Delhi District Court
Harjeet S. Sabharwal vs Assets Care Reconstruction Enterprise ... on 28 March, 2025
IN THE COURT OF SH. HARJYOT SINGH BHALLA
DISTRICT JUDGE-05, SOUTH DISTRICT,
SAKET COURTS, NEW DELHI
CS DJ 6386/2016
HARJEET S. SABHARWAL Vs. ASSETS CARE
RECONSTRUCTION ENTERPRISE LTD
CNR No. DLST01-000169-2012
Shri Harjeet S. Sabharwal
S/o Late Shri Ujagar Singh
1553, Phase-10,
Mohali, Punjab-160058
............ PLAINTIFF
Vs.
Assets Care & Reconstruction Enterprise Ltd.
IFCI Tower,
Nehru Place,
New Delhi-110019
.......... DEFENDANT
Date of Institution : 06.12.2012
Argument concluded on : 22.03.2025
Date of judgment : 28.03.2025
JUDGMENT
1. Vide this judgment, I shall dispose of the present suit filed by the plaintiff for recovery of Rs.4,64,413/- against the defendant.
2. The brief facts, as culled out from the plaint, are as follows:
1. That the Plaintiff is a very highly qualified and experienced person in the banking CS DJ 6386/2016 Page 1 of 28 sector. The Plaintiff is Post Graduate in Economics, has done CAIIB course, which is the highest qualification in the Banking field and also Post Graduate in IR&PM. He has put in 30 years in the banking sector both private and public. Before joining the defendant company the plaintiff was working as Zonal Credit Administrator with Indusind Bank, Gurgoan.
2. That the defendant, formerly known as Assets Care Enterprises Ltd., is an Assets Reconstruction Company incorporated under the Companies Act, having its registered office at IFCI Tower, Nehru Place, New Delhi and Corporate Office at 401, Eros Corporate Tower, Nehru Place, New Delhi.
The defendant is registered under Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002.
3. That vide appointment letter dated 23.12.2009, the defendant appointed the plaintiff as its Chief Manager (Assets Resolution) and agreed to pay on the basis of contractual compensation package of fixed and variable salary/incentive. The salary package provided payment of annual fixed component of Rs. 12,00,000/-. In addition thereto package included annual variable incentive component up to 35% of the Annual Fixed Component of the remuneration, payment of which was based on plaintiff's performance and the pre-tax profit of the defendant. On the said terms and condition the plaintiff joined the employment with the defendant with effect from 01.02.2010 and resigned w.e.f 30.04.2011.
4. That for the smooth and proper functioning of the Defendant Company, the Board of Directors of the Defendant CS DJ 6386/2016 Page 2 of 28 Company framed various vital policies for Operations, Manpower recruitment, Salary Packages, promotions including nature and level of salary and incentives payable to various level of employees. The defendant had also laid down its variable incentive component policy for its employees, which provides computation of variable pay in equal proportion on the performance of plaintiff and pre-tax profit of defendant as mentioned aforesaid. Keeping in view of the above the defendant had paid salary, fixed as well as variable salary, to the Plaintiff during the financial year 2009-10. That during the FY 2009-10, the plaintiff was in the employment of the defendant for two months and as such on the basis of Variable Salary/incentive, the Plaintiff was paid Rs.35,930/- as pro-rata variable salary for the said period after taking into account the performance of the plaintiff and pre-tax profit earned by the defendant in terms of the above referred pre laid down policy of the defendant and as provided in the terms of employment. It is pertinent to mention that the defendant during the said period earned a Pre-tax profit Rs.1.87 crore against the projected profit of Rs.6.1 crore approved by the Board of directors of the defendant.
5. It is pertinent to mention here that during the term of the employment of the plaintiff the said policy was never reviewed/changed by the defendant.
6. At the time of resignation i.e. on 30.04.2011, the plaintiff did not in any way waived his right to receive its entire dues which had accrued till the cessation of employment i.e. for the financial year 2010- 11 and 2011-12 (on pro-rata basis) which includes dues on account of variable incentive in terms of the contract of CS DJ 6386/2016 Page 3 of 28 employment and in accordance with the pre laid down policy in this behalf referred above.
7. The defendant company only paid an amount of Rs.37,000/- towards variable incentive for the year 2010-11 alleged to be based on KRA & Pre-tax profit in line with the policy of the defendant Company as per cover letter dated 30.09.2011. It is pertinent to note that for the year 2009-10, the defendant company paid a sum of Rs.35,930/- as variable salary on pro-rata basis for two months that to when the company has only achieved 31% of its projected pre-tax profit and in contrast thereto for the year 2010-11 when the company had achieved 100% of its projected targets on pre-tax profit had paid just a meagre sum of Rs.37000/- only that too for twelve months. The significant improvement in financial performance of the defendant was due to collective hard work and performance delivered by all the employees of defendant including plaintiff. When the plaintiff made enquiries in this regard it transpired that the top management of the Defendant Company in order to harass its ex- employees had paid the variable component salary totally in disregard and in violation of the pre-laid policy referred to herein above. Further, it transpired that the regular employees who are still in the employment of the defendant company have been receiving the variable salary in terms of the policy framed by the Board and also in terms of the their contract of employment.
