2020 (2) TMI 1549 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditor - existence of debt and dispute or not - HELD THAT - The total outstanding as overdue salary amount is ₹ 12,90,808/- plus interest @18% P.A. from 14.02.2019 till the realisation of outstanding amount is ₹ 10,02,701/-. Petitioner was employed with the CD in-charge of production in the Machine Shop. While in employment, the OC indulged in the activities deliberately and intentionally to cause losses suffered by CD with respect to quality and loss of business of several lacs besides loss of repetition in international market which is entirely on account of the petitioner. Application disposed off.

Summary

Issues Involved:
- Application filed under Section 9 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
- Allegations of non-payment of salary leading to financial hardship.
- Legal notice sent for recovery of outstanding salary.
- Reply from Corporate Debtor alleging deliberate activities causing losses.

Issue 1: Application under Section 9 of Insolvency and Bankruptcy Code
The petition was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by the Operational Creditor to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, "M/S. Karan Motors Private Limited." The Operational Creditor highlighted the non-payment of salaries and financial hardships faced as the basis for the application.

Issue 2: Allegations of Non-Payment of Salary
The Operational Creditor, who was employed as H.O.D. of the machine shop, alleged that the Corporate Debtor started withholding his salary without valid reasons. This withholding of salary began with delays in payment, eventually leading to months of unpaid salary. Despite requests and legal notices, the outstanding salary remained unpaid, causing extreme financial difficulties for the Operational Creditor.

Issue 3: Legal Notice for Recovery
In an attempt to recover the outstanding salary, the Operational Creditor sent a legal notice through counsel, followed by a demand sent in February 2019. The Corporate Debtor received these notices but failed to make any payments towards the overdue salary amount, which included interest at 18% per annum.

Issue 4: Reply Alleging Deliberate Activities
The Corporate Debtor, in its reply to the application, alleged that the Operational Creditor deliberately engaged in activities causing losses to the company. The Corporate Debtor claimed that the Operational Creditor's actions led to quality issues, loss of business, and damage to the company's reputation in the international market, resulting in significant financial losses.

In conclusion, the judgment highlighted the legal proceedings initiated under the Insolvency and Bankruptcy Code due to non-payment of salaries, the efforts made by the Operational Creditor to recover the outstanding amount through legal notices, and the Corporate Debtor's counter-allegations of deliberate actions causing financial losses.