National Company Law Appellate Tribunal
Mohit Chawla vs Gaurav Aggarwal & Ors on 22 August, 2024
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Comp. App. (AT) (Ins) No. 656 of 2023
(Arising out of the Order dated 16.02.2023 passed by the National Company
Law Tribunal, Chandigarh Bench in I.A. 583/ 2021 in CP (IB)
No. 46/Chd/Pb/2018)
IN THE MATTER OF:
Mohit Chawla,
Resolution Professional in the CIRP matter M/s J.R.
Agrotech Pvt. Ltd.
C/o SCO 2935-36, Sector 22-C, Chandigarh -
160022.
Email ID: [email protected] ...Appellant
Versus
1. Gaurav Aggarwal s/o Late Sh. Raman Kumar
Aggarwal,
r/o Adarsh Nagar, Backside Kaudu Mal Rikhi
Ram Dharamshala, GT Road, Mandi Gurdaspur,
Punjab-143531.
Email : [email protected] ...Respondent No. 1
2. Raghav Aggarwal s/o Late Sh. Raman Kumar
Aggarwal,
r/o Adarsh Nagar, Backside Kaudu Mal Rikhi
Ram Dharamshala, GT Road, Mandi Gurdaspur,
Punjab-143531.
Email : [email protected] ...Respondent No. 2
3. Gauri Aggarwal d/o Late Sh. Raman Kumar
Aggarwal,
r/o Adarsh Nagar, Bckside Kaudu Mal Rikhi Ram
Dharamshala, GT Road, Mandi Gurdaspur,
Punjab-143531.
Email : [email protected] ...Respondent No. 3
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Comp. App. (AT) (Ins.) No. 656 of 2023
4. Renu Aggarwal w/o Late Sh. Raman Kumar
Aggarwal,
r/o Adarsh Nagar, Backside Kaudu Mal Rikhi
Ram Dharamshala, GT Road, Mandi Gurdaspur, ...Respondent No. 4
Punjab-143531.
Email : [email protected]
Present
For Appellant: Mr. Pulkit Goyal, Advocate..
For Respondents : Ms. Pallavi Singh, Advocate.
JUDGEMENT
(22.08.2024) NARESH SALECHA, MEMBER (TECHNICAL)
1. The present appeal has been filed by Mohit Chawla, Resolution Professional of M/s JR Agrotech Private Limited ('Corporate Debtor') against the Impugned Order dated 16.02.2023, passed the by National Company Law Tribunal, Chandigarh Bench ('Adjudicating Authority') in IA No. 583/2021 filed in CP (IB) No. 46/Chd/PB/2018 which by Raman Kumar Aggarwal, the Appellant therein (now deceased) , whereby the Adjudicating Authority has allowed the payment of Rs. 22,61, 661.60/- as an unpaid salary including interest to Mr. Raman Kumar Aggarwal as General Manager of the Corporate Debtor.
2. Heard Counsel for the Parties and perused the records made available including the cited judgements.
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3. We note that insolvency petition bearing CP (IB) No. 46/Chd/PB/2018 was filed by the Financial Creditor (Oriental Bank of Commerce) under Section 7 of the Code which was admitted by the Adjudicating Authority and the Corporate Debtor was pushed into CIRP vide order dated 27.07.2018 along with imposition of moratorium under Section 14 of the Code.
4. The Appellant submitted that Suspended Directors and other Key Managerial Personal ('KMP') of the Corporate Debtor i.e., Raman Kumar Aggarwal, Gaurav Aggarwal, Disha Aggarwal and Vijay Pal Singh and Co. withdrew certain amount from the account of the Corporate Debtor during moratorium and as such the Appellant filed CA No. 574 of 2018 under 14(1)(b) r/w Section 4 of the Code seeking the refund of withdrawn amount from the suspended directors and other KMPs of the Corporate Debtor.
5. The Adjudicating Authority, vide order dated 18.05.2020, allowed the said CA No. 574 of 2018 and directions were given to the Respondents herein and Raman Kumar Aggarwal to refund the withdrawn amount.
6. The Appellant submitted that subsequent to this order, Mr. Raman Kumar Aggarwal sent letter dated 01.06.2020 to the Appellant with a request to release his pending salary w.e.f. 10.07.2018 to 01.06.2020 @ Rs. 90,000/- per month and calculated the claim of Rs. 22,61, 661.60/- which includes Rs. 20,43,871/- as principal amount and Rs. 2,17,790.60/- as interest over the pending salary. -4-
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7. The Appellant, vide letter dated 15.06.2020, rejected the claim of the Respondent's stating that the Appellant never availed his services and the claim lodged by the Respondent was false.
8. The Appellant also stated that the so-called appointment letter dated 10.07.2018, appointing Raman Kumar Aggarwal was forged and antedated as the same was uploaded with MCA on 01.08.2018 during the moratorium.
