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TMI Blog2022 (1) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporate Debtor? - HELD THAT:- It is pertinent to note that as per the interim reply/Counter dated 13.12.2018 filed by the Corporate Debtor, it is specific contention of the Corporate Debtor that the Corporate Debtor has not made any offer of employment to the applicant/Operational Creditor, under the respondent nor even offered shares in the respondent/company. However, in its subsequent reply/Counter dated 02.08.2019, the Corporate Debtor has contended that the Operational Creditor had offered to help the respondent in the work of establishment of cement factory in Andhra Pradesh and that the Corporate Debtor has handed over letter-heads and other documents relating to the respondent/company to the Operational Creditor. It is also averred that the Operational Creditor had voluntarily accompanied Mr. Mule Srinivasulu Reddy occasionally. It is also to be noted that according to the applicant he was offered employment in the respondent-company by the Managing Director of the respondent- company vide correspondence dated 25.07.2011 and since then he has been rendering his services to the respondent. In the Economic Survey Report dated September 2014, it has been mentioned that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no hesitation to hold that the claim of the Operational Creditor comes within the meaning of section 5(21) of the I B Code, 2016. Thus, the operational debt has been established by the applicant. Whether admitting this petition would amount to exercising equitable jurisdiction by this adjudicating authority? - HELD THAT:- In the present case the Operational Creditor is able to demonstrate by way of several communications that there was a contract of employment, whether disputed or undisputed and there is breach thereof - the petitioner's claim does commensurate with the definition provided under section 3(6) of the I B Code, 2016. Thus, there is no need to emphasize that even remotely the principles of equity is not been considered - the issue answered in negative. There is ample and irrefutable evidence of association of the Operational Creditor with the Corporate Debtor/Company and the services rendered by Operational Creditor for the Corporate Debtor/company. While appreciating the covenants/contracts entered into between individuals in private sector, it is to be borne in mind that the perfection as is available in public sector/government sector in the matter of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alary agreed to be paid and the offer made by the respondent that the applicant will be entitled to ₹ 7.50 crores as sweat equity shares in the form of remuneration have been explained. It is stated in para 8 of the Notice that the Corporate Debtor despite receipt of the Demand Notice had failed to remunerate the applicant for the services that he had rendered from 01.04.2010 to 31.12.2016. 3. In support of the pleas, the Operational Creditor relied on the following documents purported to have been issued by the respondent/company, besides the communications that the applicant purportedly entered with the respondent as well as some third parties. (A) Letter dated 25.07.2011 (ANNEXURE-5 of the application), wherein it was stated that: (i) The applicant had started working with the respondent/company from 01.04.2010 onwards and the applicant was offered ₹ 5,00,000/- as monthly salary. (ii) An amount of ₹ 80,00,000/- will be paid through shares of Teja Cement Ltd. for the work rendered by the applicant from 01.04.2010 to July 2011. (iii) The applicant will be paid salary of ₹ 5,00,000/- from August 2011. (B) Letter dated 29.01.2015 (ANNEXURE-7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum of ₹ 20,00,000/- in the respondent/company and within two months thereafter obtained refund of the same. Mr. Mule Srinivasula Reddy had never promised employment to the applicant. 5. As regards allotment of shares it is contended that unless the applicant makes substantial investments no shares can be allotted. The respondent/company has not employed any person so far. Even the Directors do not draw salary from the respondent/company. The applicant's involvement in the respondent/company is voluntary. It is stated that the login credentials available with the applicant since were not returned, Mr. Mule Srinivasula Reddy had started using another email ID from July 2016. 