8. That the amount paid by the defendant company is not in accordance with the policy of the company and in conformity with the terms of employment, as the defendant had failed to provide the basis on which the CS DJ 6386/2016 Page 4 of 28 defendant arrived at an amount of Rs. 37,000/- which was remitted to the Plaintiff towards variable salary/ incentive 2010-11, in spite of asking by the Plaintiff.
9. That the defendant with malafide intention did not provide the details and however in order to avoid the material issue, by its letter dated 11.5.2012 required the plaintiff to visit (from Mohali in Punjab) its office in Delhi with prior appointment and understand the details. The plaintiff in terms of the said letter the plaintiff tried to contact the concerned officials for appointment but no response was received from the defendant company in this regard.
10. That as a last resort, the plaintiff again wrote letter dated 30/08/2012 and asked the defendant company to send the forward details of payment of variable salary paid for the FY 2010-11 with necessary calculations with relevant policy on variable incentive as applicable to the plaintiff, by post and also required the defendant to pay the plaintiff's dues on account of the variable pay on pro- rata basis for the period of one month from 1.4.2011 to 30.4.11 served during the FY 2011-12 but the defendant failed to provide not only the worksheet containing details of the computation of the variable incentive paid to the plaintiff but also did not provide the relevant variable policy documents.
11. That it is learnt on enquiry that during the period when the plaintiff served with the defendant many employees had resigned or forced to resign by the CEO Sh. R.P Singh to accommodate the people belonging to IFCI to which he himself belong and many of such employees have been treated in the same manner as the plaintiff by the defendant, as they have not been paid their legitimate CS DJ 6386/2016 Page 5 of 28 contractual dues of their variable salary till the time they served the defendant. The defendant through its CEO has acted in most non-transparent manner and has performed clandestinely as the CEO has adopted different policy in order to harass plaintiff and like employees. It seems that CEO without any authority from the Board of the Directors of the Defendant Company had of his own will and fancy twisted the policies of the defendant and made rules and computation formulas in order to deprive certain employees including the plaintiff who are entitled for the dues on account of variable incentive and in turn distributed the incentives to those persons who were not the Regular employees and were not at all eligible to receive the same in terms of their respective engagement contract of fixed period employment simply because they were the ex-employees of the IFCI and PNB the promoters of the defendant. Being a Public Limited Company, the CEO has applied the funds of the defendant in a most indiscriminate manner and has arbitrarily discriminated regular employees and fixed period contract basis persons without any justification.
12. That during the FY 2010-11, the plaintiff was in the employment of the defendant for the entire year. During the said period the plaintiff had made excellent performance by taking steps and applying strategies leading to outstanding recoveries of over dues from various willful defaulters thereby resulting into and contributing to achieve the targets of pre-tax profit of the said year. It is pertinent to mention that the defendant had actually earned actual pre-tax profit of Rs. 9.24 crore against the projected target of Rs. 4.36 crore, an achievement of more than 200% of the projected target set by the Board of the CS DJ 6386/2016 Page 6 of 28 Defendant Company. By applying the same formula and methodology as applied in the previous FY of 2009-10, for this excellent performance of the plaintiff during the FY 2010-11, the average of the Self rating and the Appraiser's Rating is assumed as minimum 4.50 on a scale of 5. Thus the amount of the variable salary by applying the policy guidelines on variable pay, the dues of the plaintiff for the FY 2010-11 comes to Rs. 3,99,000/- and after adjusting Rs. 37,000/- paid by the defendant to the plaintiff a sum of Rs. 362,000/- is due from the defendant to the plaintiff. In addition to the above the Plaintiff is also entitled to a sum of sum of Rs.33,250/- as variable incentive for FY 2011-12, as the plaintiff was in the employment of defendant for one month from 1.4.11 to 30.4.11 during the said year based on the performance of the plaintiff and the defendant during the said year at the same level as in the previous financial year, which the defendant has failed to pay despite demands made by the plaintiff.
Thus an aggregate sum of Rs. 3,95, 250/- is due to the plaintiff from the defendant with interest thereon from the date the said amount has fallen due on 30/9/2011 till payment.
13. The defendant is also liable to pay interest on the said amount @15% from the date the Plaintiff is entitled to the variable salary / incentive i.e. 30.09.201f till the filing of suit which comes to Rs. 69168/-and continues to be liable to pay the interest at the same rate till payment. The aggregate dues with interest up to date of filing suit works out to Rs.4,64,418/-.
14. That the cause action for the suit arose on 1/2/2010 when the defendant joined the employment of the defendant and on CS DJ 6386/2016 Page 7 of 28 30/4/2011 when the defendant ceased to be in employment, on 30/9/2011 when the defendant failed to pay the entire dues of the plaintiff and did not provide the necessary calculation sheet of dues paid.
3. Summons were sent to defendant, which were duly served. Defendant entered appearance and filed Written Statement on record. The defence taken by the defendant in the WS is as under:
1. That the Defendant 'Assets Care & Reconstruction Enterprise Limited' (Hereinafter referred to as ACRE Ltd/Defendant), is a company incorporated under the Companies Act, 1956 and registered a an Asset Securitisation and Reconstruction Company pursuant to Section 3 of "THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSESTS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002" and having its registered office at 6th Floor, IFCI Tower, 61, Nehru Place, New Delhi 110 019.
Mr Rashmi Ranjan Mahapatra working as Sr. Manager (Law) with the defendant vide Authorization dated 10th August 2009 issued in favour CEO of the defendant who has been authorized by the Board of Directors of the Defendant Nol to issue such authorization, is competent to sign and verify the contents of this written statement on behalf of the sole defendant ACRE LTD. [Copy of the Authorization is annexed herewith as Annexure D-1].
PRELIMINARY SUBMISSIONS-
2. That the CEO in his capacity and competence decided that for the FY 2010-11, the variable Pay would be calculated based upon the performance of the concerned CS DJ 6386/2016 Page 8 of 28 individual employee having 75% weight-age and balance 25% on the profit of the Company.
3. The CEO decided that a sum of Rs.
10,00,000/- shall be available for the distribution amongst its employees towards annual variable component part of their salary. Accordingly Rs.2,50,000/- was payable to the employees on the basis of the performance of the Company and Rs. 7,50,000/- shall be payable on the basis of the individual performance of the employee.
4. It was decided to distribute the total amount in the ratio of 60:40 amongst the senior level management officer and junior level officer of the Company respectively.
5. It was decided that for the FY 2010-11, the variable Pay would be available to the concerned employee on pro-rata basis provided that the Employee should have render his services in the Company till 31 st March 2011.
6. It was decided that for the FY 2010-11, the variable Pay would be available / payable to the Chief Managers up to 35% of its fixed annual component only.
7. The Plaintiff was designated as Chief Manager reporting to the Vice President with regards to all the business and operational issues of the company for Resolution Department of the accounts / cases acquired. Upon evaluation of the KRA for the FY 2010-11 it was found that the accounts/cases assigned to him were not resolved as well as the interests / installments received were not in due time period which showed his low acumen towards business and behavioural skill. So KRA rating adjudged to the Plaintiff CS DJ 6386/2016 Page 9 of 28 was 1 (One).
8. The Plaintiff's Annual Fixed Component was Rs.12,00,000/-(Col.C). Since KRA rating earned by the plaintiff was 1(Col.F) fixed within the range of 1to5 as decided by the CEO of the Company i.e. 20% upon conversion of the KRA into percentage (Col.G). Since Variable pay component payable has been fixed up to 35% of the annual fixed component, hence variable pay applicable to an employee shall be 25% of the variable component payable (Col.H) as per the Company's Performance i.e. 8.75% of the annual fixed component and 75% of the variable component payable (Col.I) as per employee's performance i.e. 26.25% [rounded of a 26.3%] of the annual fixed component.
9. Thus variable pay worked out on the basis of Company's performance in case of plaintiff works out to Rs.1,05,000/- which is 12.03% (Col.K &L) of the total variable component payable to the Senior Management Employees of Rs.8,72,812.50. Based on the 60:40 ratio distribution, the variable pay payable to the Senior Management of Company's performance comes to Rs. 1,50,000/-out of Rs.2,50,000/- and thus plaintiff was entitled for Rs. 18,045/-(i.e. 12.03% of Rs. 1,50,000/-) [Col.L].
10. With regards to the variable pay payable on the basis of plaintiff's individual performance, on the basis of KRA works out to 5.25% [Co.M] (i.e. 20% of 26.25% [Col.G]) amounting to Rs.63,000/- which is 4.21% of the total variable component payable to the Senior Management of Rs.14,95,688/-. Based upon the 60:40 ratio distribution, the variable pay payable to the CS DJ 6386/2016 Page 10 of 28 Senior Management of their individual performance is Rs. 4,50,000/- out of Rs.7,50,000/- and thus plaintiff was entitled for Rs. 18,954/-(i.e. 4.21% of Rs. 4,50,000/-) [Col.L].
