AI Structured Summary
Not yet generated for this judgment
Judgment
MA/747/2019 is an Application filed by the Applicant, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 seeking relief as follows;
(i) Directing the Respondent to pay the Applicant Rs.1,45,824/- (Rupees One Lakh Forty Five Thousand Eight Hundred and Twenty Four Only) being the outstanding salary and other benefits during the Corporate Insolvency Resolution Process (CIRP) period, which are due to the Applicant herein;
(ii) Pass such other order as the Tribunal may deem fit.
FACTS OF THE CASE
2.1. The Corporate Debtor was admitted into CIRP on 27.11.2019 and the 2nd Respondent herein was appointed as IRP on 13.12.2017. In pursuance of the same, public announcement was made on 15.12.2017 and the Applicant herein who is an Employee of the Corporate Debtor has submitted his claim before the IRP on 28.12.2017 to the tune of Rs.17,10,890/-.
2.2. The IRP admitted the claim of the Applicant to the tune of Rs.12,47,240/- and rejected the balance sum of Rs.4,63,650/-. Aggrieved by the same, the Applicant wrote a letter to the IRP on 06.06.2018 against the rejection of the sum of Rs.4,63,650/- and also filed MA/141/2018 before this Tribunal, which was disposed off on 15.06.2018 stating that Liquidation was already ordered on 12.06.2018 and hence it was stated that the Liquidator shall proceed with the process of liquidation. However, it is stated that in the counter filed in MA/141/2018, the RP has stated that an amount of Rs.4,26,479/- was due to the Applicant and an amount of Rs.1,63,699/- was paid and the balance was Rs.2,62,780/-.
2.3. The Liquidation of the Corporate Debtor was ordered on 12.06.2018 and the 2nd Respondent was appointed as the Liquidator and the Applicant has filed its claim before the Liquidator and the Liquidator by way of e- mail dated 20.08.2018 has stated that the total claim is Rs.19,07,689/- and the amount admitted by the Liquidator is Rs.15,80,461/- and the amount rejected is Rs.3,27,228/-. The grounds for rejection is stated to be 'gratuity not payable', June month Salary excess claimed' and 'advance recoverable was adjusted against claim'.
2.4. However, it is stated by the Applicant that during the CIRP period the claim was admitted to the tune of Rs.12,47,240/- and during the liquidation period the claim admitted is Rs.15,80,461/- and the difference is Rs.3,33,221/- which is the pending salary and other benefits during the CIRP period which is payable to the Applicant.
2.5. It is submitted that out of the said sum, the 2nd Respondent has paid a sum of Rs.1,32,181/- to the Applicant on 03.04.2019 and the balance payable is Rs.2,01,040/-. Out of the said sum, after deducting the travel advance of Rs.55,216/- the balance outstanding payable is Rs.1,45,824/- which the Liquidator ought to have paid but has not paid. Hence the present Application.
3 COUNTER FILED BY THE LIQUIDATOR;
3.1. The Liquidator has filed counter and has stated that the Applicant being a marketing professional and during CIRP there was no marketing activity was undertaken, except for executing pending small orders. Since there was not much work, the salary was paid at 50%.
3.2. Further it is stated that the for the month of January & February 2018, due to less cash flows of the Corporate Debtor, the Respondent had decided to reduce the salary to various categories as follows;
i. Category 1: <50k - 100% salary paid
ii. Category 2: >Rs.50k - 75% salary paid
iii. Category 3: 3 top executives 50% salary paid
iv. Category 4: 1 top executive 100% salary cut.
3.3. It is stated that the Applicant falls into the third category and the above decision of the RP was informed to the CoC in its 2nd Meeting held on 28.02.2018 and in the 3rd Meeting of the CoC, held on 26.03.2018, it was suggested by the CoC as follows;
Employees drawing
Gross pay
Percentage of pay
Less than Rs.50,000/-
100%
Rs.50,000/- to Rs.1,00,000/-
75%
Above Rs.1,00,000/-
50% or 40%
3.4. It is stated that the RP has to keep the Corporate Debtor as a going concern within the available cash flows of the Corporate Debtor and also requested the CoC members to provide and support to create a Corpus fund for financing the CIRP costs which will to some extent reduce the financial burden of the Corporate Debtor.