6. It is stated that all the e-mail communications and letters annexed to the Notice dated 05.12.2018 and to the application bear forged signature of Srinivasula Reddy. (paras 17, 18 and 19). The applicant had obtained domain name tejacement.com without knowledge of the Directors of the respondent/company and created e-mail ID [email protected] purported to be that of Mule Srinivasula Reddy and had misused the same for addressing e-mail communications unto himself from the said e-mail account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of the respondent/company by various Government agencies/authorities and third parties, the applicant/Operational Creditor sought to prove his case. Equitable jurisdiction, as available with Civil Courts, is not available with this AA while dealing with applications under section 9 of the I B Code, 2016. Police Closure report is not final since the same is challenged vide Criminal MP No. 162 of 2021 in Crime No. 4 of 2018 (CID Hyderabad) before the Court of the VI Addl Chief Metropolitan Magistrate at Hyderabad. Copy of the said application is enclosed. 13. Learned counsel for the Corporate Debtor also placed reliance on the following decisions, (a) Radha Exports (India) Private Limited Vs. K.P. Jayaram and another, (2020) 10 SCC 538 (paras 39-42), wherein it is held that, ...... The payment received for shares, duly issued to a third party at the request of the payee as evident from official records, cannot be a debt, not to speak of financial debt..... (b) Canara Bank Vs. IVRCL in IA No. 436 of 2018 in CP (IB) No. 294/07/HDB/2017 dated 01.02.2019 (para 16, 17, 20, 21, 22 and 33), wherein it is held that, debt converted into equity shall beco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Whether the applicant had obtained domain name tejacement.com without knowledge of the Directors of the respondent and created e-mail ID [email protected] purported to be that of Mule Srinivasula Reddy and had misused the same? (4) Whether there is no operational debt or default? (5) Whether admitting this petition would amount to exercising equitable jurisdiction by this Adjudicating Authority? 16. We have heard the learned counsel for both parties at length. Perused the record, written submissions and the case law submitted before us. POINT No. (1) : Whether the application is barred by law of limitation? 17. It is trite to say that the burden lies on the applicant (suitor) to establish that the claim made is within the period of limitation whether or not the opposite party raises the issue of limitation. Insofar as the case on hand is concerned the respondent had raised plea of limitation in its written submissions. Refuting the plea of the respondent that the claim made under the demand notice is barred by limitation learned counsel for the applicant placing reliance on the letter dated 29.01.2015 (Annexure-7), letter dated 276.09.2016 (Annexure-8), letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the Operational Creditor Mr. Mayur Mundra invited our attention to the following letters/e-mail communications: (i) letter dated 25.07.2011 (ANNEXURE-5 of the petition), (ii) letter dated 29.01.2015 (ANNEXURE-7 of the petition), and (iii) letter dated 28.08.2016 (ANNEXURE-9 of the petition/page 82). 21. According to the learned counsel the above correspondence clinchingly establishes that the applicant was associated with the respondent/company for the period from 01.04.2010 to 31.12.2016, as such denial of remuneration to the operational creditor is unjust. 22. Per contra, the learned senior counsel for the respondent Dr. P. Bhaskar Mohan while vehemently refuting the above submissions of the learned counsel for the applicant contended that there is no relationship of employer and employee between the Operational Creditor and the Corporate Debtor. Learned senior counsel further submitted, (I) that the documents produced by the petitioner in support of his claim of employee under the respondent; ₹ 7.5 crores towards his salary are false and forged, as such no reliance can be placed on these documents. (II) When the documents basing on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the form of shares. (iii) Communication dated 10.08.2016 (Annexure-9, Page 85, Volume-1 of the petition) is another computer typed letter purportedly addressed by said M. Srinivasula Reddy to the applicant offering the Corporate Debtor position as Full Time Director, which is as follows. Dear Mr. I.V. Nanda Gopal. You have been working for Teja Cement Ltd. since 1st April 2010 and have been a very important part of the company and involved in all aspects of its progress since 2010. As we have discussed in the past two weeks about your compensation for the past 6 years and 4 months, here is the gists of what the board members discussed. We will discuss this with our CA and CS to formalise this: 1. You will be induced as a full time Director of the board with designated responsibilities, salaries, perks, etc. 2. You will receive sweat equity shares of ₹ 7.5 crores in FY 2016-17 and 3.5 cores in FY 2018-19. (This is apart from the compensation that will be paid to the 6.5 acres land purchased by your wife I. Kavitha) 3. All other details we will discuss and finalise by the