9911796707
TMI Blog2020 (9) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... d Ninety Six Only) as on 21.09.2018, including interest. 2. Brief facts of the case, as mentioned in the Company Petition and summary, which are relevant to the issue at hand, are as follows: (1) The Petitioner/Operational Creditor has an Identification No. /Pan AALPG8718Q and his address is No. 08/11, SBI Colony, Geetapuram, Srirangam, Trichy, Tamil Nadu 620006. (2) The Respondent/Corporate Debtor is a Company incorporated in India on 12.05.1998 under the provisions of the Companies Act 1956 with CIN: U51394KA1998PTC023723 and has its registered office at Prestige Trade Tower, # 46, 10th Floor, Palace Road, High Grounds, Sampangi Ram Nagar, Bangalore 560001. (3) It is stated that the Petitioner joined the Respondent company as AGM, as evidenced by his Employment Letter bearing Reference No. REIPL/HRD/08-09 dated 08.04.2008. The Corporate Debtor, among forms of remuneration promised the Petitioner certain numbers of Performance Shares. (4) It is stated by the Petitioner that 510, 549, 485 Performance Shares were granted to the Petitioner/Operational Creditor on 02.12.2015, 22.09.2016 and on 03.10.2017 respectively. Statement of accounts have been filed. On an internal inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/08/2019 issued by the Petitioner is against the provisions of law as it was addressed to the President- Essilor India Pvt. Limited, CEO- Essilor India Pvt. Limited, and not to Essilor International, the entity which had issued the Performance Shares. Since there is no privity of contract between the parties to the present petition with respect to the least Performance Shares transactions, the Respondent cannot be classified as a Respondent/Corporate Debtor and does not fall within the ambit of section 2(8) of the Code. In spite of this, the Respondent duly replied to the notice in good faith on 21/08/2019, denying the claims as baseless. (3) The Petitioner's claim is based on a flawed understanding of the Performance Shares Plan which was introduced by the then Essilor International (now Essilor Luxxotica) on 02/12/2015 in favour of non-French residents as a retention mechanism for its employees, and was open to only selected employees. There were certain qualifying criteria before the right of any employee to claim any Performance Shares arises. This also does not form part of the salaries nor is a cost to the Company. It is an additional component which is given by Essilo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended in the light of the extension in the retirement age wide notice dated 27/07/2016. Hence his rights and liabilities also continued to be governed by the same Agreement beyond the age of 58 years. The Petitioner would have turned 60 years of age only in the month of May, 2019 but admittedly he had tendered his resignation even before the age of retirement, i.e. on 21/09/2018 and hence the contention that he remained in employment to the age of 60 years is false. (6) It is submitted that on the basis of complaints against the Petitioner, he was suspended from work vide letter of suspension dated 04/07/2018, pending investigation, for breach of Essilor Group Policies relating to some suspicious and improper payments surmounting to bribery and corruption. These investigations were carried out in accordance with his employment agreement in consonance with the Essilor Groups relevant policies and procedures on ethics and compliance. Even as these investigations were pending, the Petitioner submitted his handwritten letter of resignation dated 21/09/2018 which was accepted by the Respondent as per the Letter of Acceptance of Resignation dated 21/09/2018, wherein he was requeste ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the grant date, according to French laws and International Tax Treaties and who have not declared that they would become French residents in the 3 months following the grant date. A grant date means the date of the Board of Directors meeting in which it was decided to make a conditional grant of Performance Shares to one or several beneficiaries. Also, the set Performance Shares Plan is governed by the provisions of articles EI.2 to 5 - 197 -1 to EII. 2 to 5 - 197 - 6 of the French commercial Code relating to free share grants. (9) It is submitted that the beneficiaries of the Performance Shares do not get automatic ownership over the Performance Shares when they receive notice of information of allocation/award of the Performance Shares. The said notice of allocation sent to a beneficiary is only an intimation to the allottee by Essilor Luxxotica informing them of their eligibility. The right of ownership however, as laid down under the conditions of the Performance Shares Plan is subject to fulfilment of certain future conditions contained thereunder. As regards the "conditions to receive the Performance Shares", it is stated that as per the Plan, 2 conditions are necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng period of the Performance Shares only begins with the final delivery date and the actual ownership of the same also begins then. Therefore in the light of the vesting period, the said 510 Performance Shares awarded to the Petitioner on 02/12/2015 will only practically