3.5. It was submitted that the claim made by the Applicant is a sum of Rs.17,10,890/- which is inclusive of Rs.4,08,435/- being interest on delayed payment and due to the cash flow constraint and the CoC's direction in rationalising the payment and with no support on raising interim finance, the Respondent has not paid the salary due during the CIRP period, eventhough it is due and it cannot be treated as the CIRP costs as the same was not approved by the CoC. Hence, it prayed by the Liquidator to dismiss the present Application
After hearing the counsel for the parties, it is seen from this Tribunal order dated 19.02.2020 that the Learned Counsel for the Liquidator has submitted that the sole Financial Creditor viz. State Bank of India (SBI) is standing outside the liquidation and also sought time to file an additional affidavit to bring to the notice about the financial position of the liquidation estate as of date.
The Liquidator has filed additional counter and states as follows;
5.1. SBI, one of the major Financial Creditors of the Corporate Debtor stood outside the Liquidation process and all the assets and receivables were hypothecated to the said Financial Creditor. The Liquidator handed over the keys of the Corporate Debtor to SBI on 19.07.2019.
5.2. It is stated that the amount realized out of the Liquidation Estate i.e. sale of vehicles, redemption of mutual fund to the tune of Rs.16,83,067/- was spent on CIRP costs and Liquidation costs and not even a single creditor / stakeholder is paid from the funds.
5.3. It is stated that there is no fund in the Liquidation estate and the funds available with the Liquidator in the bank account to the tune of Rs.1,05,29,516/- are that of SBI which is staying away from Liquidation process and the Liquidator is holding the same under trust.
5.4. It is stated that SBI was not able to sell the assets of the Corporate Debtor which are mortgaged to them and the said assets are not forming part of the Liquidation estate. Unless the said assets are sold by SBI, the Liquidation process cannot be closed.
Heard the submissions made by the Learned Counsel for both the parties and perused the file including the pleadings placed on record. It is seen that the Applicant is the Employer of the Corporate Debtor and has rendered his service during the period in which moratorium was imposed in relation to the Corporate Debtor. The Applicant in para 5 of the Application has tabulated the salary amount which is due and payable to him and the same is extracted hereunder;
S.
NO.
SALARY DUES
AMOUNT
(Rs.)
1
January 2018
57,764
2
February 2018
57,765
3
March 2018
16,057
4
April 2018
63,603
5
May 2018
63,478
6
June 2018
25,862
7
Excess amount deducted (TDS prior to 31.03.2018 - due to wrong calculation)
54,211
TOTAL
3,38,740
Out of the total amount claim of Rs.3,38,740/-, it is seen that the Respondent has paid a sum of Rs.1,32,181/- to the Applicant on 03.04.2019 and after deducting a sum of Rs.55,216/- towards travel advance, the sum which is due and payable to the Applicant is Rs.1,45,824/-. It is not in dispute that the said sum which is payable to the Applicant forms part of the CIRP costs, since the Applicant has rendered service to the Corporate Debtor during the moratorium period to keep the Corporate Debtor as a going concern and keeping the said fact in mind, the Respondent has also paid part amount to the Applicant on account of his salary dues. Further, the Liquidator in his counter also has not denied that the said sum is due and payable to the Applicant, however has stated that the said CIRP cost was not approved by the CoC. It is also seen that the Liquidator in his additional affidavit has categorically stated that there is no funds in the Liquidation estate and that the sole Financial Creditor viz. SBI is standing outside the Liquidation Estate. Further, it is averred in para 3 of the Additional affidavit that the amount realized out of the Liquidation Estate i.e. sale of vehicles, redemption of mutual fund to the tune of Rs.16,83,067/- was spent on CIRP costs and Liquidation costs and not even a single creditor / stakeholder is paid from the funds. All the assets are hypothecated to SBI along with all other assets and SBI not participating in the Liquidation proceedings under Section 52 of IBC and all the amount collected from customers / receivables / book debts should be paid to SBI, after adjusting their share of CIRP cost.
Thus, the amount due to the Applicant forms part of the CIRP cost, and once the share of State Bank of India in relation to the CIRP cost is being paid to the Liquidator, we hereby direct the Liquidator to pay to the Applicant the balance amount which is due and payable to the Applicant, in accordance with his service rendered to the Corporate Debtor during the period of moratorium. With the above directions, this application stands disposed of.