TaxTMI 
TaxTMI 
2022 (5) TMI 494
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....l'/the suspended Director of the 'Corporate Debtor' in Company Appeal (AT) (Insolvency) No. 195/2022, both preferred this Appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code'), dissatisfied by the Admission of the Corporate Insolvency Resolution Process (CIRP) in an Application filed by the Respondent/the 'Operational Creditor', under Section 9 of the Code. 2. Since both these Appeals arise out of a common Impugned Order and deal with common facts, they are being disposed of by this common Order. 3. The facts in brief are that Mr. Anil Agrawal/'Operational Creditor'/Managing Director (hereinafter referred to as the 'MD'), filed an Application under Section 9 of the Code on the ground that he was entitled to Rs.3Lakhs/- per month as remuneration from 16/01/2010, which was revised with effect from 01/08/2014 to Rs.4Lakhs/- per month, but the payment was also short of the agreed sum. It was stated that the shortfall in the salary of the MD would be paid when the financial position of the Company improves. While so, in May 2019, the MD was removed by the 'Corporate Debtor' with effect from 14/05/2019 without clearing his salary d....
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....ate the alleged shortfall in his salary by taking an imaginary figure of Rs.4Lakhs/- per month which was neither approved nor agreed to nor is it supported by any documents such as an Employment Agreement or a Board Resolution. Learned Counsel placed reliance on the following table in support of his argument that the entire amount has been paid and nothing is 'due and payable': Period Ref. Period Salary Payable (INR) Salary Paid (INR) Period 1 16.01.2010 to 31.07.2014 67,72,974/- 67,72,974/- Period 2 01.08.2014 to 31.03.2016 62,00,000/- 62,00,000/- Period 3 01.04.2016 to 31.03.2018 86,50,000/- 86,50,000/- Period 4 01.04.2018 to 31.03.2019 43,80,000/- 43,80,000/- Period 5 01.04.2019 to 14.05.2019 5,35,334/- 5,35,334/- 7. It is also submitted that the Certificate issued by the Independent Chartered Accountant M/s. K.C. Khanna and Co. dated 20/10/2021 was never considered by the Adjudicating Authority. Learned Counsel argued that there were discrepancies in both the notices sent under Section 8 of the Code; that Part IV of the Application filed under Section 9 of the Code shows that the principal amount of the alleged 'Operational Debt' is Rs.1,29,34,187/- out....
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....pite the view taken by this Court that Article 102 of the Limitation Act of 1908 was applicable to such cases, the Limitation Act of 1963 had been passed repeating the law, contained in Articles 102 and 120 of the Limitation Act of 1908, in identical terms without any modification. The Legislature must be presumed to be cognizant of the view of this Court that a claim of the nature before us, for arrears of salary, falls within the purview of Article 102 of the Limitation Act of 1908. If Parliament, which is deemed to be aware of the declarations of law by this Court, did not alter the law, it must be deemed to have accepted the interpretation of this Court even though the correctness of it may be open to doubt. If doubts had arisen, it was for the Legislature to clear these doubts. When the Legislature has not done so, despite the repeal of the Limitation Act of 1908. and the enactment of the Limitation Act of 1963 after the decisions of this Court, embodying a possibly questionable view, we think it is expedient and proper to overrule the submission made on behalf of the appellant that the correctness of the view adopted by this Court in its decisions on the question so far shoul....
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....y was agreed for 3.6million until July 2014. I began work form 16th Jan 2010 but started taking payroll from July 2010 only and most of the difference is not on books. Form August 2014 it was raised to 4.8 million although I had asked for Rs.6 million. The 6 million part was to be implemented from April 2015. However, in April 2015 due to other developments, this issue was not discussed and since the management of Company and finances was on my lone shoulders I let is stay that way. I think in all fairness, this needs to be implemented from April 2015. You can check this issue with Herman. I shall send you a copy of minutes." 14. Further, in the email dated 26/05/2016, the salary of the MD was increased to Rs.44Lakhs/- per year from Rs.36Lakhs/- and the Learned Counsel based his argument on the following contents of the emails: 15. Learned Counsel Mr. Sharma submitted that in the Minutes of the Meeting of the Board of Directors of Omega Icehill Pvt. Ltd. held on 19/03/2018 in item 7 & 8 referring to 'Repayment of Loans', and 'Review of Salaries' it was specifically stated that the MD's remuneration and perks needed a revision and that his salary arrears were required to be paid. ....
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....9 Rs.71,529/- 22. At this juncture, it is required to be seen as to whether there is any 'acknowledgement of debt'/'salary dues' to fall within the ambit of Section 18 of the Limitation Act, 1963,which reads as follows: "18. Effect of acknowledgment in writing,- (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgment of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyme....
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....el for the Respondent show that there has been a proposal by the MD for increase in salary, which was never definitively concluded as 'accepted' even in the email communication. One such email dated 26/05/2016 clearly reads 'I understand your original salary was Rs.3.6M then was increase as per Financial Year 2014-16 to Rs.4.4M. I remember that you told me that this was then discussed but that another increase that was supposed to be discussed the next year was not implemented. Now I see Rs.6M for 2015-16, was this agreed between the Shareholders? My notes on this, are not clear, and of course there are no Board Meeting Minutes that clarify this. Can you tell me what was agreed?' From this correspondence it is clear that it was a 'Proposal' which was still under discussion and that there was no Resolution passed at a Board Meeting accepting the same. Further, this communication is from one Mr. Leendert Stutvoet who is not the authorized representatives of the Corporate Debtor Company. Be that as it may, even if he is representing the Dutch Company, (a part of the JV Agreement), the statement made in the email is neither conclusive nor binding as it is not a Board decision. Para 8 o....
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....at the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the "dispute" is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application." ..................... 56. Going by the aforesaid test of "existence of a dispute", it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately su....