materialise on the final delivery date that is on 02/12/2019 which is further subjected to several conditions in respect of the same. Since the Petitioner had already tendered his resignation on 21/09/2018 and the same had been accepted, the Petitioner now has no right whatsoever in respect of the said Performance Shares awarded to him. Similarly, the vesting period of the 549 Performance Shares awarded on 22/09/2016 will only practically materialise on the final delivery date i.e. on 22/09/2020, subject to several conditions as per the above, that is after the date of his resignation on 21/09/2018 and hence the Petitioner acquires no right whatsoever to claim the same. (12) It is submitted that in the Petitioner's notice, at annexure B, page number 18 the letter dated 03/10/2017 clearly stated that 'this award was granted, as authorised by the Essilor's General Meeting of 05/05/2015, subject to certa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dues of the Petitioner in respect of his employment have already been paid and there exists no debt or claim. Reference in this regard has been made to the decision in the case of Mobilox Innovations Pvt. Limited reported in 2018 (1)SCC, 353. This application is not maintainable and is liable to be dismissed since the Respondent has already communicated the dispute with regard to the Petitioner's claims on 21/08/2019 and hence there exists no debt. Further, since admittedly as per the Letter of Acceptance of Resignation dated 21/09/2018 full and final settlement was computed amounting to Rs. 29, 78, 929/-, and this has already been paid on 31/12/2018, and which has also been acknowledged by the Petitioner. Hence, there exists no claim between the parties herein. (17) It has also been submitted that clause XIV of the Plan clearly ousts the jurisdiction of Indian courts. In respect of the present dispute, the governing law is the French law and in the light of the aforesaid clause, any dispute relating to the interpretation, execution or implementation of these Rules shall be subject to the exclusive jurisdiction of the Commercial Court of Paris. Hence the Indian Courts do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity of contract must be shown, whereas privity of consideration is not required. Therefore, how the Respondent was going to compensate the Petitioner and from which source/funds, is not material to the Petitioner in his contractual relationship with the Respondent. (3) With regard to the Respondent's contention that the Petitioner was not eligible for the Performance Shares as he did not meet the conditions of Performance and Presence, it is submitted by the Petitioner that as per Clause 16, the services of the Petitioner shall stand automatically terminated on the attainment of the age of 58 years and the Company, at its discretion can employ the Petitioner as a consultant on contractual basis. The Petitioner's case is that he retired on the attainment of 58 years and was therefore working with the Company only on the basis of good faith. As regards the notice dated 27/07/2016, extending the retirement age up to 60 years, it is stated that this has been brought to the notice of the Petitioner for the 1st time in their reply dated 15/11/2019. The Petitioner denies that he was ever informed about this notice and its reply dated 15/11/2019 cannot be relied upon. Even otherw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment with the respondent Company. Hence this clause of jurisdiction was not binding upon him. Also, the dispute is not over the "interpretation, execution or implementation" of the Rules governing the Performance Shares. The jurisdiction of this Hon'ble Tribunal is not ousted by foreign jurisdiction clauses in private contracts, since this Tribunal is not adjudicating civil disputes in the nature of recovery of money but is here to serve the larger purpose of resolution and asset maximisation while operating within the confines of the Code. (6) In addition to the written arguments filed on 06.02.2020, the Petitioner in further written arguments filed on 14.02.2020 has again reiterated that as the alleged notice/circular dated 07/07/2016 extending his retirement age was not brought to the notice of the Petitioner, the original employment agreement stands un-mended to this date. As the Petitioner had completed 58 years in employment, as per clause 16 of the appointment letter he is deemed to have automatically retired, and was therefore eligible for the Performance Shares. He was suspended from employment on alleged charges of improper payments and was coerced to resign with im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it is generally understood to be directory. Therefore, no leniency is allowed to private parties, in this case the Respondent. Thus, the belated reply to Demand Notice cannot be looked into by this adjudicating authority. 