9. It has been brought out that Raman Kumar Aggarwal filed IA No. 378 of 2020 for his outstanding salary claims which was allowed by the Adjudicating Authority.
10. The Appellant submitted that company slipped into CIRP on 27.07.2018, which was just few days before Raman Kumar Aggarwal resigned from the directorship of the Corporate Debtor and in less than one month of the CIRP date, Raman Kumar Aggarwal has allegedly claimed to be appointed as General Manager of the Corporate Debtor.
11. The Appellant submitted that the alleged appointment letter is a fabricated and forged letter as it is claimed to be approved in the board meeting of the Corporate Debtor dated 12.07.2018 which was never supported by any independent document like minutes of the board meeting claimed to be held on 12.07.2018 and even the notice for BoD meeting was not linked.
12. The Appellant submitted that in the director's report of the Corporate Debtor for the year ending 31.03.2019 as part of 'Annual Report' signed by -5- Comp. App. (AT) (Ins.) No. 656 of 2023 suspended directors of the Corporate Debtor which included son of Raman Kumar Aggarwal (Respondent No. 1 herein Gaurav Aggarwal) stated that no board meeting of the Corporate Debtor was held during the entire financial year i.e., from 01.04.2018 to 31.03.2019, whereas Raman Kumar Aggarwal claimed that his appointment was approved in the board meeting dated 12.07.2018.
13. The Appellant also emphasized that the Raman Kumar Aggarwal never claimed the salary and almost after two year of CIRP, that too after the order of Adjudicating Authority dated 18.05.2020 passed in CA No. 574 of 2018 whereby Raman Kumar Aggarwal and other suspended directors were asked to refund the money which they withdrew illegally during moratorium, for the first time wrote a letter to the Appellant on 01.06.2020 claiming outstanding dues which is nothing but a fraud.
14. The Appellant submitted that during his period as Resolution Professional, he had never availed the services of Raman Kumar Aggarwal.
15. It has been brought out that during the pendency of IA No. 378 of 2020, Raman Kumar Aggarwal expired and his legal heirs were impleaded as Applicants who are now Respondents in the present appeal.
16. The Appellant assailed the Impugned Order which has been passed ignoring the vital facts that the letter of appointment of Raman Kumar Aggarwal was a fabricated document and also ignoring the fact that the Appellant as Resolution Professional never availed the services of Raman Kumar Aggarwal -6- Comp. App. (AT) (Ins.) No. 656 of 2023 and further the Adjudicating Authority failed to take into consideration that no board meeting took place during 2018 - 2019 as per directors report of the Corporate Debtor. The Appellant submitted that the letter dated 10.07.2018 claimed by Raman Kumar Aggarwal is an antedated document, in order to defraud the Corporate Debtor.
17. The Appellant submitted that as per Section 17(1)(c) of the Code, after the appointment of Interim Resolution Professional, the officers and managers of the Corporate Debtor are required to report to the Resolution Professional but Raman Kumar Aggarwal never reported to him during the entire period.
18. The Appellant drew our attention to the judgment of the Hon'ble Supreme Court of India in the matter of Sunil Kumar Jain Vs/ Sundaresh Bhatt Reported at [(2022) ibclaws.in 23 SC] whereby the Hon'ble Supreme Court of India held that the workers and employee who have not worked are not entitled to get salary.
19. The Appellant submitted that no board meetings or notice regarding conduct of the board meeting, as prescribed under Section 173 (3) of the Companies Act, 2013, were produced to substantiate true facts regarding board meeting actually taken place ratifying the appointment of Raman Kumar Aggarwal.
20. The Appellant submitted that the Corporate Debtor was involved in milling of paddy and one of associate company of the Corporate Debtor i.e., M/s RDA Enterprises, which is a partnership firm (in which wife of Raman Kumar -7- Comp. App. (AT) (Ins.) No. 656 of 2023 Aggarwal and wife of Gaurav Aggarwal were partners), also operated in the same premises and as such Raman Kumar Aggarwal might have come to the premises as claimed by him but never worked for the Corporate Debtor.
21. Concluding his arguments, the Appellant submitted that the Impugned Order is illegal and need to be set aside.
22. Per contra, the Respondent Nos. 1,2,3 & 4 (in short Respondents) (who are the legal heirs of late Raman Kumar Aggarwal) denied all the averments made by the Appellant treating there as misleading and malicious.
23. The Respondent submitted that the Adjudicating Authority have taken all the facts into consideration along with legal position and then only passed the Impugned Order allowing the payment of outstanding salary to Raman Kumar Aggarwal.
