Satish Chinnadurai Vs Ravindra Hirasingh Rawat (NCLAT Delhi)
NCLAT Delhi held that operational creditor can initiate Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor only in clear cases where no real dispute exists between the two parties.
Facts- The instant Appeal has been preferred by the Appellant–`Mr. Satish Chinnadurai’, who is aggrieved and dissatisfied by the Order passed by the Adjudicating Authority (National Company Law Tribunal), filed u/s. 61 of the Insolvency and Bankruptcy Code, 2016, whereby and whereunder the Company Petition preferred by `Mr. Ravindra Hirashingh Rawat’ (Respondent) u/s. 9 of the Code was admitted and further `Mr. Pankaj Ramandas Majithia’ (Respondent) was appointed as Interim Resolution Professional (IRP) in the Corporate Insolvency Resolution Process (CIRP) Proceedings.
Conclusion- Tribunal in the case of Om Prakash Vs. Wipro Enterprises Pvt. Ltd. has held that where operational creditor seeks to initiate insolvency process against a Corporate Debtor, it can only be done in clear cases where no real dispute exists between the two parties which is, however, not so borne out given the facts of the present case.
Keeping in view the Judgement of this Tribunal in `Om Prakash’, we are of the view that the Impugned Judgement passed by the Adjudicating Authority (National Company Law Tribunal), cannot be sustained in the eye of law and we hereby allow this Appeal and set aside the Impugned Order passed by the Adjudicating Authority initiating CIRP of the Corporate Debtor and all other Orders issued pursuant to the Impugned Order. The Corporate Debtor is released from the rigours of CIRP and is allowed to function independently through its Board of Directors with immediate effect.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
1. The instant Appeal bearing App. (AT) (Ins.) No.1239/2022 has been preferred by the Appellant – `Mr. Satish Chinnadurai’, who is aggrieved and dissatisfied by the Order dated 23.09.2022, passed by the Learned Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court – I), filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as `The Code’), whereby and whereunder the Company Petition preferred by `Mr. Ravindra Hirashingh Rawat’ (Respondent No. 1 herein) under Section 9 of the Code was admitted and further `Mr. Pankaj Ramandas Majithia’ (Respondent No. 2 herein) was appointed as Interim Resolution Professional (`IRP’) in the Corporate Insolvency Resolution Process (`CIRP’) Proceedings.
2. The brief facts giving rise to the instant Appeal are as follows:
i. That the Appellant herein is the Director of DB Group India Private Limited (Corporate Debtor). On 06.11.2006, the Corporate Debtor appointed by the Respondent No. 1 as a Senior Manager – Finance and Administration, effective from 06.12.2006.
ii. On 30.09.2013, the Corporate Debtor issued a promotion and increment letter to the Respondent No. I promoting him to the position of Deputy General Manager.
iii. On 01.04.2016, the Corporate Debtor issued a promotion letter and increment to the Respondent No. 1 to be promoted to the position of General Manager India.
iv. On 01.02.2017, the Corporate Debtor issued an increment letter to the Respondent No. 1 and increased his salary to Rs. 1,50,000 per month.
v. On 22.01.2018, the Respondent No. 1 addressed an email submitting his resignation to the Corporate Debtor.
vi. On 22.01.2018, the Corporate Debtor issued a relieving letter and relieved the Respondent No. 1 immediately.
vii. On 22.01.2018, the Respondent No. 1 and the Corporate Debtor entered into a Non-Disclosure Agreement (`NDA’). Under this NDA, the Corporate Debtor and the Respondent No. 1 agreed upon themselves that they would comply with their respective obligations as more particularly set out therein. For better understanding of the case, the relevant clauses of the NDA are reproduced as under:
“1 (a) Following your resignation, the corporation will pay you a monthly salary at the Gross rate of 150.000 INR as Notice of discharge.
1 (b) You will be available to give information and collaborate with local Authorities for any legal cases related to the company and opened before your resignation at the cost of corporation with prior intimation.
2 (e) In consideration of the execution of this Agreement, you shall receive a gross sum of 150,000 INR; also, the corporation undertakes not to divulge, for any reason, any information concerning the conclusion of the work with D.B. Group.
2 (f) If you or Board of Directors of D.B. Group spa (President, Vice President, CEO) and D.B. Group India Pvt. Lid (General Manager) violates directly or indirectly the obligations contained in this Agreement, defaulting amount received for a one year employment period in consideration of the execution of this Agreement, for a total amount of 400.000 INR. The Company and you also reserves the right to obtain additional damages and injunctive relief.
2 (i) Salary will be paid every month along with other employees till March 21st 2018, and Full & Final and Gratuity payments will be done within 30 days from March 21st, 2018.”
viii. On 17.06.2018, the Respondent No. 1 addressed an email to the Corporate Debtor alleging non-payment of Rs. 1,50,000 towards the Notice of discharge and the gross amount of Rs. 1,50,000 in consideration of the execution of the NDA, which were the subject matter of the Application filed before the Adjudicating Authority. This email was controverted and disputed by the Corporate Debtor on immediate next day vide its email dated 18.06.2018 inter alia stating that no amounts were payable to Respondent No. 1. In the said email, the Corporate Debtor through Appellant, categorically and explicitly stated and clarified that:
“Dear Mr. Ravindra,
I have already checked the same and there is no such pending from our side.”
ix. By email dated 19.06.2018, the Respondent No. 1, once again made a demand for the said sum of Rs. 1,50,000 towards the Notice of discharge and the gross amount of Rs.1,50,000 in consideration of the execution of the NDA. Immediately, the next day, i.e., on 20.06.2018, the Corporate Debtor replied to the said email of Respondent No. 1, once again denying and disputing the claim of the Respondent No. 1, and stated as hereunder:
“Dear Luca.
Below email received from Mr. Ravindra for your ref.
CC: Ravindra
The NDA was prepared by Italy and per their instructions I have processed your dues. Nothing is pending from our side. For clarifications on the below clause, you need to speak to Mr. Luca.”
x. Hence, the claim made by the Respondent No. 1 in the Application was disputed by the Corporate Debtor, in series of correspondence, at the relevant time, and therefore there was a clear “Pre-Existing Dispute” between the parties since 2018, which is much prior to the issuance of Demand Notice by Respondent No. 1 on 31.12.2018.
xi. The Corporate Debtor states that the Corporate Debtor has made the following payments to the Respondent no. 1 in compliance with its obligations under the NDA:
