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2020 (7) TMI 268 - Tri - Companies LawMaintainability of application - initiation of CIRP - termination of employment - salary and other dues - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - legally enforceable debt or not - HELD THAT:- At the very beginning that these proceedings under the Code are summary proceedings, where even if there was a debt, the same should be clear and undisputed and the default, as defined under section 3(12) of the Code should be clearly established. There is no scope for investigation under the Code, further than what has been brought on record. Further, it is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of MOBILOX INNOVATIONS PRIVATE LIMITED VERSUS KIRUSA SOFTWARE PRIVATE LIMITED [2017 (9) TMI 1270 - SUPREME COURT], has inter alia, held that Code, 2016 is not intended to be a substitute to a recovery forum and cannot be used to jeopardize the financial health of an otherwise solvent company by pushing it into insolvency. The Appointment Letter is placed on record. Since the appointment was made even prior to the incorporation of the Corporate Debtor, it is evident that there could not have been any Board Resolution to discuss, propose or confirm such an appointment. Nothing has been brought on record to indicate that any such confirmation was done subsequently by the Board. In this situation, it cannot be said that any right to payment or claim arose in the hands of the Operational Creditor against the Corporate Debtor, in the absence of any decision from the Board - the payments due to the Operational Creditor depended upon his performance and merit, and at the discretion of the Management. Clauses 17 and 18 of the Appointment Letter also mention a Code of Conduct and binding rules regarding the discipline and conduct of the Petitioner during the course of his employment with the Corporate Debtor. The Operational Creditor had served a Notice dated 10.04.2017 also demanding an amount of ₹ 18,25,000/- towards arrears of salary. Notably, this amount is different from the amount mentioned in the Demand Notice sent later on 08.09.2017 under the provisions of the Code (mentioned in this Petition), being ₹ 28,37,481, indicating that there was no clarity on the debt even by the calculations of the Petitioner. This would also mean that either there was no valid Demand Notice or there is a defective Petition, which should be dismissed on this ground alone. There was no debt, and/or in any case the same was substantially disputed by the Corporate Debtor with the Petitioner/Operational Creditor, before different forums, as well as per its own records, much prior to the Demand Notice - Petition dismissed.
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