24. The Respondents submitted that Raman Kumar Aggarwal has resigned from the post of director on 13.06.2018 which were prior to initiation of CIRP. The Respondent also brought out that the Corporate Debtor is in the business of milling of paddy for which personal contacts and personal relationship/ liasoning is very critical and Raman Kumar Aggarwal possessed all these qualities. The Respondents stated that looking to the work and contacts of Raman Kumar Aggarwal, he was appointed as General Manager of the company on 12.07.2018 with a monthly salary of Rs. 90,000/-.
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25. The Respondents alleged that the Corporate Debtor never paid any amount to Raman Kumar Aggarwal and after waiting for considerable period of time, Raman Kumar Aggarwal wrote a letter to the Appellant for his outstanding dues which was turned down by the Appellant. Aggrieved by the same, Raman Kumar Aggarwal filed an Interlocutory Application bearing I.A. No. 378 of 2020 for his outstanding salary claim which was allowed by the Adjudicating Authority vide the Impugned Order.
26. The Respondents submitted that the Resolution Professional, if required, could have terminated the services of Raman Kumar Aggarwal which was not done and as such Raman Kumar Aggarwal, is entitled to his salary and to make such payments are within the powers of the Resolution Professional under Section 20(2)(b) of the Code.
27. The Respondents submitted that the Appellant never pleaded nor produced any document that the services of Raman Kumar Aggarwal were terminated under Section 25(2)(d) of the Code.
28. The Respondents stated that the Corporate Debtor was running as going concern till January, 2021 as such the salary payable to Raman Kumar Aggarwal should have been treated as cost incurred in running the Corporate Debtor during the CIRP and should have become part of the CIRP cost.
29. The Respondents submitted that the resignation of Raman Kumar Aggarwal was duly got reflected in the portal of MCA.
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30. The Respondents submitted that the order arising in I.A. 571 of 2018 based on the application filed by the Appellant was w.r.t. refund of money by Raman Kumar Aggarwal and other directors, as directors of the Corporate Debtor, whereas IA no. 378 of 2020 was filed by Raman Kumar Aggarwal for his outstanding salary dues as General Manager, as such these are two different issues.
31. The Respondents submitted that merely for non issuance of notice under Section 173(3) of the Companies Act, 2013, the BoD meeting is not questionable and would not negate the appointment of Raman Kumar Aggarwal.
32. The Respondents submitted that due to hard work of Raman Kumar Aggarwal during CIRP, the Corporate Debtor could earn reasonable money and at this stage Raman Kumar Aggarwal cannot be denied his outstanding dues.
33. The Respondents submitted that it was for the Resolution Professional to take any work from the employees and Raman Kumar Aggarwal who never denied any work and if Resolution Professional was not happy with the services or did not require the services of Raman Kumar Aggarwal, the same should have been terminated by Resolution Professional.
34. The Respondents submitted that judgment of Sunil Kumar Jain (Supra) is not applicable in the present case as Raman Kumar Aggarwal worked on the post of General Manager, which is evident from the affidavits of the business customers and employees.
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Comp. App. (AT) (Ins.) No. 656 of 2023
35. The issue in the present appeal, to be decided by us, is limited i.e., whether the appointment of Raman Kumar Aggarwal as General Manager of the Corporate Debtor was correct, backed by the documentation and whether Raman Kumar Aggarwal was entitled for the outstanding salary for the alleged services rendered by him to the Corporate Debtor ?
36. It is a fact that the Corporate Debtor was admitted into CIRP on 27.07.2018 and Raman Kumar Aggarwal had resigned from the directorship of the Corporate Debtor on 13.06.2018 which was just a few days before the CIRP date.
37. We note the contention of the Appellant that obviously Raman Kumar Aggarwal and the Respondent knew very well about the likely initiation of CIRP and they did all action of appointing Raman Kumar Aggarwal as General Manager of the Corporate Debtor to defraud Corporate Debtor and its other creditors.
38. It is worth noting that in less than one month from resigning from the directorship of the company, Raman Kumar Aggarwal was appointed as General Manager who claimed to have been appointed in the board meeting held on 10.07.2018 on a the monthly salary of Rs. 90,000/-.
39. We note from the submissions that in the director's report (annual report) of the Corporate Debtor, for the relevant year i.e., 2018-19, it has been categorically mentioned in director's report that no board meeting took place during the period.
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40. We wonder that when the director's report mentions that no BoD meeting took place they how the BoD meeting was held on 12.07.2018 in which the appointment of Raman Kumar Aggarwal was approved. Incidentally, the appointment letter is claimed to have been issued on 10.07.2018, whereas the alleged board meeting was conducted on 12.07.2018 i.e., after the appointment letter claimed to have been issued. The appointment of KMP, if so required to be approved by board, it should have been done before hand and not subsequent to the issue of appointment letter.
41. These facts, therefore, prima-facie do not support the claim of the Respondents to make it reliable and convincing. Moreover, no board meeting minutes or the board notice as required under Section 133 of the Companies Act, 2013 has been placed on record.
