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TMI Blog2024 (11) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority cannot be said to be irrational or without an application of mind. There is yet another aspect which is required to be taken into consideration, its that at the stage of initiation of proceedings the issuance of demand notices under Section 8 of the I B Code, which is a condition precedent for raising a determined demand for the claim, which is falling within the purview of debt or an operational debt herein, the Appellant admittedly has issued Form 3and Form 4. In fact, the two forms provided under rules, of the raising of a demand they altogether intend to meet a distinct objective accordingly it classifies the demand itself. The rules prescribe that the Operational Creditor can send a demand notice, either in Form 3 or in Form 4 as contemplated under Section 8 of the I B Code, which is to be read with Rule 5 of the I B Code, as well as the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. The Learned Adjudicating Authority while considering the claim has further observed, that the sending of the notices under Form 3, as well as under Form 4, that itself depicts that the Appellant was not very sure about the nature of the claim and its cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecretary, as back as on 16.01.1986, in a group company, Nagarjuna Hire Purchase Ltd. He was later on transferred to the holding company i.e., M/s. Nagarjuna Investment Trust Limited, as Assistant Company Secretary and later was appointed as its Company Secretary, and he was transferred to yet another unit of the group, that is, M/s. Nagarjuna Fertilisers and Chemicals Limited, which is the alleged Corporate Debtor, where he continues to work till he superannuated on 30.04.2018. The case of the Operational Creditor, the Appellant, herein is that by an office memorandum dated 08.09.1994, and consequent to the order of transfer, the Operational Creditor was appointed as the Assistant Company Secretary of the Corporate Debtor vide appointment order dated 12.09.1994. The Appellant contends that, he would be entitled for the payment of performance pay @ 15% of the CTC in terms of the letter dated 04.08.2017 of the Corporate Debtor and hence, his performance pay ought to have been determined and paid as per the policy of the corporate debtor. According to the service certificate as it was issued on 30.04.2018, he contends that, he would be entitled for the remittance of the performance pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section 8 of the I B Code. The claim raised by the Appellant before the Learned Adjudicating Authority was vehemently opposed by the Respondent, (Corporate Debtor) contending thereof that in fact, the claim as raised by the Appellant, the Operational Creditor, would not fall to be a debt or a operational debt as defined under the I B Code and, since it will not be forming to be a debt or a operational debt , within the meaning of operational debtors defined under Section 5 (21) of the Code, the Appellant would not be entitled for the amount as claimed by him in the notices, as it was issued by him on 27.01.2020. The definition as contained under Sub-Section 21 of Section 5 dealing with the operational debt is extracted hereunder: - operational debt means a claim in respect of the provision of goods or services including employment or a debt in respect of the payment 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 . He argues that the claim of performance pay in respect of which the Appellant has raised the claim will not fall within the ambit of definition of operational debt, as it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the I B Code will be falling well within the ambit of the claim, which could be satisfied by the initiation of proceedings under Section 9 of the I B Code. In response, the Learned Counsel for the Respondent, has submitted that the claim raised by the Operational Creditor in respect of performance pay for the year 2017-2018 by the issuance of the notices under Section 8 of the I B Code, will not be falling to be under the category of an operational debt, because it was not payable to him, that performance pay will be an amount payable under a policy, under which the quantum of performance pay payable is determined every year based on the assessment of performance of the employee, the performance of the group division he is working in and the overall performance of the company based upon the parameters prescribed under the policy herein, as it finds place as in Annexure B to the memorandum supplied by the Counsel for the Respondent on 28.10.2024, dealing with the scope and ambit of performance assessment of the financial year 2017-18 and the goal setting for the financial year 2018-19. The said office memorandum of 24.04.2018, prescribes various parameters based on which performan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are settled and predetermined and are these which are not to be assessed according to the service laws as applicable with the Respondent governing service conditions of the Appellant. The Appellant has submitted that the denial of the same is absolutely arbitrary, because according to his expectation, the amount thus assessed by him in the notice issued under Section 8 of the I B Code, that itself will suffice the purpose and the classification that, it is variable factors which requires an analytical determination to be made by the Corporate Debtor, is not acceptable. However, the claim thus raised by the Appellant by the issuance of Section 8 notice and drawing of proceedings under Section 9 of the I B Code on 13.02.2020, when it was taken into consideration on its merit, the Learned Adjudicating Authority by the Impugned Judgment of 02.05.2024, after considering the rival contentions and particularly, as to how the entitlement and the aspect of the determination of performance pay, is required to be determined and particularly also from the perspective of the entitlement of interest on it, which would be payable on the same, in the absence of any contract to the contrary in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stage of initiation of proceedings the issuance of demand notices under Section 8 of the I B Code, which is a condition precedent for raising a determined demand for the claim, which is falling within the purview of debt or an operational debt herein, the Appellant admittedly has issued Form 3and Form 4. In fact, the two forms provided under rules, of the raising of a demand they altogether intend to meet a distinct objective accordingly it classifies the demand itself. The rules prescribe that the Operational Creditor can send a demand notice, either in Form 3 or in Form 4 as contemplated under Section 8 of the I B Code, which is to be read with Rule 5 of the I B Code, as well as the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. The Learned Adjudicating Authority had observed and rightly so, that the two formats of demand they deal with different aspects and nature of demand altogether. For example, that has observed in the case for demand notices which are issued in Form 3, then the submission of the copy of the invoice along with the application is mandatory, whereas in Form 5 is not mandatory, provided that the documents itself justifying deman ..... X X X X Extracts X X X X X X X X Extracts X X X X
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