TaxTMI 
TaxTMI 
2023 (2) TMI 45
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...."NCLT") in C.P. No.(I.B.) 1387 (MB) of 2017. Appellant is being represented in the present proceedings through its Resolution Professional. 3. Respondent is a former employee of appellant. 4. Respondent was appointed as an employee pursuant to an appointment letter dated 29th November 2001 that was issued by appellant (Exhibit 49). In the appointment letter clauses 2 and 8 (d) read as under: "(2) SALARY & ALLOWANCES: (1) Basic Salary : Rs.40,000/- (Rupees Forty Thousand Only) per month (2) Cost of Living Allowance (COLA): Rs.3835/- (Rupees Three Thousand Eight Hundred and Thirty Five Only) per month. You will also be entitled to Leave Travel Allowance and Medical Reimbursement. Besides the above, you will also be entitled to Bonus/ Ex-Gratia, Gratuity, Superannuation (if applicable), Medical & Personal Accident Insurance etc. in accordance with the Law/Company Policy from time to time. Your compensation details are indicated in the Annexture. (8) TERMINATION OF PERMANENT SERVICE: (a)........ (b)......... (c).......... (d) On satisfactory completion of the probation period and after your confirmation in wr....
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....e reliefs as prayed for ? As per final order. 6 What order ? As per final order. 9. Appellant led evidence of one witness to defend the claim and respondent stepped into the witness box to justify his claim in the suit. Both cross examined each other. No other witness was examined for either side. After hearing the parties extensively, the Trial Court has given a reasoned judgment, which is impugned in this appeal. By the said judgment, the Trial Court rejected respondent's claim of Rs.5,49,45,488/- towards arrears of service contract, compensation etc. and the claim for Rs.4,44,017/- towards accumulated provident fund. Trial Court also rejected respondent's claim that he was wrongfully terminated and observed that appellant was entitled to terminate respondent's services without even having to ascribe any reason for termination in view of clause 8(d) of the appointment letter. Trial Court, however, granted a decree in favour of respondent (a) in the sum of Rs.4,82,112/- towards 3 month salary along with interest @ 18% p.a. from the date of termination, i.e., 1st November 2006 till realization of entire amount; (b) a sum of Rs.9,24,006/- towards leave encashment alon....
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....tage of rejoinder also submitted that the interest of 18% p.a. awarded by the Trial Court was excessive. BASIC SALARY 13. Mr. Bharucha submitted :- (a) Clause 8(d) of the appointment letter dated 29th November 2001 (Exhibit 49) which is quoted above, provides that respondent's services could be terminated by giving notice of 3 months or payment of salary in lieu thereof, and salary has been defined in clause 8(d) just to mean "Basic + COLA; (b) In March 2002, the company decided to restructure the compensation being given to all employees and the compensation for every employee was worked out on cost to company basis. It was effective from 1st April 2002 and respondent herein also accepted the restructured compensation package; (c) The two elements basic and COLA were combined with other benefits to arrive at only basic pay. The three months compensation that respondent would have been entitled to, therefore, is only basic pay which is shown in the revised compensation structure because the revised basic pay also has absorbed the COLA component; (d) The Trial Court has erroneously calculated the basic salary by dividing the gross amount of ....
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....pellant that salary should not be as defined in the employment contract Exhibit 49 but it should be worked on the basis of cost to company. Our attention was invited to the payslip for the month of February 2006 (part of Exhibit 65), which provides for paid leave encashment of Rs.3,34,003.65 for 41 days. Therefore, it would be Rs.8146.43 per day, which for a month should be about Rs. 2,47,787.26. Our attention was invited to the income tax projection for year 2004-2005 (part of Exhibit 51), in which the company has informed Mr. Bansal that income chargeable to tax under the head salaries will be Rs.23,35,739/- and that itself, during that period comes to about Rs.2 lakhs and odd; (c) Therefore, that there is no error committed by the Trial Court and amount as declared should be paid. DAMAGES 18. Mr. Bansal submitted that he had suffered hardship and anybody can imagine what an employee, who has been unceremoniously terminated from employment would go through and there is nothing on record to indicate why appellant did not pay the termination package promptly. Mr. Bansal, therefore, states that Trial Court correctly inferred that he was entitled to damages, though he ....
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....e was to be calculated on the basis of basic salary as suggested in the cross examination. The basic salary, therefore, can never be Rs.83,688.98 as suggested by Mr. Bharucha. Moreover, the termination letter at Exhibit 53 provides that appellant was entitled to terminate the services of respondent without any notice in lieu of 3 months salary. Appellant cannot fall back on the definition of salary as mentioned in the appointment letter (Exhibit 49) when the salary and allowances has been restructured from 1st April 2002 and there is no mention of COLA in the revised compensation package. We have to also note that in the income tax projection for the year 2004-2005, which is forming part of Exhibit 51, the income chargeable to tax under the head of salaries was Rs.23,35,739/- and the earnings per annum of respondent is shown to be 23,38,112/- and the earnings included basic salary, house rent allowance, children education allowance, uniform allowance, leave encashment, special allowance, food coupons. Infact, these heads other than basic salary, should, in our view, also come under the definition of COLA. 21. In the circumstances, in our view, the Trial Court has not erred in....