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2022 (1) TMI 1219 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - existence of debt and dispute or not - service of notice - time limitation - applicant was in the employment of the respondent or not - applicant had obtained domain name tejacement.com without knowledge of the Directors of the respondent or not - exercise of equitable jurisdiction by this Adjudicating Authority or not. Whether the application is barred by law of limitation? - HELD THAT - Placing reliance on the documents available, wherein there is a clear and categorical admission of outstanding dues of the applicant by the respondent, it can be said that right to sue for the said amount accrued in favour of the applicant consequent to non-payment and the present claim having been filed on 28.03.2020 is well within three years of accrual of right to sue. Therefore, the claim as made under the demand notice as well as the application are within the period of limitation. Whether the applicant was not in the employment of the Corporate Debtor? - HELD THAT - It is pertinent to note that as per the interim reply/Counter dated 13.12.2018 filed by the Corporate Debtor, it is specific contention of the Corporate Debtor that the Corporate Debtor has not made any offer of employment to the applicant/Operational Creditor, under the respondent nor even offered shares in the respondent/company. However, in its subsequent reply/Counter dated 02.08.2019, the Corporate Debtor has contended that the Operational Creditor had offered to help the respondent in the work of establishment of cement factory in Andhra Pradesh and that the Corporate Debtor has handed over letter-heads and other documents relating to the respondent/company to the Operational Creditor. It is also averred that the Operational Creditor had voluntarily accompanied Mr. Mule Srinivasulu Reddy occasionally. It is also to be noted that according to the applicant he was offered employment in the respondent-company by the Managing Director of the respondent- company vide correspondence dated 25.07.2011 and since then he has been rendering his services to the respondent. In the Economic Survey Report dated September 2014, it has been mentioned that the applicant has been associating with the respondent-company in all aspects for the last four years. His qualification and past experience was also mentioned in the said Techno-Economic Feasibility Report. So much so the Techno-Economic Feasibility Report has in fact, fully supports the contention of the applicant that he has been under the employment of the respondent-company since 2011. Also, the plea of the Corporate Debtor that correspondence relied upon by the applicant- Operational Creditor including e-mails are fabricated and forged as the Operational Creditor is in possession of letter-heads, etc. of the Corporate Debtor - HELD THAT - Admittedly, the applicant had placed reliance not only on certain letters said to have been exchanged between the applicant and Srinivasula Reddy, but also on the letters/e-mails addressed to some third parties including Government agencies/Departments - there are no force in the contention of the learned counsel for the Corporate Debtor that the letters are forged and fabricated by the applicant. Consequently, the documents establishes the employer-employee relationship between the applicant and the respondent is assumed accordingly. Whether the applicant had obtained domain name tejacement.com without knowledge of the Directors of the respondent and created e-mail ID [email protected] purported to be that of Mule Srinivasula Reddy and had misused the same? - HELD THAT - The communications include the correspondence made with the Government authorities at the level of Principal Secretary and the said correspondence relates to the request for certain statutory clearances required for setting up a cement plant. Thus, when these letters are for the benefit of the respondent, we are unable to find any force in the contentions of the learned senior counsel for the respondent that the above referred e-mails/letters are forged by the applicant - the correspondence and letters relied upon by the applicant herein are the letters and correspondence made in the capacity of employee of the respondent. As such the plea of misuse of e-mail ID of Srinivasula Reddy by the applicant is totally unfounded and mischievous. Whether there is no operational debt and default? - HELD THAT - The applicant was offered employment in the respondent/company though his position could not be clearly designated, as such there are no hesitation to hold that the claim of the Operational Creditor comes within the meaning of section 5(21) of the I B Code, 2016. Thus, the operational debt has been established by the applicant. Whether admitting this petition would amount to exercising equitable jurisdiction by this adjudicating authority? - HELD THAT - In the present case the Operational Creditor is able to demonstrate by way of several communications that there was a contract of employment, whether disputed or undisputed and there is breach thereof - the petitioner's claim does commensurate with the definition provided under section 3(6) of the I B Code, 2016. Thus, there is no need to emphasize that even remotely the principles of equity is not been considered - the issue answered in negative. There is ample and irrefutable evidence of association of the Operational Creditor with the Corporate Debtor/Company and the services rendered by Operational Creditor for the Corporate Debtor/company. While appreciating the covenants/contracts entered into between individuals in private sector, it is to be borne in mind that the perfection as is available in public sector/government sector in the matter of appointments cannot be expected in private sector. Private sector is a group of individuals, which owns private-sector business - the level of perfection practised in Union Public Service Commission or Staff Selection Commission in the matter of appointments cannot be expected in a private sector. The present application deserves to be admitted under section 9 of the I B Code, 2016. Accordingly, the application filed by the Operational Creditor is admitted and the Corporate Debtor is put under CIRP.
Issues Involved:
1. Whether the application is barred by the law of limitation. 2. Whether the applicant was not in the employment of the Corporate Debtor. 3. Whether the applicant had obtained the domain name "tejacement.com" without the knowledge of the Directors of the respondent and misused it. 4. Whether there is no operational debt or default. 5. Whether admitting this petition would amount to exercising equitable jurisdiction by this Adjudicating Authority. Issue-wise Detailed Analysis: 1. Whether the application is barred by the law of limitation: The Tribunal held that the burden lies on the applicant to establish that the claim is within the period of limitation. The respondent raised the plea of limitation, but the applicant countered by presenting letters and email communications showing clear and categorical admission of outstanding dues by the respondent. The Tribunal found that the right to sue accrued on non-payment and the application filed on 29.03.2019 was within the three-year limitation period. Therefore, the claim was within the period of limitation. 2. Whether the applicant was not in the employment of the Corporate Debtor: The applicant contended that he worked on a consultancy basis and was promised remuneration, including sweat equity shares. The respondent denied any employment relationship, alleging the documents were forged. The Tribunal examined various letters and email communications, comparing signatures and considering the Techno-Economic Feasibility Report, which acknowledged the applicant's involvement. The Tribunal concluded that the applicant was indeed employed by the respondent and the documents were genuine, establishing an employer-employee relationship. 3. Whether the applicant had obtained the domain name "tejacement.com" without the knowledge of the Directors of the respondent and misused it: The respondent claimed the applicant created the domain name and email ID without authorization and misused them. However, the Tribunal found that several communications from third parties and government authorities addressed the applicant as 'Director,' indicating his recognized role. The Tribunal rejected the respondent's plea of forgery and misuse, finding the correspondence and letters to be genuine and made in the capacity of an employee. 4. Whether there is no operational debt or default: The Tribunal referred to section 5(21) of the I&B Code, 2016, defining 'operational debt' and found that the applicant's claim fell within this definition. The Tribunal concluded that the applicant's employment and the outstanding dues constituted an operational debt, establishing the existence of debt and default. 5. Whether admitting this petition would amount to exercising equitable jurisdiction by this Adjudicating Authority: The Tribunal emphasized that it examined the case based on the provisions of the I&B Code, 2016, and the definition of 'claim' under section 3(6). The applicant demonstrated a contract of employment and breach thereof, fitting the definition of 'claim.' The Tribunal clarified that it did not consider principles of equity and found the petitioner's claim valid under the I&B Code, 2016. Conclusion: The Tribunal admitted the application under section 9 of the I&B Code, 2016, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. A moratorium was declared, and Shri P.M.V. Subbarao was appointed as the Interim Resolution Professional (IRP). The Tribunal directed the Registry to update the status of the Corporate Debtor on the MCA-21 site of the Ministry of Corporate Affairs.
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