5. The Respondent/Corporate Debtor has also filed written arguments dated 12/02/2020 and has mainly summarised the contentions made by it in its objections referred to earlier. The same are, briefly, as under: (1) The Operational Creditor states that he was forced and caused to resigned from the Company, however, he has not taken any action under sections 19, 19A and 64 of the Indian contract Act, 1872 for avoidance of the same. He continues to retain the benefits from the said settlement and having received the full and final settlement, no further claim would lie against the Respondent/Corporate Debtor. He is therefore now precluded from any further frivolous claims. (2) Reference has been made to the decision of the Hon'ble NCLT, Mumbai Bench, in the case of Shri Ajit Narayanan Rane v. You 1st Money Express Pvt. Limited. Here the question was whether full and final settlement arrived at would include all dues of the operational Creditor such as ESOP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear and undisputed and the default, as defined under section 3(12) of the Code should also be clearly established. The Code does not envisage detailed investigation nor resolution of any dispute. Further, it is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Pvt. Limited Vs. Kirusa Software Pvt. Limited (2018)1 SCC 353 has, inter alia, held that I&B Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardize the financial health of an otherwise solvent Company by pushing it into insolvency. The Hon'ble Supreme Court in the case of K. Kishan Vs. Vijay Nirman Company Pvt. Ltd. clarified that the Petitioners cannot use IBC either prematurely or for extraneous considerations or as substitute for debt enforcement procedures. In Transmission Corporation of A.P. Ltd. Vs. Equipment Conductors and Cables Ltd.,1 Hon'ble Supreme Court of India has inter alia held that existence of undisputed debt is sine qua non of initiating CIRP. The facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor, whereas in the instant case the reply raising the dispute over the eligibility of the Petitioner for final grant of the Performance Shares was sent on 21/08/2019. Since a substantive dispute has been raised in the Petition which is not illusory in nature or a feeble legal ruse by the Corporate Debtor to evade payment of alleged operational debt, the minor technical issue of delay of 2 days in replying to the Notice of Demand would not be material. 10. The core issue is the alleged default of the Corporate Debtor in not finally granting the "Performance Shares" to the Petitioner. The conditions as laid out in the Rules for the final grant and conveyance of such shares would indicate whether any right or claim arose in the hands of the Petitioner/Operational Creditor with regard to such Performance Shares. The "Rules of the Performance Share Plan", a copy of which has been placed on record, shows that Essilor International had adopted the Rules regarding Performance Shares on 02.12.2015, as authorised by the EGM held on 05.05.2015, for the benefit of its Non-French employees and executive officers, in which they could participate, being a part of the Group. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Performance Shares shall be the date of the definitive cessation of all employee or corporate officer functions." This clause also contains Exceptions relating to retirement. It states that the beneficiary shall remain entitled to the free grant of Performance Shares, in case of forced or voluntary retirement on account of either legal age applying in a particular country or agreements governing the employment conditions of the eligible beneficiary. Clause V "Performance Condition' stipulates the formula for working out the percentage of shares to be definitively delivered. 13. Coming to the facts of the Petitioner's case, it is seen that Performance Shares were awarded to the Petitioner on 02.12.2015, 22.09.2016 and 03.10.2017. As per Clause III of the Rules, the Vesting Period in the case of the Petitioner would have ended on, and he would have become eligible for finally earning the Performance Shares in four years, i.e. in the years 2019, 2020 and 2021 respectively. The conditions required to be fulfilled were two, namely the Presence Condition of the employee and the Performance condition of the shares. But he was admittedly not an employee in the Respondent/Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being unaware of the extension letter. It is also seen from the Notice dated 27.07.2016 that it was circulated to all Regional and Branch Offices, all Notice Boards and All Employees. No material has been brought on record by the Petitioner to establish that the said Notice was fake, non-existent, an afterthought or issued only in his case to deny him the benefits claimed. 15. Further, a look at the Letter of Acceptance of Resignation dated 21.09.2018 reads at Clause 3 as under: "The full and final settlement amount stipulated in this letter is correct, adequate, sufficient and justified in respect of the terms and conditions mentioned herein and the same is acceptable to me. Upon receipt of the full and final settlement amount as stated in this letter, (i) no amounts are payable by Esselor India (and Esselor Group) to me including as salary, perks, benefits or otherwise, and (ii) I will not have any claims whatsoever on the Essilor Group and agree not to initiate any litigation or other dispute resolution proceedings whatsoever against Essilor Group." It is amply clear that the Petitioner had accepted the terms offered by the Respondent/Corporate Debtor including the "salary, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