11. Therefore, the plaintiff was eligible for an amount of Rs.36,999.61 rounded off to Rs. 37,000/- which has been paid less TDS vide our Cheque No. 778747 drawn on IDBI Bank Ltd dtd 30th September 2011.[ Copy of the Computation of Variable Component(2010-11) of Plaintiff is annexed herewith as Annexure D-2] REPLY ON MERITS-
12. It is humbly submitted that the Board of the Defendant has never framed any policy for payment of 'Variable Pay' as wrongly stated by the plaintiff in the application. There is no policy of the Board for payment to employees towards 'Variable Salary'. The Board of the Defendant has delegated the substantial power of Management to manage the whole of the affairs of the Company to its CEO and thus the CEO has exclusive delegated power and authority to decide and frame Management policy to effectively manage the whole of the affairs of the Defendant including the policy for payment to employees towards 'Variable Salary'. The CEO in exercise of his discretionary power took policy decision to make payment to the employees on the rolls of the Defendant towards the variable Pay for the FY 2010-11 out of total sum of Rs.10,00,000/- made available for the distribution amongst its employees towards annual variable component part of their salary, to be calculated based upon the performance of the concerned individual employee having 75% weight-age and on the profit of the Company CS DJ 6386/2016 Page 11 of 28 having 25% weight-age. The CEO in exercise of his discretionary power took policy decision to make payment to the employees on the rolls of the Defendant towards the variable Pay for the FY 2010-11 only after the adoption of the Annual Accounts in the AGM for the FY 2010-2011.
13. It is specifically submitted that the plaintiff is not entitled for any amount towards the variable component for one month on pro-rata basis for the period 2011- 2012.
14. It is submitted that the defendant has paid the legitimate variable salary to the plaintiff based upon individual performance as well as performance of the company.
15. It is specifically submitted that the plaintiff never turned up of called upon the defendant with respect to the redressal of his grievance.
4. Defendant had not filed any documents with the written statement. Therefore, no affidavit regarding the admission-denial of the documents was filed by plaintiff as per order dated 04.05.2022.
ISSUES:
5. From the pleading of the parties, the issues were framed vide order dated 04.05.2022, which are as follows:
1. Whether the plaintiff is entitled for decree of Rs.4,64,418/- with pendent lite and future interest @ 15% per annum from the date of filing of the suit till realization as prayed for?
OPP .
CS DJ 6386/2016 Page 12 of 282. Relief.
Evidence:
6. In plaintiff evidence plaintiff examined himself as PW-1, who filed his affidavit reiterating the contents of the plaint and relying upon the documents which are as follows:-
(i) The appointment letter dated 23.12.2009 as Ex.P-1.
(ii) Variable salary /incentive policies operating during the employment of defendant as Ex.P-2.
(iii). Letter dated 30.09.2011 by the defendant as Ex.P-3.
(iv) Letter dated 04.04.2012 by the plaintiff to defendant as Ex.P-4.
(v) Letter dated 11.05.2012 by the Plaintiff to the defendant as Ex.P-5.
(vi) Letter dated 13.08.2012 by the Plaintiff to defendant as Ex.P-6.
(vii) Postal receipt in respect of letter dated 30.08.2012 as Ex.P-7.
(viii) Statement of claim as Ex.P-8.
(ix). Computation of employees variable component of remuneration (year 2009- 10) as Ex.P-A.
(x) Annual report of 2011-12 as Ex.P-9.
(xi) K.R.A. sheet of the Plaintiff as Ex.P-10.
(xii). Employees variable component of remuneration for the year 2010-11 as Ex.P-11.
(xiii) Letter dated 27.09.2011 by the Vice President of defendant as Ex.P-12.
(xiv) Computation of employees variable component of remuneration (year 2010-11) as Ex.P-13.
(xv) Appointment of Sh. Ankur Jain as Ex.P-14.
(xvi) Performance appraisal of Mr. Ankur CS DJ 6386/2016 Page 13 of 28 Jain as Ex.P-15.
(xvii) Letter dated 12.05.2011 by defendant to Sh. Ankur Jain as Ex.P-16.
(xviii) Letter dated 30.09.2011 by defendant to Sh. Ankur Jain in respect of payment of variable salary for the year 2010-11 as Ex.P-17.
(xix) 19. Appointment Letter of Ms. Chhavi Gupta as Ex.P-18.
(xx) Performance appraisal of Ms. Chhavi Gupta as Ex.P-19.
(xxi) Payment of variable incentive to Ms. Chhavi Gupta for the year 2010-11 as Ex.P-20.
