TaxTMI 
TaxTMI 
2023 (9) TMI 190
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....onal Company Law Tribunal, Mumbai Bench, Court - I), filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as `The Code'), whereby and whereunder the Company Petition preferred by `Mr. Ravindra Hirashingh Rawat' (Respondent No. 1 herein) under Section 9 of the Code was admitted and further `Mr. Pankaj Ramandas Majithia' (Respondent No. 2 herein) was appointed as Interim Resolution Professional (`IRP') in the Corporate Insolvency Resolution Process (`CIRP') Proceedings. 2. The brief facts giving rise to the instant Appeal are as follows : i. That the Appellant herein is the Director of DB Group India Private Limited (Corporate Debtor). On 06.11.2006, the Corporate Debtor appointed by the Respondent No. 1 as a Senior Manager - Finance and Administration, effective from 06.12.2006. ii. On 30.09.2013, the Corporate Debtor issued a promotion and increment letter to the Respondent No. I promoting him to the position of Deputy General Manager. iii. On 01.04.2016, the Corporate Debtor issued a promotion letter and increment to the Respondent No. 1 to be promoted to the position of General Manager India. iv. On 01....
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....troverted and disputed by the Corporate Debtor on immediate next day vide its email dated 18.06.2018 inter alia stating that no amounts were payable to Respondent No. 1. In the said email, the Corporate Debtor through Appellant, categorically and explicitly stated and clarified that: "Dear Mr. Ravindra, I have already checked the same and there is no such pending from our side." ix. By email dated 19.06.2018, the Respondent No. 1, once again made a demand for the said sum of Rs. 1,50,000 towards the Notice of discharge and the gross amount of Rs.1,50,000 in consideration of the execution of the NDA. Immediately, the next day, i.e., on 20.06.2018, the Corporate Debtor replied to the said email of Respondent No. 1, once again denying and disputing the claim of the Respondent No. 1, and stated as hereunder: "Dear Luca. Below email received from Mr. Ravindra for your ref. CC: Ravindra The NDA was prepared by Italy and per their instructions I have processed your dues. Nothing is pending from our side. For clarifications on the below clause, you need to speak to Mr. Luca." x. Hence, the claim made by the Respondent No. 1 in ....
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....s no breach by the Corporate Debtor of the NDA. c. No monies whatsoever were due and payable to the Respondent No. 1 by the Corporate Debtor. d. The monies as claimed by the Respondent No. 1 were all throughout disputed by the Corporate Debtor. e. There was no breach or default on the part of the Corporate Debtor and the claim made by the Respondent No. 1 was only to arm-twist the Corporate Debtor. f. The Respondent No. 1 never made references to monies claimed in its correspondences prior to 17.06.2018. g. The penalty clause in the NDA cannot be construed as an admitted liability, and h. The claim of damages does not come within the purview of the disputes adjudicated under the IBC. xvii. On 13.11.2019, Learned Counsel for the Respondent No. 1 had filed a Rejoinder denying the assertions made by the Corporate Debtor in its Reply Affidavit. xviii. The Application was heard on 14.07.2022 and thereafter reserved for Orders. During the hearing, both parties argued at length, and the Adjudicating Authority had in fact orally indicated that the Petition is not maintainable as it is premised on damages. However, on 2....
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....ebtor had explicitly disputed and denied the claims of Respondent No. 1 which clearly established `Pre-Existing Dispute' amongst the parties, much prior to the issuance of the Demand Notice dated 31.12.2018, has not been considered at all by the Adjudicating Authority, despite the same being on record. iii. It is a well settled law that the Adjudicating Authority has to look into the correspondences wherein a `debt' has been disputed, and that a proceeding under Section 9 of the Code with respect to the disputed `debt' cannot be initiated. The Operational Creditor can only initiate CIRP against a Corporate Debtor in case where there are no real disputes exiting between the parties. iv. In the instant case, the Corporate Debtor had all throughout disputed the claims of the Respondent No. 1 and as such the Adjudicating Authority ought not to have initiated the CIRP against the Corporate Debtor. The principles governing dismissal of an Application filed under Section 9 of the Code on the grounds of `Pre-Existing Disputes', has been recently reiterated by this Tribunal. v. At this juncture, Learned Counsel placed reliance on the Judgement of this Tribunal in ....
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....1(a) of the NDA, (b) Rs. 1,50,000/- as per Clause 2(e) of the NDA and (c) Rs. 40,00,000/- as penalty towards alleged violation of the NDA. It is evident that Respondent No. 1 had himself admitted in his Application that he has received two payments each for the sum of rupees; (a) Rs. 1,50,000/- and (b) Rs. 1,50,000/-, being the only payments required to be made by the Corporate Debtor under the NDA. Despite receipt of the said payments under the NDA, the Respondent No. 1 has mala fide claimed a sum of Rs. 40,00,000/- from the Corporate Debtor, as a penalty towards alleged violation of the NDA. vii. It is a settled principle of law that Operational Debt does not include penalty or liquidated damages. It is also submitted that a claim for penalty does not become an Operational Debt until the liability is adjudicated upon by a Civil Court, and the damages/claims are assessed and crystallised. It has also been succinctly laid down in the Judgement of the Hon'ble Supreme Court in the matter of `Kailash Nath Associates' Vs. `DDA', reported in (2015) 4 SCC 136, wherein the Hon'ble Apex Court has laid down as follows: "43.1. Where a sum is named in a contract as a liquida....
