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2021 (3) TMI 282 - SC - Insolvency and BankruptcyCIRP - Former Employees claiming arrears of salary - Period of limitation - Seeking declaration that the notice/letters alleged to have been issued by 1st defendant as null and void and will not bind the plaintiff - seeking to grant permanent injunction restraining the 2nd defendant from relying on or claiming against the plaintiff based on the alleged letters/notices - HELD THAT - What becomes clear is the fact that from the date of the last acknowledgement i.e. 30.09.2014 till the date on which the petition before the NCLT was filed i.e. 27.07.2017, three years have not elapsed. Therefore, at least to the extent of an acknowledgement made by the then Managing Director of the Corporate Debtor, the arrears of salary due for a period of at least 3 years prior to 30.09.2014 would certainly be within limitation, and therefore payable to the Appellant. This being the case, it is clear that the NCLT judgment is correct in admitting the Section 9 application by the Appellant. Mr. Rai correctly points out that the Employees Provident Fund letter dated 13.04.2016 was only a red-herring, and has nothing to do with the arrears of salary which had to be paid. It is clear that there is an acknowledgement of liability, which therefore shows that there is no dispute as to amounts owed to the Appellant. The impugned NCLAT judgment is accordingly set aside. Consequently, the NCLT judgment is restored to the file. Appeal allowed.
Issues:
1. Interpretation of acknowledgments of liability for arrears of salary. 2. Application of limitation period under the Insolvency and Bankruptcy Code, 2016. 3. Dismissal of a Civil Suit filed by the Corporate Debtor. 4. Dispute over arrears of salary and delay in raising the claim. 5. Correctness of National Company Law Appellate Tribunal's decision in admitting the matter. Interpretation of Acknowledgments of Liability: The appeal involved a former employee claiming arrears of salary from 1998 to 2013 under the Insolvency and Bankruptcy Code, 2016. The National Company Law Tribunal (NCLT) admitted the petition based on acknowledgments of liability, including a letter from the Managing Director acknowledging the principal amount. The NCLAT, however, raised a dispute over the arrears and the delay in raising the claim. The Supreme Court held that acknowledgments made the arrears payable and not time-barred, setting aside the NCLAT's decision. Application of Limitation Period: The NCLT correctly admitted the Section 9 application as the acknowledgment made by the Managing Director fell within the limitation period. The Court emphasized that the acknowledgment of liability negated any dispute over the amounts owed to the appellant, rejecting the argument that the claim was time-barred. The Court reinstated the NCLT judgment and dismissed the alternative argument presented by the Respondent's counsel. Dismissal of Civil Suit: The Corporate Debtor filed a Civil Suit challenging the acknowledgments of liability, which the NCLT deemed as an attempt to evade the dues. The suit was later dismissed for non-prosecution, with an application for restoration pending. The Court noted the suit's dismissal and its implications on the acknowledgment of liability. Dispute Over Arrears of Salary and Delay: The NCLAT highlighted a dispute over the arrears of salary and questioned the delay in raising the claim from 1998 to 2016. It held that the application under Section 9 was not maintainable due to the existence of a dispute and the unexplained delay. However, the Supreme Court overturned this decision, emphasizing the acknowledgments of liability and the lack of a genuine dispute. Correctness of NCLAT's Decision: The NCLAT overturned the NCLT's decision, citing a dispute and delay in raising the claim. The Supreme Court disagreed, reinstating the NCLT judgment based on the acknowledgment of liability and the absence of a genuine dispute. The Court allowed the appeal, rejecting the permission to file Civil Appeals. This detailed analysis of the judgment provides insights into the interpretation of acknowledgments of liability, the application of the limitation period, the dismissal of the Civil Suit, the dispute over arrears of salary, and the correctness of the NCLAT's decision, offering a comprehensive overview of the legal issues addressed in the case.
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