2018 (6) TMI 681 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - default in payment of salary - Held that - From the definition of Operational creditor and Operational Debt , it can be seen that the applicant being in employment in the respondent company and having provided service to the respondent company clearly comes within the definition of Operational Creditor. Similarly the claim of outstanding salary due to him comes within the definition of Operational Debt. Respondent company having admitted that the applicant was working in the respondent company. Since the respondent Corporate Debtor has admitted the term of employment of applicant, and there being default in payment of salary of that period, the application deserves to be admitted on that score alone for triggering Corporate Insolvency Resolution Process against the respondent corporate debtor. We are satisfied that 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.

Summary

Issues:
1. Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Claim of unpaid salary by the applicant against the respondent corporate debtor.
3. Determination of whether the applicant qualifies as an operational creditor.
4. Admission of the application and issuance of moratorium under section 14 of the Code.
5. Appointment of an Interim Resolution Professional and payment of expenses.

Analysis:

1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process against the respondent corporate debtor. The applicant claimed unpaid salary for specific months, supported by evidence such as demand notices, cheques, and bank statements.

2. The applicant alleged non-payment of salary for several months by the respondent corporate debtor, which was confirmed by returned cheques due to insufficient funds. The applicant had sent a demand notice under Section 8 of the Code, enclosing relevant documents to support the claim of outstanding dues.

3. The respondent raised objections, disputing the applicant's status as an operational creditor, citing alleged misconduct and probationary status. However, the Tribunal determined that the applicant, being an employee who provided services to the respondent company, fell within the definition of an operational creditor as per the Code.

4. Based on the admission of the respondent regarding the applicant's employment and the default in salary payment, the Tribunal found the application complete and admitted it for triggering the Corporate Insolvency Resolution Process. A moratorium was issued under section 14 of the Code, prohibiting certain actions against the corporate debtor.

5. An Interim Resolution Professional was appointed following recommendations by the Insolvency and Bankruptcy Board of India to expedite the resolution process. The applicant was directed to pay a specified sum to the Interim Resolution Professional for expenses. The moratorium was set to remain in effect until the completion of the corporate insolvency resolution process.

This detailed analysis covers the key issues addressed in the Tribunal's judgment, outlining the legal proceedings and decisions made regarding the application for insolvency resolution against the respondent corporate debtor.