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2022 (5) TMI 494 - AT - 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 - time limitation - HELD THAT - There is no specific approval either of the payment of arrears or of any fixation of the MD s remuneration or increase of his salary/perks. It is also relevant to note that there is no crystallised quantum of amount which can be claimed as salary/remuneration fived by the Board of Directors as contemplated under Section 196 of the Companies Act, 2013. The contention of the Learned Counsel Mr. Sharma that the cause of action did not arise till the dispute arose is untenable, keeping in view, that the claims date back to 2010 and there is no record of disputes having arisen at that point of time - the emails, the correspondence relied upon by the Learned Counsel for the Respondent do not give any definitive quantum of salary to have been accepted by way of any Resolution by the Board of Directors, to fall within the ambit of the definition of acknowledgement of debt as contemplated under Section 18 of the Limitation Act, 1963. Therefore, this Tribunal if of the earnest view that the Section 9 Application filed on 27/08/2021is barred by Limitation as the claims of Rs.96,92,000/- and Rs.18,00,000/- pertain to the period prior to 31/03/2016 and more than three years have lapsed since. Pre-Existing Dispute existing between the parties or not - HELD THAT - It is seen from the record that the remuneration of the MD is a disputed question of fact . It is not within domain under IBC to decide the issue of the fixation of the salary of the MD , but to ascertain if there is any Dispute regarding the issue. Having regard to the emails/correspondence and the Minutes on record, it is opined that the Dispute raised is not a feeble legal argument nor is it a spurious one but one which is supported by evidence. The Adjudicating Authority has not addressed either to the question of claims having been time barred nor to the issue of the existence of a Pre-Existing Dispute between the parties - Appeal allowed.
Issues Involved:
1. Whether the claims in the application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016, are barred by limitation. 2. Whether there is any pre-existing dispute between the parties regarding the claims. Detailed Analysis: 1. Barred by Limitation: The primary issue addressed is whether the claims in the Section 9 application are barred by limitation. The application was filed on 27/08/2021, claiming an amount of Rs.1,29,34,187/- towards salary dues and Rs.53,03,016/- towards simple interest at 18%. - Claims Period: The claims pertain to various periods from 16/01/2010 to 14/05/2019. Specifically, Rs.96,92,000/- for the period 16/01/2010 to 31/07/2014 and Rs.18,00,000/- for the period 01/08/2014 to 31/03/2016. - Acknowledgement of Debt: The tribunal examined whether there was any acknowledgment of debt or salary dues to fall within the ambit of Section 18 of the Limitation Act, 1963. The respondent relied on minutes from meetings and email communications to argue that there was a promise to pay salary arrears. - Board Approval: It was noted that there was no specific approval or resolution from the Board of Directors fixing the MD’s remuneration or acknowledging the debt. The Articles of Association of the company stipulate that the remuneration of the MD must be determined by the Board. - Conclusion on Limitation: The tribunal concluded that the emails and correspondence did not provide a definitive quantum of salary accepted by a Board resolution. Therefore, the claims for Rs.96,92,000/- and Rs.18,00,000/- are barred by limitation as they pertain to periods prior to 31/03/2016. 2. Pre-Existing Dispute: The tribunal also addressed whether there was a pre-existing dispute between the parties. - Disputed Remuneration: The remuneration of the MD was a disputed question of fact. The tribunal’s role under the Insolvency and Bankruptcy Code (IBC) is not to decide the issue of salary fixation but to ascertain if there is a dispute. - Evidence of Dispute: The tribunal found that the dispute regarding the MD’s salary was not a feeble legal argument but was supported by evidence, including emails and minutes of meetings. The dispute was genuine and required further investigation. - Supreme Court Precedent: The tribunal referred to the Supreme Court judgment in ‘Mobilox Innovations (P) Ltd. Vs. Kirusa Software Pvt. Ltd.’, which emphasizes that the adjudicating authority must reject the application if there is a plausible contention requiring further investigation and the dispute is not spurious or illusory. Conclusion: The tribunal concluded that the claims in the Section 9 application were barred by limitation and that there was a pre-existing dispute between the parties. Consequently, the impugned order dated 15/02/2022 was set aside, and both appeals were allowed. The amount deposited by the appellant in compliance with the tribunal's order dated 22/02/2022 was ordered to be refunded.
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