7. Thereafter, Plaintiff was duly cross-examined and discharged.
8. In defence, the AR of the Defendant Sh. Manish Kumar Manav was examined as DW-1. DW-1 relied upon the following documents:-
1. Authorization letter as Ex.DW1/A.
2. The computation of the variable component of remuneration payable to the Plaintiff as Ex.DW1/B.
9. DW-1 was also duly cross-examined and discharged.
10. I have heard the arguments and perused the record. My issue wise finding is as follows:
Issue no.1. i.e. Whether the plaintiff is entitled for decree of Rs.4,64,418/- with pendent lite and future interest @ 15% per annum from the date of filing of the suit till realization as prayed for? OPP .CS DJ 6386/2016 Page 14 of 28
11. The plaintiff has proved the appointment letter Ex.P1, which categorically records:
Your compensation package will comprise an all-inclusive fixed component of Rs.12,00,000/- (Rupees Twelve Lakh Only) per annum on a Cost-To-Company (CTC) basis, the break-up of which is indicated in the annexure to this letter. In addition, there will be an annual variable component that can go up to 35% of the annual fixed component of your remuneration, as indicated in the annexure.
...
ANNEXURE ...
Variable:
There is also an annual variable component of your remuneration, capped at 35% of the annual fixed component that will be paid to you, in full or in part, based on your performance and the pre-tax profit of the Company, in line with the Company policy.
12. Therefore, the plaintiff has been able to prove the contract for payment of variable component of salary as an intrinsic part of the offer of appointment, which was accepted by the plaintiff. It is a matter of record that the variable component was paid to the plaintiff for 2 months for the financial year ending on 31.03.2010, amounting to Rs.35,930/- on pro-rata basis. It is the defence of the defendant as reproduced hereinabove from the written statement that the KRA rating of the plaintiff was adjudged to "1" and the policy of the company was changed by the CEO to:
a. 75% weight-age to performance and 25% to the profit; b. Only a sum of Rs.10,00,000/- was to be distributed CS DJ 6386/2016 Page 15 of 28 amongst the employees;
c. The distribution was to be in the ratio of 60:40 amongst senior level management and junior level officers; and d. That the employee must have completed the financial year in service.
13. Therefore, the defendant has claimed that because of the change in policy of the company, the plaintiff's entitlement to variable pay was reduced to Rs.37,000/- for the whole financial year 2010-2011.
14. It is pertinent to note here that alongwith the written statement, only two documents were filed by the defendant company i.e. the documents showing delegation of power to Sh. R.P. Singh by the Board in the form of extract from the Minutes of Meeting dated 19.08.2010 and the computation of plaintiff's variable component of remuneration for year 2010-2011. This led to the plaintiff filing applications under Order 11 Rule 1 of CPC and Order 11 Rule 11, Rule 12 and Rule 14 of CPC on 04.10.2013. The said applications came to be allowed vide order dated 06.10.2015, passed by my Ld. Predecessor, directing the defendant to place on record documents and an affidavit. The defendant was also directed to reply to the interrogatories. Thereafter, some dispute remained vis-a-vis compliance of the order for placing on record documents and answering the interrogatories. After the Covid wave, evidence was recorded in the present matter.
15. While hearing final arguments, the controversy vis- a-vis non compliance of the direction for filing documents resurfaced and on 25.09.2024, a detailed order was passed by this court, directing the production of the original documents by the CS DJ 6386/2016 Page 16 of 28 defendant. The order dated 25.09.2024 is quoted for ease of reference:
"Part arguments heard.
Ld. Counsel for plaintiff submits that the appointment letter of the plaintiff is Ex.P1, dated 23.12.2009, which categorically records as follows:
Your compensation package will comprise an all-inclusive fixed compenent of Rs. 12,00,000/- (Rupees Twelve Lakh Only) per annum on a Cost-To-Company (CTC) basis, the break-up of which is indicated in the annexure to this letter. In addition, there will be an annual variable component that can go up to 35% of the annual fixed component of your remuneration, as indicated in the annexure.
Ld. Counsel has next submitted that this letter was issued by the CEO Sh. Bhaskar Ghosh. Thereafter, counsel has relied on Ex.P3, which is a declaration by the company regarding the decision to pay variable incentives to its employees for the year 2010-2011.
Ld. Counsel has next relied on Ex.P2 filed alongwith the replication of the plaintiff. He has submitted that the said document is a welcome kit given to the employees, which refers to the variable pay policy of the company, interalia, in the following manner:
As per Company policy, the variable pay will be available to concerned employees on a pro-rata basis for completed number of months of their services in the Company.
In line with Company Policy, variable pay is based in equal proportion (50:50) on the performance of the individual employee and on the pre-tax profit of the Company.
As indicated above, the Company's pre-operative profit of Rs.1.87 crore for the review period (2009-10) works out to 30% of the targeted level of pre-tax profit for the year of Rs.6.10 crore.
Teh individual's performance is determined by his/her KRA rating.CS DJ 6386/2016 Page 17 of 28
Calculation and aggregation of both these items determine the individual's variable compensation component as a proportion of his/her fixed component.
We may accordingly pay variable compenent of salary to the employees of the Company, as per above. A separate compilation of each employee's variable pay will be put up for sanction.
