and zeal. I have almost exclusively loaned the company my car, my driver, my manager. Apart from doing my part of the work in procuring EC from MoEF, CFE from APPCB, AMP from IBM, TEFR from Holtec, Mining Lease, etc, I have attended each and every meeting with the numerous financial and technical consultants, legal counsel, Government Offices, OEMs, etc. I have also travelled to Bangalore, Nagpur, New Delhi, Chennai, Goa, etc. several times to attend to the business of M/s. Tela Cement Limited. I have given up a very lucrative job in Duba 2011, based on your assurance that I will have a better future and a better career in M/s.Teja Cement Limited. All I have are your assurances and nothing more for all the work that I have done. On 11th August 2016, you sent me an email saying that by the end of August you will have everything worked out. On 7th September 2016, you assured me that everything will be sorted out by the 15th September 2016, and made me attend the te visit to Yerraguntla with the officials of 10HD Humboldt, even though....
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.... August. But it is taking longer than I expected. I will definitely give you darity by 15th October 2016. Meanwhile, I would like you to set aside all doubts and misapprehensions and continue to work with the same diligence and zeal. Teja Cement Limited needs your services now more than ever." Yours faithfully, M.Srinivasula Reddy Director M/s.Teja Cement Limited. Pros Sipil 81 Document 6 cyst with Teja Cement Ltd Oct 17, 2019 ANNEXURE-10 86 Sivasula Reddy at you net to get annoyed at my previous email dated 26/09/2016. I hope that you can and my angst at the events that transpired since I started working for M/s. Teja Cement dm 1st April 2010. Here are all the facts that transpired since I started working for Teja United you first approached me in March 2010 and requested me to be a part of the Teja Cement you told me that the cement plant will come into production by the end of 2013 or by the mg of 2014 at the latest. It is now October 2016, and we are at least 6 months away from the construction of the plank, that too if we work on war footing and obtain financial closure The banks as soon as possible. Theref....
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.... lect the shares or share application money in my name. When I questioned you why this was so, tld me that you will allot shares at the time of raising the authorized share capital. But even raising the authorised share capital twice or thrice, you did not do so, for reasons best known you. Finally, after meeting with Mr.S.P. Nagarajan and discussing about the structuring and organisation of the company in January 2015, you calculated my remuneration to be 528,24,000/- rupees from 01.04.2010 to 31.03.2015, by calculating the Interest on unpaid salary 024% per annum compounded annually, and you have assured me that you will allot shares in my me for Rs.5.28 crores Rs.10/- per share, by 31.03.2015. But you did not keep your word. when I confronted you In April 2015 about the 31.03.2015 deadline, you told me that you were bying to raise 15 crore rupees to get the mines land registered and raise the authorised share capital to Rs.150 crores and unless you raised the share capital, you cannot allot the shares to me, the total authorised share capital of Teja Cement Limited as on 31.03.2015 was only Rs.5 crores. Irequested you to at least have the 5.28....
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....hares for 7.5 crore rupees as sweat equity and formalise my appointment as a Director to the Board of Teja Cement Limited, but with no other details. You followed it up with a letter dated 28th August 2016, with a few changes that the 7.5 crore rupees worth of shares will be allotted to me as a combination of sweat equity and ESOPS - and requested time till 15th September 2016 to do so. I have raised a few questions/doubts regarding your letter dt 28.8.2016, and you said that you will discuss the same with the CA, CS and others and get back to me by 15.09.2016. Another 4 weeks passed with no action from you. After I could wait no longer, I have sent an email to you on 26.09.2016 describing my anxiety due to the delay, and you replied saying that you need more time 15th October 2016 and went to Yerraguntla on 26.09.2016 and have been there ever since. I came to know on 13.10.2016 that you are not planning on coming to Hyderabad till 18th or 19th, and therefore, you will not be able to allot me the shares and fulfil other formalities by the 15th of October 2016, as promised. I am sure you are going to drag this matter further for a few more week....
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....o on, but when it comes to the subject of my remuneration, you suddenly do not seem to have any me. That is why I am getting worried, because of your lackadaisical attitude towards my well being. If you are really serious about it, formallsing my financial compensation and work package, allotment of shares in my name and my appointment to the Board by passing appropriate board resolutions should not take more than 2 or 3 days to finalize at the most. On one hand you assure and reassure me that you will compensate my efforts in the best possible way, and on the other hand you keep on postponing. I do not know what to make of this. Now, I am hearing rumours that you are trying to sell the company on an as-is basis to third parties. This is further troubling me, as your actions also seem to Indicate such a move. At no point of time since 2010 have I missed one single appointment or meeting nor caused any delay in discharging my duties for Teja Cement Limited. I worked with my blood and sweat and ars to help you build this company and you also agree that I played a pivotal role in its development, despite continuous snubs from you and Teja Cement Lim....
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.... the rate per share the company would pay me for by shares, in case I do not want to continue under new Management/Promoters/Investors. 1.Appoint me as the Director of Teja Cement Limited, by convening an EGM and passing appropriate board resolutions and filling the same with the ROC. Fox my salary/perks and start paying me the same from the month of August 2016 (As you have promised me to issue the 7.5 crore rupees worth of shares on 10th August 2016). In case you do ot pay salary for August to October 2016, allot me shares for the same and start paying me from November 2016. Scan the cost of acquisition of the 6.5 Acres of land in the Teja Cement Limited mines area ped by my wife, Mrs.I.Kavitia, and extend the same terms for the shares buy back for her as Pass appropriate board resolution/s and file them with the Registrar of Companies for fulfilling 1-5 above. MG Sp Document 9 89 Irequest you to kindly get this exercise completed by 15th November 2016, without fail, so that the trust and faith that I have placed in you and in Teja Cement Limited will not dwindle further. I sincerely hope that your acts will be true to the spirit of ....