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TMI Blog2022 (5) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... give any definitive quantum of salary to have been accepted by way of any Resolution by the Board of Directors, to fall within the ambit of the definition of acknowledgement of debt as contemplated under Section 18 of the Limitation Act, 1963. Therefore, this Tribunal if of the earnest view that the Section 9 Application filed on 27/08/2021is barred by Limitation as the claims of Rs.96,92,000/- and Rs.18,00,000/- pertain to the period prior to 31/03/2016 and more than three years have lapsed since. Pre-Existing Dispute existing between the parties or not - HELD THAT:- It is seen from the record that the remuneration of the MD is a disputed question of fact . It is not within domain under IBC to decide the issue of the fixation of the salary of the MD , but to ascertain if there is any Dispute regarding the issue. Having regard to the emails/correspondence and the Minutes on record, it is opined that the Dispute raised is not a feeble legal argument nor is it a spurious one but one which is supported by evidence. The Adjudicating Authority has not addressed either to the question of claims having been time barred nor to the issue of the existence of a Pre-Existin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution increasing the salary from Rs.3Lakhs/- to Rs.4 Lakhs/- to Rs.5Lakhs/- or to Rs.7.5Lakhs/- as claimed by the MD in his Section 9 Application; that the MD was discharged on 15/05/2019; and drew our attention to the amounts of salary dues claimed in the Application: Rs.3 Lakhs/- per month from 16/01/2010 to 30/06/2010 totalling to Rs.16,50,000/-. Rs.79,26,000/- is the shortfall in the Salary for the period 01/07/2010 to 31/07/2014. Rs.4Lakhs/- per month from 01/08/2014 to 31/03/2016 totalling to Rs.19,19,000/-. Rs.5Lakhs/- per month for the period 01/04/2016 to 31/03/2018 totalling to Rs.40,40,000/-. Rs.7,50,000/- for the period 01/04/2018 to 14/05/2019 totalling to Rs.63,52,000/-. 5. Learned Counsel also drew our attention to the Financial Statements for the year ending 2011-2018, which were all signed by the MD himself. It is argued that the Statement made by the MD that he was not drawing his full salary during the period when the Corporate Debtor Company was undergoing a financial crunch is factually incorrect as the payslip for the month of April 2019 shows that the MD was drawing a gross salary of Rs.3,43,100/- which also establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 9 of the Code shows that the principal amount of the alleged Operational Debt is Rs.1,29,34,187/- out of which, Rs.96Lakhs/- is the amount shown as due for the period 16/01/2010 to 31/07/2014, which amount is barred by Limitation as the Application was filed on 27/08/2021. Article 7 of the Limitation Act, 1963, which deals with the wages accrued clearly specifies that this Application is barred by Limitation . The amount shown as due for the period 01/08/2014 to 31/03/2016 is Rs.18Lakhs/- and this too is beyond the three year period. 8. Learned Sr. Counsel Mr. Kathpalia stressed that only Rs.9.50Lakhs/- is the shortfall which may be due and payable for the period to 01/04/2016 to 31/03/2018 even if the contention of the MD is considered at that Rs.4Lakhs/- per month was indeed payable, even then this amount is less than the threshold of Rs.1Crore/-. The Adjudicating Authority has erroneously admitted the Application and initiated the CIRP Process. 9. It is argued by the Learned Sr. Counsel that the letter dated 01/08/2014 has not been signed by the Appellant; that the Minutes of discussion dated 12/05/2016 is not an AGM or a Board Meeting of the Appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant that the correctness of the view adopted by this Court in its decisions on the question so far should be re-examined by a larger Bench. 11. The appellant's contention, however, is that, even if suit barred by time, he would get three years was more of arrears of salary as within time if Article 120 (instead of Article 102) Limitation Act of 1908 was applied and each failure to pay the monthly salary due constituted a fresh cause of action. We cannot accept this view as we have, for reasons already given, held that Article 102 of the Limitation Act, 1908, was correctly applied. 12. We think that the High Court was right in treating the order of reversion passed against the petitioner to be void and inoperative, Or non est . The result was that no declaration was needed for the purpose of enforcing a claim which fell within 3 years. Consequently, only, the amount which fell within three years of the suit filed could be decreed. 11. Learned Counsel, Mr. Sharma appearing for the Respondent submitted that for the first 5 years from 2010 to 2015 as the Company was suffering from financial losses, the MD had not claimed his full salary. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was specifically stated that the MD s remuneration and perks needed a revision and that his salary arrears were required to be paid. The email dated 03/07/2018 sent by the MD to the Dutch Company also sought in item 8, a proposal from his side, that the remuneration level should be Rs.7,50,000/- per month. In support of his argument that the Company was going through a financial crunch and that was the main reason that why the MD did not draw his full salary, the Counsel for the Respondent relied on the Minutes book dated 09/07/2018 wherein it was stated that there was a shortfall in the finances of the MD and the stakeholders should take the approval of the Board for further review. 16. With respect to Limitation, Learned Counsel contended that the salary arrears were not paid since 2010 onwards and therefore construes a continuing cause of action and viewed from any angle, it cannot be said to be barred by Limitation . With respect to the table relied upon by the Learned Counsel for the Appellant, Learned Counsel submitted that in the last column referring to Notice period of three months, for the period 15/05/2019 to 15/08/2019 an amount of Rs.11,01,279/- was indeed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owledgment was so signed. (2) Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right, (b) the word signed means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right. 23. It is significant to mention that the Learned Counsel for the Respondent Mr. Sharma has placed reliance on the Minutes of the Meeting dated 19/03/2018 and referred to items 7 8 which deal with Repaymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tell me what was agreed? From this correspondence it is clear that it was a Proposal which was still under discussion and that there was no Resolution passed at a Board Meeting accepting the same. Further, this communication is from one Mr. Leendert Stutvoet who is not the authorized representatives of the Corporate Debtor Company. Be that as it may, even if he is representing the Dutch Company, (a part of the JV Agreement), the statement made in the email is neither conclusive nor binding as it is not a Board decision. Para 8 of the Minutes of discussion of the Shareholders dated 12/05/2016 is also not convincing. The communication dated 01/08/2014 form is signed by one Mr. Wimde Bergh representing Omega Thermo Products, one of the Shareholders of the Appellant Group Companies. 26. Article 40 of the Articles of Association of the Appellant Company stipulates that the remuneration of the MD would be fixed by Board of Directors from time to time. The said Article reads as follows: 40. The Managing Director may be paid such remuneration as may, from time to time, be determined by the Board and such remuneration as any be fixed by ways of salary or commission or participat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjudicating authority has to reject the application. 56. Going by the aforesaid test of existence of a dispute , it is clear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability. 30. It is seen from the record that the remuneration of the MD is a disputed question of fact . It is not within our domain under IBC to decide the issue of the fixation of the salary of the MD , but to ascertain if there is any Dispute regarding the issue. Having regard to the emails/correspondence and the Minutes on record, we are of the earnest view that the Dispute raised is not a feeble legal argument nor is it a spurious one but one which is supported by evidence. 31. We are of the considered vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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