42. We also find it strange that Raman Kumar Aggarwal who was promoter director of the Corporate Debtor and resigned from the company has claimed to have been appointed as General Manager. We also note that Raman Kumar Aggarwal has further claimed that he has worked from 10.07.2018 to May, 2020 claiming outstanding amount of Rs. 22,61, 661.60/- which includes the interest for the delayed payment at the rate of 12%. However, Raman Kumar Aggarwal never claimed any amount during the entire period, whereas the appointment letter issue dated 10.07.2018 clearly stated that "your monthly carry salary will -12- Comp. App. (AT) (Ins.) No. 656 of 2023 be directly credited to your account. The pay role administrator will provide the details to you."
43. If this appointment letter dated 10.07.2018 is the basis then obviously the salary should have been claimed and paid to the Raman Kumar Aggarwal regularly by the Corporate Debtor which has not happened . It is again undisputed fact that the claim of outstanding salary by Raman Kumar Aggarwal vide its letter dated 01.06.2020 which is after more than two years of CIRP and that too after the order of the Adjudicating Authority dated 18.05.2020 passed in IA No. 574 of 2018 whereby Raman Kumar Aggarwal along with other directors were directed to refund the money taken from the Corporate Debtor during moratorium period.
44. We note that the Adjudicating Authority while disposing IA 378 of 2020, after recording the submissions of the Appellant and the Respondents has allowed, based on records available and the Adjudicating Authority has found that Raman Kumar Aggarwal has been rendering continued service to the Corporate Debtor and further no approval or extension has been made by the Resolution Professional who was in charge of the management of the Corporate Debtor. The Adjudicating Authority also noted that since appointment letter has not been cancelled by the management as evidenced from the affidavits of the employees therefore there was no justification to deny the outstanding dues of Raman Kumar Aggarwal and based on this finding, IA No. 378 of 2020 was allowed. -13-
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45. During the arguments, our attention was drawn to the affidavits filed by Deepti Aggarwal partner of Corporate Debtor enterprises claiming that Raman Kumar Aggarwal has worked for the Corporate Debtor. Similar affidavit has been placed by Parshotam Lal, Lokesh Kumar, Raman Kapoor.
46. The Respondents relied upon four affidavits one by Dipti Aggarwal i.e., Partner of M/s RDA Enterprises and three of his old employees i.e., Parshotam Lal, Lokesh Kumar, and Rakesh Kapoor who certified that Raman Kumar Aggarwal worked during the CIRP period.
47. The Appellant submitted that the alleged affidavits appended by Raman Kumar Aggarwal in support of his contention that he worked during the CIRP period are also false and frivolous and the same was procured from related parties. Deepti Aggarwal is the daughter-in-law Raman Kumar Aggarwal and wife of Respondent No. 1 Gaurav Aggarwal whereas Parshotam Lal and Lokesh Kumar are the old employees of the Corporate Debtor and the third employee Raman Kumar Aggarwal had already stated that his affidavit was procured by undue influence from Raman Kumar Aggarwal. This reads as under :- -14-
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48. We note from the submissions of the Respondent that Raman Kumar Kumar Aggarwal never worked with the Resolution Professional. He further stated that Raman Kumar Aggarwal attended most of the meeting of the CoC and during almost 2 years Raman Kumar Aggarwal never demanded his unpaid salary but once the breach of moratorium application was held against him on 15.08.2020, Raman Kumar Aggarwal for the first time demanded the unpaid salary on 01.06.2020.
49. On the pointed query by this Tribunal regarding relationship with persons who filed the affidavits before the Adjudicating Authority which was recorded in the Impugned Order, the Appellant reconfirmed that they are related party/ family members/ employee of the Corporate Debtor and as such the letters are not genuine. The fact was not specifically denied by the Respondents. However, they reiterated that as evident from such affidavits, the work was indeed done by Raman Kumar Aggarwal.
50. After going through all the records including the Impugned Order, IA 378 of 2020, we find that the entire claim has been made by Raman Kumar Aggarwal based on the letter dated 10.07.2018. This appointment is supposed to have been approved in the board meeting held on 12.07.2018 which is after two days of the appointment. And the directors report stated that no board meeting took place during 2018 - 2019.
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51. We also take into account that Resolution Professional has categorically stated that Raman Kumar Aggarwal had never performed any work and in the light of judgment of Sunil Kumar Jain (Supra) such employees who have never performed any work during CIRP are not entitled to claim any wages.
52. Based on above, we find merit in the appeal and find that the Adjudicating Authority has not taken all the entire and record into consideration while passing the Impugned Order and as such the Impugned Order is not valid and legal.
53. In fine the appeal succeeds. The Impugned Order dated 16.02.2023 is set aside. No Costs. IA, if any, are closed.
[Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Naresh Salecha] Member (Technical) [Mr. Indevar Pandey] Member (Technical) Sim