2020 (11) TMI 242 - Tri - Insolvency and Bankruptcy

Validity of retraction of resolution to approach the Central Government for its approval with regard to the remuneration of the Applicant passed in the seventh meeting of the Committee of Creditors held on 30.08.2018 - compliance with the directions of the Committee of Creditors in the meeting held on 26.04.2018 to make an application to the Central Government seeking approval for the remuneration paid to the Applicant - reimbursement of legal expense incurred by the Applicant - HELD THAT - It is seen that the instant IA was filed during the period of CIRP of the Corporate Debtor and any action on the part of the RP for getting approval from the Central Government required CoC's approval with ' the requisite majority which was not forthcoming. Meanwhile this Adjudicating Authority vide its order dated 26.07.2019 in 1A Nos. 544 680 of 2019 has passed an Order of Liquidation. In view of the Liquidation of the Corporate Debtor, this Adjudicating Authority deems it proper not to adjudicate upon the instant IA at this point of time and feels it proper to direct the Applicant herein to approach Liquidator for the relief in relation to the approval of remuneration by Central Government - application disposed off.

Summary

Issues:
1. Application under Section 60(5) of the IB Code, 2016 seeking to set aside retraction of resolution for remuneration approval.
2. Compliance with Committee of Creditors' directions for remuneration approval.
3. Reimbursement of legal expenses incurred by the Applicant.

Analysis:

1. The Applicant, an employee of the Corporate Debtor, filed an application seeking to set aside the retraction of the resolution to approach the Central Government for remuneration approval, declaring it arbitrary and illegal. The Applicant's appointment details, salary increments, and approvals for remuneration were outlined, highlighting the sequence of events leading to the dispute. Despite approvals and directions from the Committee of Creditors, the Applicant faced non-payment of salary, leading to the application before the Adjudicating Authority.

2. The Resolution Professional (RP) countered the Applicant's claims, stating the necessity for Central Government approval due to the remuneration exceeding the prescribed amount under the Companies Act, 2013. The RP detailed the steps taken to obtain approvals, including the COC's involvement and subsequent rejections of resolutions for remuneration approval. The RP emphasized the lack of support from the COC for the required approvals, leading to the rejection of resolutions in multiple meetings.

3. After hearing both sides and reviewing the records, the Adjudicating Authority noted that the application was filed during the Corporate Insolvency Resolution Process (CIRP) and that any action for Central Government approval required COC's majority approval, which was not obtained. Subsequently, the Corporate Debtor went into liquidation, prompting the Authority to direct the Applicant to approach the Liquidator for relief regarding remuneration approval. The Authority closed the instant application with the liberty for the Applicant to seek recourse from the Liquidator, signaling the end of the legal proceedings in this matter.

This detailed analysis of the judgment from the National Company Law Tribunal, Hyderabad Bench, showcases the legal complexities surrounding the dispute over remuneration approval and the eventual direction for the Applicant to seek resolution through the Liquidator in the context of the Corporate Debtor's liquidation.