Ld. Counsel next submits that, as per the appointment letter of plaintiff, he was entitled to 35% variable pay component of the annual fixed payment.
It is pertinent to note that the plaintiff has, during the pendency of the case, moved an application under Order 11 Rule 1 of CPC, as also, application under Order 11 Rule 12 and 14 of CPC which came to be allowed vide detailed order dated 06.10.2015. The operative part, so far it pertains to discovery of documents, is quoted for ease of reference:
In view of these facts and circumstances and the submissions made at bar on behalf of the defendant, applicaton under discussion is allowed with the direction to the defednant to take necessary steps as per law with regard to the documents as find mentioned in Para 5 of the application. Defendant is directed to place on recordthe documents which are available with them and documents which are not available with them, an affidavit in that regard be filed by the defendant/authorized representative. The application is disposed of accordingly in above terms.
This order passed by the court was not complied with and vide another order dated 08.07.2016, the following directions were passed:
1. Arguments have already been heard on the point whether the defendant has complied the order dated 06.10.2015 passed by disposing of the application under Order 11 Rule 12 & 14 CPC and another application under Order 11 Rule 1 CPC filed on behalf of the CS DJ 6386/2016 Page 18 of 28 plaintiff.
2. Ld. Counsel for the defendant has submitted that the documents mentioned in Paragraphs 6 to 10 in the application under Order 11 Rule 12 & 14 CPC are irrelevant, therefore, their discovery is not required. Ld. Counsel has further submitted that these documents do not pertain to the plaintiff herein, therefore, plaintiff could not be allowed seeking their discovery. Ld. Counsel has further submitted that the plaintiff is trying to make fishing and roving inquiry in the garb of Order 11 Rule 12 & 14 CPC. Ld. Counsel has further submitted that the interrogatories from K to to Q in the application under Order 11 Rule 1 CPC also do not pertain to the plaintiff, therefore, liable to be struck out. Ld. Counsel for the plaintiff relied upon the following rulings:
1. Canara Bank vs. Rajeev Tyagi & Associates & Anr. 166 (2010) DLT 523.
2. A.K. Aggarwal vs. Shanti Devi 1996 Rajdhani Law Reporter 60.
3. Ld. Counsel for the plaintiff has submitted that the Ld. Predecessor of this court vide his order dated 06.10.2015 has allowed both the applications and directed the defendant to reply to the interrogatories and also file documents on record. Ld. Counsel has further submitted that the defendant has deliberately not complied the directions given by the court vide its order dated 06.10.2015. Ld. Counsel has further submitted that defendant is delaying the matter by taking false and frivolous pleas.
4. Entire records perused. Perusal of the record reveals that the Ld. Predecessor of this court vide order dated 06.10.2015, after hearing both the parties, allowed the application under Order 11 Rule 1 CPC and CS DJ 6386/2016 Page 19 of 28 directed the defendant to file reply of the interrogatories on Oath. The Ld. Predecessor has disposed of the application under Order 11 Rule 12 & 14 CPC by giving directions to the defendant to place on record the documents which are available with them and the documents which are not available with them and an affidavit in that regard be filed by the defendant. In compliance of said order, reply to interrogatories as well as reply to the discovery of documents on affidavits filed on behalf of the defendant. However, in reply to the interrogatories from K to Q, it is submitted that these interrogatories do not relate to the issue in question and these interrogatories are irrelevant and vexatious.
Similarly, with regard to discovery of documents (vi) to (x), it is submitted that these documents also do not relate to the issue in question being irrelevant and vexatious.Once the defendant has been directed to reply to all the interrogatories and has also directed to file the documents which are available with it then the defendant has to comply the order and cannot be allowed to make excuses on one or other ground. If the defendant is not satisfied with the order dated 06.10.2015, the only remedy is available with it to challenge the said order but it cannot be allowed to raise plea that the said interrogatories and documents are irrelevant. The rulings relied upon by the defendant are not applicable at this stage as the application under Order 11 Rule 12 & 14 CPC and another application under Order 11 Rule 1 CPC have already been disposed of.
5. In view of the above discussions, defendant is directed to comply the order dated 06.10.2015.
6. Put up for further proceedings on 16.08.2016.
CS DJ 6386/2016 Page 20 of 28Ultimately, the court was constrained to proceed with defendant ex-parte on 16.08.2016.
The matter went to the Hon'ble High Court, whereby a Ld. Single Judge of the Hon'ble High Court remanded the matter back with direction to the court to decide the objections raised by the defendant with interrogatories.
Vide order dated 26.11.2018, the objections came to be decided and the following order was passed:
In the present case, the plaintiff has filed two applications under Order 11 Rule 1 CPC and another under Order 11 Rule 12 & 14 CPC asking the defendant to make discovery on Oath by serving interrogatories on him. The plaintiff served interrogatories from points 'a' to 'q'.