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....ne month salary for serving the company for a long time) and other dues. ii. Further he also submitted that the Appellant had made alleged false submissions in the present Appeal. For better understanding, the said table is being reproduced as hereunder: Date Amount Particular 10.05.2018 Rs.3,19,219/- Payment as provided for in clause 2(e) of the NDA in the form of Salary for March 2018 and other dues. iii. It is further contended that the above alleged submissions made by the Appellant in the present Appeal is contrary to his own submissions made in his Reply filed before the Adjudicating Authority and the Appellant has thereby attempted to mislead this Tribunal as and by way of a false declaration in the present Appeal. iv. In support of his submissions, he placed reliance on the Judgement of the Hon'ble Supreme Court in the matter of `Kishore Samrite' Vs. `State of U.P. & Ors.' in Criminal Appeal No. 1406 of 2012, whereby in Para 29, it has been observed as follows : "29. Now, we shall deal with the question whether both or any of the petitioners in Civil Writ Petition Nos. 111/2011 and 125/2011 are guilty of suppression of m....
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....use (i). There is nothing to suggest any connection of 2(e) with Clause (i). Whereas we construe that clause 2(i) is in reference to clause 1(a) and thus the same has been discharged with. Hence, the payment made for the months of February and March, 2018 cannot be construed to be in discharge of the liabilities rising out of Clause 2(e). Thus, the Corporate Debtor has failed to comply with the terms of Clause 2(e) of the Agreement and has committed default." vi. It is further contended that the Settlement Letter had been addressed by the Appellant on 27.02.2023, unilaterally offering Rs.1,50,000 as full and final settlement of all claims of Respondent No.1. For ready reference, the said letter is being reproduced as hereunder: vii. It was submitted by the Learned Counsel for the Respondent that he was employed with the Corporate Debtor for a period of about 11-12 years and his last designation was that of General Manager and after submission of his resignation letter, the Corporate Debtor had entered into the NDA on 22.01.2018 to confirm the terms of the end of the contract of employment with the Respondent No.1 and the same was signed by the Appellant and the Re....
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.... the Claims of the Respondent No.1 constitute as an "Operational Debt" as defined under sub-Section (21) of Section 5 of the Code; that there was no `Pre- Existing Dispute' between the Corporate Debtor and the Respondent No.1; and that the Appellant failed to provide the proof of payment for the claim amount as demanded by Respondent No.1 in the Demand Notice. xi. At the outset, Learned Counsel for the Respondent placed reliance on Para 27 of the Judgement of the Hon'ble Supreme Court in the matter of `Innoventive Industries Ltd.' Vs. `ICICI Bank and Anr.' reported in (2018) 1 SCC 407, wherein the Apex Court has held as follows: "27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes nonpayment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", ....
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....editor. It shall however be open for the Operational Creditor to seek alternative legal remedy for its dues, if any, before the appropriate legal forum as permissible in law. 11. Hence, this Appeal is allowed and the Order passed by the Adjudicating Authority is set aside. 12. The Office of the Registry is directed to upload the Judgement on the website of this Tribunal and send the copy of this Judgement to the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court-I) forthwith. ============= Document 1 151 4 T Subject Pending amount From [email protected] To satish [email protected] Date: Sunday, 17 June, 2010, 443:18 PM IST Doar Satish Director DB Indite Annexure G1 This has reference to Para 1 (a) of Non-Disclosure Agreement dtd.22.01.2018 the corporation ( DB Group India Pvt Ltd) have to pay a Monthly salary at the Gross Rate 1,50,000 INR os notice of discharge. Secondly, as per para 2(e), in consideration of the execution of said Non-Disclosure agreement, you have to pay a gross sum of 1,50,000 INR also. Till date you haven't pay both as agreed sum as per sald agreement. There ....
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....ready acknowledged receipt of it. I did not understand Mr. Luca role in said payment I am not obliged to ask him since you are primarily responsible to settle my dues. Regards Ravindra Rawat TRUE COPY Altested by me KIRTI H. SYONTRI Advocate High Court (004 OTARY D. R. SAWANT GREATER MUMBAI MAHARASHTRA) Reg3531 Exor Date 05-08-2023 GOVT. OF INDIA * Document 4 6 154 On 20-Jun-2018, at 10:14 AM, Salish [email protected] wrote: Dear Luca, Below mail from Mr. Ravindra for your ref. c: Ravidra Annexure-6/4 The NDA was prepared by Italy and per their instructions I have processed your dues. Nothing is pending from our side. For clarifications on the below clause you need to speak to Mr. Luca. Regards, * TRUE COPY 4 Attested by me KIRT H. SYONTRI Advocate High Court (MAM5/1994 OTARY GR. SAWANT GREATER MUMBAI ( TRA) R3531 Enivate ã™ GOVT. OF INDIA Document 5 TAS LAW MR. KIRTI H. SYONTRI Address TAS LAW Advocates & Solicitors, No 10,1 Link Road, 71 Phone Email New Delhi-110014, INDIA +9170426 2336891-11-44759....