2022 (6) TMI 314

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....ment amount payable to the applicant shall be treated as part of CIRP cost and accordingly the I.A. No. 41 (KB)/ 2021 was disposed off. 2. Submissions of the Learned Counsel for the Appellant:- (i) The Appellant herein joined Rohit Ferro Tech Limited (under CIRP) as Head (Commercial) with effect from 21.11.2006, vide appointment letter dated 20.11.2006 and posted at the Jajpur Plant, Orissa of the said company. (ii) On 21.03.2016 the Appellant was promoted and appointed as Executive Director (Works) of the said Corporate Debtor for a period of three years i.e. upto 23.03.2019. (iii) The Appellant tenure of as Executive Director (Works) was renewed and he was reappointed as Executive Director (Works) with effect from 13.02.2019. at monthly salary of Rs. 2,14,000/- (Rupees Two Lakh Fourteen Thousand Only) and he was also entitled to payment of bonus, leave encashment and gratuity. (iv) The terms of the agreement dated 13.02.2019 for the re- appointment of an Executive Director (Works) is marked as Annexure-B at Page- 40 to 43 of the 'Memo of Appeal'. (v) Keeping in view, the compliance with the Factories Act, 1948 with regard to appoint....

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.... Director Or Whole Time Director Or Manager (1) A company may make payment to a managing or whole-time director or manager, but not to any other director, by way of compensation for loss of office, or as consideration for retirement from office or in connection with such loss or retirement. (2) No payment shall be made under sub-section (1) in the following cases, namely: a) where the director resigns from his office as a result of the reconstruction of the company, or of its amalgamation with any other body corporate or bodies corporate, and is appointed as the managing or whole-time director, manager or other officer of the reconstructed company or of the body corporate resulting from the amalgamation; b) where the director resigns from his office otherwise than on the reconstruction of the company or its amalgamation as aforesaid; c) where the office of the director is vacated under sub. section (1) of section 167; d) where the company is being wound up, whether by an order of the Tribunal or voluntarily, provided the winding up was due to the negligence or default of the director; e) where the director has been guil....

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....ional stated that soon after his taking over the charge of the affairs of the Corporate Debtor, several instances of mismanagement at the Jajpur plant of the Corporate Debtor had been brought to his notice, example- unauthorized lifting of raw material from the plant premises, sale of scrap at under value, e.t.c. (c) Based on this, decisions was taken to terminate the service of Applicant (Appellant herein) in accordance with the terms of the Agreement at 13.02.2019 which was approved by CoC. (d) On 27.03.2020 one month notice had been given to the Appellant in accordance with the terms and conditions of the agreement dated 13.02.2019. (e) He further stated that the Appellant has been holding office of Director of Corporate Debtor and falls with the purview of 'related party' and therefore, all payments made to the Appellant including salary has to be made with the approval of CoC Members. (f) He also stated that the payment of salary the month of April, 2020 Rs. 2,14,000/- had been paid to the Appellant after obtaining approval of the CoC. (g) Respondent No. 2 has also stated in his 'Reply Affidavit' that Appellant had moved to the Adju....

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.... mentioned that Appellant has conveniently suppressed the provisions as contained under sub-rule (3) of Rule 17 of the Companies (Meetings of Board and its Powers) Rules, 2014 which proscribes such payment of compensation under Section 202 in certain cases. "17. Payment to director for loss of office, etc. in connection with transfer of undertaking, property or shares.-(1)No director of a company shall receive any payment by way of compensation in connection with any event mentioned in sub-section (1) of section 191 unless the following particulars are disclosed to the members of the company and they pass a resolution at a general meeting approving the payment of such amount - (a) name of the director; (b) amount proposed to be paid; (c) event due to which compensation become payable; d) date of Board meeting recommending such payment; (e) basis for the amount determined; (f) reason or justification for the payment; (g) manner of payment - whether payable in cash or otherwise and how; (h) sources of payment; and (i) any other relevant particulars as the Board may think fit. (2) Any payment mad....

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.... Corporate Debtor from making any payments towards the alleged compensation claimed by the Appellant herein. (t) He has also denied allegations made by the Appellant that termination of Appellant was not a decision of the CoC but of RP. He stated that the CoC meeting held on 05.03.2020 expressed their intension that the senior personnel of the Corporate Debtor be changed. (u) As per record the leave encashment of Rs. 5,67,100/- which is due to the Appellant who continued to act as the Director of the Corporate Debtor and as per the provisions of the IBC, Appellant falls within the purview of the definition of 'related party'. After determining the amount due to the Appellant on account of leave encashment, the aforesaid issue was placed before the members of the CoC in its meeting held on 07.12.2020 for their approval. However, the same was not approved by the members of the CoC. (v) Respondent No. 1 admit that gratuity amount of Rs. 8,02,500/- due to the Appellant has been paid by the Corporate Debtor. (w) Due to various reasons brought out above and stated that Adjudicating Authority disposed off I.A of the Appellant without considering the pra....