2017 (11) TMI 1525 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - proof of existing debt - Held that - The applicant has attached the relevant certified bank account statements along with certificate issued by Bank of India that Since January 2017 no amount has been paid by Respondent Corporate Debtor to the applicant. Further from the certificate issued by the Deutsche Bank it is clear that no amount has been paid by the respondent Corporate debtor between 17/08/2017 to 18/09/2017 in the account of the applicant operational creditor. This shows that the provisions of Section 9(3)(c) of the Code has been satisfactorily compiled with by the applicant. The present application is complete and there has been part admission of salary dues and non-payment of the same has caused default by respondent. Therefore, on fulfilment of the requirements of section 9(5)(i)(a) to (d) of the Code, the present application is admitted. A moratorium in terms of section 14 of the Code is being issued accordingly.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Claim of unpaid salary and interest
3. Jurisdiction and territorial authority
4. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC)
5. Objections raised by the corporate debtor
6. Existence of a dispute
7. Allegations of forum shopping
8. Compliance with Section 9(3)(c) of the IBC
9. Burden of proof on allegations made by the corporate debtor
10. Issuance of moratorium

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of CIRP against the corporate debtor. The applicant, an operational creditor, claimed unpaid salary dues and interest.

2. Claim of Unpaid Salary and Interest:
The applicant was employed by the corporate debtor and alleged that salary payments were irregular and partial since 2008, resulting in accumulated dues of ?46,77,124/-. The applicant also claimed interest at 18% per annum on the outstanding amount. The corporate debtor admitted an outstanding amount of ?28,84,160/-.

3. Jurisdiction and Territorial Authority:
The Tribunal confirmed its jurisdiction over the matter as the corporate debtor's registered office is in Delhi, aligning with Section 60(1) of the Code.

4. Compliance with Procedural Requirements:
The applicant sent a demand notice under Section 8 of the Code and filed the application under Section 9 in Form-5. The applicant also provided bank certificates confirming no salary deposits since January 2017, complying with Section 9(3)(c) of the Code.

5. Objections Raised by the Corporate Debtor:
The corporate debtor raised several objections:
- The claim was barred by limitation.
- Existence of a dispute before the Deputy Labour Commissioner.
- Allegations of forum shopping.
- Non-compliance with Section 9(3)(c) of the Code.
- Allegations regarding the applicant's conduct and software development.

6. Existence of a Dispute:
The Tribunal found no pending dispute before the Deputy Labour Commissioner, as the complaint was not entertained. The corporate debtor failed to provide evidence of any prior dispute regarding salary dues, rendering the objection unsustainable.

7. Allegations of Forum Shopping:
The Tribunal dismissed the forum shopping allegation, stating that an unpaid employee can seek remedies under the IBC if the default exceeds ?1 lakh.

8. Compliance with Section 9(3)(c) of the IBC:
The applicant satisfactorily complied with Section 9(3)(c) by providing certified bank statements and certificates from Bank of India and Deutsche Bank, confirming no salary payments from the corporate debtor.

9. Burden of Proof on Allegations Made by the Corporate Debtor:
The corporate debtor's allegations regarding the applicant's conduct and software development were unsupported by documentary evidence. The Tribunal emphasized that the burden of proof lies on the party making the allegations.

10. Issuance of Moratorium:
The Tribunal admitted the application and issued a moratorium under Section 14 of the Code, prohibiting:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transfer or disposal of the corporate debtor's assets.
- Actions to enforce security interests.
- Recovery of property occupied by the corporate debtor.

The Tribunal directed the Insolvency and Bankruptcy Board of India to recommend an Interim Resolution Professional, as no proposal was made by the applicant. The moratorium would be effective until the completion of the CIRP as per Section 14(4) of the Code.

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