Ld. Counsel for the defendant has answered the interrogatories on Oath from 'a' to 'j' by filing reply/affidavit on 08.12.2015. However, he objected to the interrogatories at points 'k' to 'q' on the ground that the interrogatories are irrelevant, unreasonable, vexatious and prolix. He further stated that in the name of interrogatories, the plaintiff is making an attempt to make fishing and rebing entries which is not permissible under law.
It is stated by Ld. Counsel for the plaintiff that interrogatories at points 'k' to 'q' are sought as the defendant has taken defence of policy for Variable Pay for the financial year 2010-11 being changed by CEO and certain new parameters being evolved for disbursing Variable Pay to the employees. Interrogatories have been filed to elicit whether the parameters as stated in the Written Statement were applied uniformally to all the employees working with the defendant.
It is stated by Ld. Counsel for the defendant that the plaintiff was working as a Chief Manager with the defendant company and, therefore, the plaintiff cannot seek the CS DJ 6386/2016 Page 21 of 28 details of amount and basis of payment of Variable Pay to the officials higher in hierarchy like CEO, Executive, Vice- President etc. At this stage, Ld. Counsel for the plaintiff submits that in order to cut short the controversy, the defendant may be directed to answer the interrogatories 'q' specifically for Ms. Chavi Gupta, Assistant Manager and Mr. Ankur Jain, Manager as they are lower in heirarchy being subordinate to plaintiff.
In the facts and circumstances of the case, I am of the considered opinion that the discovery of the said documents would help the court in deciding the present suit effectively and to unearth truth. At this stage, it is stated by Ld. Counsel for the defendant that he is ready to make discovery of the documents relevant to the case in respect of the variable pay for the financial year 2010- 11 for Chavi Gupta and Ankur Jain.
Accordingly, the defendant is directed to place on record the Appointment Letter, KRI Sheet/documents relevant for awarding KRI to the aforesaid employees on the next date of hearing. So, defendant is directed to produce these documents alongwith answers to interrogatories 'q' in the prescribed format for employee Chavi Gupta and Ankur Jain. Accordingly, both the application under Order 11 Rule 1 CPC and application under Order 11 Rule 12 & 14 CPC filed by the plaintiff are disposed of.
Put up for further proceedings on 05.02.2019.
Further, vide order dated 22.04.2019, the court was again constrained to note that the interrogatory (q) was not properly answered and again direction was given to the defendant to answer the said interrogatory.
An affidavit, ultimately, was filed on 10.07.2019, answering the interrogatory (q).
It is noticed that the originals were never produced CS DJ 6386/2016 Page 22 of 28 by the defendant. Let the originals of Ex.P13 and Ex.P8A and all supporting documents be produced before the next date of hearing."
16. Non production of vital documents alongwith the written statement was sufficient to show that there was no change in policy of the defendant. It is settled law that the onus to prove the change in circumstances is always on the party who asserts the change in circumstances. That the defendant herein had set up a defence that the policy of the company had changed for the financial year 2010-2011, therefore, it was for the defendant to prove the changed policy and that the CEO was competent to introduce such changes. Since the defendant has not placed any documents on record, the plaintiff could have simply relied upon the failure on part of the defendant to prove the said fact through documents. However, the plaintiff went a step ahead and served interrogatories and an application for production of documents on the defendant. The defendant's witness in his affidavit only exhibited two documents i.e. the authorization in favour of the AR as Ex.DW1/A and the alleged computation of variable component of remuneration as Ex.DW1/B. None of the documents produced by the defendant pursuant to the directions for production of documents or interrogatories were exhibited by the witness. The court has already noticed in the order dated 25.09.2024 that the originals of such documents were never produced and therefore, originals of Ex.P13 and Ex.P8A had to be produced by the defendant. Some of these documents were rather exhibited by the plaintiff.
17. During the cross examination of plaintiff, it was put to him that he was paid the incentive in accordance with the CS DJ 6386/2016 Page 23 of 28 policy framed by CEO, which was duly approved by the Board of respondent company. Therefore, it is defendant's own case put to the plaintiff that CEO had framed the policy which was duly approved by the Board.
18. Has this fact been proved by the defendant? In my view "No". The letter dated 27.09.2011 is by the Senior Vice President. However, the same was not exhibited by the defendant, nor the signatures thereon identified by the defendant's witness. Even if it was assumed that the CEO had approved the capping of Rs.10,00,000/- of the profit, where was the authority to do so coming from? The payment of variable component is a part of contract with the plaintiff and, although, subject to policies of the company, can it be unilaterally modified or taken away by the CEO?
19. In my view, first of all, such a policy would have to be formulated and the commencement of the financial year. 20 Secondly, since determines the contractual obligations of the parties, its communication to the employee would be imperative. The employee should be in a position to decide whether or not he would wish to continue to work with the defendant company under the changed circumstances i.e. his remuneration. Without communication, the change would be, in my view, ineffective and cannot constitute acceptance of the changed condition.
