9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (5) TMI 226 - AT - Insolvency and BankruptcyCIRP process - release of managerial remuneration/salary arrears - Appellant claims that his Application was considered by the Adjudicating Authority but the Adjudicating Authority wrongly rejected the same - Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is matter of record that COC dealt with the claim of the Appellant in meeting dated 26.04.2018 as well as 07.08.2018 but did not support the Appellant with regard to his claim for salary in excess of what is permissible under Section 197 of the Companies Act. The Appellant appears to have been aware that he was drawing excess salary which was being picked up on the basis that approval of Central Government was awaited and on two occasions, admittedly the excess drawn was returned - Being in managerial position, this may have happened in the Company (which is now stated to have gone in liquidation) because of being related party. The Appellant was related party as reflected from the minutes of COC meeting dated 26.04.2018 (Annexure - A of Reply) in Item No.9. The COC which includes the lead and other lenders did not approve and there is nothing to show that Central Government permitted payment of excess remuneration and when this is so, there appears to be no reason to find fault with the Impugned Order and we do not find any reason to interfere. There are no substance in the argument that it was responsibility of this Resolution Professional to move the Government for necessary permission. When the claim is submitted in Form D, the amount claimed must have support from record to spell out dues payable and the Applicant cannot expect the Resolution Professional and COC to go and get the necessary permissions. There is no substance in the Appeal. Appeal dismissed.
Issues:
1. Claim for excess salary payment prior to CIRP initiation. 2. Rejection of salary claim during CIRP period. 3. Dispute over managerial remuneration approval under Companies Act, 2013. 4. Role of Resolution Professional and COC in approving remuneration. Issue 1: Claim for excess salary payment prior to CIRP initiation The Appellant filed an Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, claiming an amount of &8377; 1,06,28,584/- as salary dues prior to the commencement of Corporate Insolvency Resolution Process (CIRP). The Appellant had a history of increment and promotions within the company, and claimed that certain salary amounts were recovered by the Corporate Debtor. However, the Adjudicating Authority rejected the claim, stating that the excess remuneration was paid in anticipation of approval from lenders and the Central Government, which was not granted. The Authority directed the Resolution Professional to pay the salary for services during the CIRP period but did not admit the claim for pre-CIRP excess payments. Issue 2: Rejection of salary claim during CIRP period The Resolution Professional informed the Appellant that excess remuneration could not be paid without Central Government approval, as per the Companies Act, 2013. The COC meetings did not support the Appellant's claim for salary exceeding the prescribed limits under the Act. The Appellant was aware of the excess salary issue and had agreed to repay the amount if necessary approvals were not obtained. The COC, including lenders, did not approve the excess payment, and the Central Government did not grant permission. The Adjudicating Authority upheld the rejection of the salary claim during the CIRP period, based on the lack of necessary approvals. Issue 3: Dispute over managerial remuneration approval under Companies Act, 2013 The Resolution Professional cited Section 197(1) of the Companies Act, 2013, which mandates Central Government approval for remuneration exceeding prescribed limits. The Corporate Debtor had paid excess remuneration to the Appellant in anticipation of approvals, which were later recovered. The Resolution Professional argued that the lenders did not approve the excess payments, and the COC resolutions reflected the disapproval of such payments. The Adjudicating Authority emphasized the need for compliance with legal provisions regarding managerial remuneration. Issue 4: Role of Resolution Professional and COC in approving remuneration The Resolution Professional and COC were responsible for evaluating and approving remuneration payments, ensuring compliance with legal requirements. The Appellant's claim for excess salary was rejected due to lack of necessary approvals and support from the COC. The Appellant's awareness of the excess payments, related party status, and previous recovery of excess amounts indicated a lack of justification for the claim. The Adjudicating Authority dismissed the Appeal, emphasizing the importance of adhering to legal provisions and approval processes for remuneration payments. In conclusion, the judgment highlighted the significance of obtaining approvals for managerial remuneration under the Companies Act, 2013, and the role of Resolution Professional and COC in evaluating and approving such payments during insolvency proceedings. The rejection of the Appellant's claim was based on non-compliance with legal requirements and lack of necessary approvals, as reflected in the COC resolutions and Central Government directives.
|