end of August 6, 2016. We will take the appropriate Board Resolutions and fili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly intended to set up. Therefore, when the report submitted was for the benefit of the respondent, firstly the theory of forging the said document shall fall to ground and nextly having admitted the credential of the applicant in the said report the respondent cannot now be allowed to approbate and reprobate as the same is impermissible under law. It is also to be noted that according to the applicant he was offered employment in the respondent-company by the Managing Director of the respondent- company vide correspondence dated 25.07.2011 and since then he has been rendering his services to the respondent. In the Economic Survey Report dated September 2014 supra, it has been mentioned that the applicant has been associating with the respondent-company in all aspects for the last four years. His qualification and past experience was also mentioned in the said Techno-Economic Feasibility Report. So much so the Techno-Economic Feasibility Report has in fact, fully supports the contention of the applicant that he has been under the employment of the respondent-company since 2011. 27. That apart, if really the Operational Creditor is not employed by the Corporate Debtor, why M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erabad) filed before the Court of the VI Addl Chief Metropolitan Magistrate at Hyderabad. Learned Magistrate has not passed any interim order and the matter is sub-judice. It is thus, clear that for want of evidences the case is closed by the Police authorities. No doubt, the respondent has challenged the final report, but nothing is said or placed before us, indicating that the final report is stayed or suspended. Therefore, when a report from a competent authority negating the plea of forgery is on record, we find no reason to discard the same and believe the oral and inconsistent version of the respondent/Corporate Debtor that the documents relied on by the applicant are forged. Thus, we are constrained to hold the plea of forgery as 'absurd' inasmuch as the said document undoubtedly meant for the benefit of the respondent rather than to the applicant. 33. Therefore, we do not find any force in the contention of the learned counsel for the Corporate Debtor that the letters are forged and fabricated by the applicant. Consequently, we hold that the aforestated documents clearly establish the employer-employee relationship between the applicant and the respondent is assu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority; 37. Relying on the following ruling of the Hon'ble Supreme Court of, India supra, the respondent contended that there is no operational debt. In our discussion under the point, we have held that the applicant was offered employment in the respondent/company though his position could not be clearly designated, as such we have no hesitation to hold that the claim of the Operational Creditor comes within the meaning of section 5(21) of the I B Code, 2016. We are therefore, of the opinion that operational debt has been established by the applicant. POINT No. (5) - Whether admitting this petition would amount to exercising equitable jurisdiction by this adjudicating authority? 38. We may state herein that we have essentially examined the subject-case merits, keeping the provisions of the I B Code, 2016 in the backdrop, more particularly having regard to the definition 'claim' as provided in I B Code, 2016, which reads as under: Section 3. Definitions. (6) claim means- (a) a right to payment, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individuals might own a sole proprietorship or LLC, while shareholders own corporations. Whereas, Governmental agencies are not owned by individuals; they are owned by and operated on behalf of the public and they are governed by written laws, which have been enacted in the constitution or in legislation. In other words, the level of perfection practised in Union Public Service Commission or Staff Selection Commission in the matter of appointments cannot be expected in a private sector. 42. Therefore, having heard the learned counsel for both parties, considering the submissions made by the learned counsels, on perusal of the record, written submissions and the case law, we are of the view that the present application deserves to be admitted under section 9 of the I B Code, 2016. Accordingly, the application filed by the Operational Creditor is admitted and the Corporate Debtor is put under CIRP. 43. Shri P.M.V. Subba Rao has filed Memo dated 09.12.2021 along with Form-2, for his appointment as IRP in this matter. 44. Hence, the Adjudicating Authority admits this Petition under Section 9 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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