21. Thirdly, it cannot be retrospectively made effective i.e. from the date of the commencement of financial year. It can only be prospective since it is a part of matter of contractual obligations, unless ratified by the other contractual party.
22. Fourthly, although, the decision to distribute only CS DJ 6386/2016 Page 24 of 28 Rs.10,00,000/- seems to have been placed on record, the decision to give weight-age of 75% to performance and 25% to profit of the company has not been placed on record, nor proved.
23. Fifthly, similarly, the decision to divide the said amount of Rs.10,00,000/- in the ratio of 60:40 has not been placed on record, nor proved.
24. Sixthly, since it was defendant's own case that Board had authorized the CEO of the company to change the policy, the defendant had to prove the said fact. The plaintiff categorically disputed the said authorization in his evidence. When the defendant's witness appeared for cross examination, he was categorically questioned on the said aspect and his cross examination is quoted for ease of reference:
Cross-examination of DW-1 Manish Kumar Manav dated 27.01.2024:
It is correct that the defendant company is a public limited company.
...
Q. 1 I put it to you that being a public limited company only the board of directors of the defendant company has power to frame all the policies for managing day to day affairs of the defendant company? Ans. It is correct that the board of the directors used to frame the policies governing the affairs of the company, however, in addition to that the MD and CEO has also power to frame the internal policies for the defendant company. Q.2 Can you tell from where the MD and CEO of the defendant company draws their power to frame internal policies for the defendant company?
Ans. It is delegation of power by the board of CS DJ 6386/2016 Page 25 of 28 directors of the defendant company. Q.3 Can yo show any document whereby the board of directors of the defendant company had delegated the powers to the MD and CEO to frame the internal policies for the defendant company.
Ans. I cannot show the said document as the same has not been placed on record. However, I can produce the same.
Cross-examination of DW-1 Manish Kumar Manav dated 07.03.2024:
Q.1 Have you brought the document whereby the board of directors of the defendant company had delegated the powers to the MD and CEO to frame the internal policies for the defendant company. Ans. Yes. I have brought the true copy of resolution passed by the board of the defendant company dated 14.07.2010, the same is now exhibited as Ex.DW-1/X1.
The contents of Ex.DW1/X1 are quoted hereinbelow for ease of reference:
RE: APPOINTMENT OF CHIEF
EXECUTIVE OFFICER
"RESOLVED THAT subject to the approval of RBI, Board of Directors hereby accord 'in principle' approval for the appointment of Shri R.P. Singh, Chief Operating Officer and Manager as the Chief Executive officer of the company on the terms and conditions to be approved by the Remuneration Committee of Directors.
RESOLVED FURTHER that the Company Secretary be and is hereby authorized to seek RBI approval for the appointment of Shri R.P. Singh as the Chief Executive Officer of CS DJ 6386/2016 Page 26 of 28 the company."
25. Therefore, there is no delegation of any power to frame policies of the company as per the said exhibit. The defendant has miserably failed to show that the CEO was even otherwise, competent to change any policy pertaining to salaries and allowances of the existing employees, as also, how much fund was to be allocated for the said purpose. No capping on any previous occasion was proved and therefore, the claim of the defendant fails on this count as well.
26. Lastly, the grant of KRA rating of "1" to the plaintiff has not been proved by producing the document whereby such KRA rating was granted.
27. That defendant has failed to show that there was any change in policy with respect to payment of variable pay, the calculation done by the plaintiff with respect to its variable pay for the year 2010-11. All alleged changes in the policy have been rejected as not proved/beyond the competence of CEO, as the case may be. Therefore, plaintiff is entitled to the sum claimed in the plaint, as the calculations have not been disputed.
28. Further, the alleged change in the policy regarding completion of year has also not been proved. Since plaintiff was paid pro-rata for the financial year 2009-2010, he is also held entitled to variable pay for the period he worked in the year 2011-2012.
29. Suit is accordingly, decreed for a sum of Rs.3,62,000/- for the year 2010-2011 and Rs.33,250/- for the financial year 2011-2012 (pro-rata) alongwith interest @ 8% per annum from 01.05.2012 i.e. the month after the letter dated CS DJ 6386/2016 Page 27 of 28 04.04.2012 till the payment of the amount. Costs of the suit are also awarded to the plaintiff and against the defendant.
30. Decree sheet be prepared accordingly.
31. File be consigned to Record Room.
Digitally
signed by
Harjyot
Harjyot Singh
Singh Bhalla
Date:
Pronounced in the open court Bhalla 2025.03.28
17:18:33
on 28.03.2025
+0530
(HARJYOT SINGH BHALLA)
DJ-05, SOUTH SAKET COURTS
NEW DELHI
CS DJ 6386/2016 Page 28 of 28