TMI Blog2020 (1) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... engagement some of the petitioners in the company. Therefore, the petitioners have not established the alleged outstanding amount arises and various facts. It is settled position of law that the provisions of the Code cannot be invoked for recovery of outstanding alleged amount - The hon'ble Supreme Court in the case of Mobilox Innovations P. Ltd. v. Kirusa Software P. Ltd. [ 2017 (9) TMI 1270 - SUPREME COURT] has inter alia, held that the IBC, 2016 is not intended to be substitute to a recovery forum. The petitioners not only failed to establish their claims beyond dispute but also failed to prove that the respondent-company is insolvent. And mere pendency of cases would not ipso facto prove that the company is insolvent. Moreover, it is stated by the respondent that several of cases have been settled and thus the company cannot be justified to put under the corporate insolvency resolution process (CIRP) as urged by the petitioners - the petitioner failed to make out any case so as to initiate corporate insolvency resolution process as prayed for and thus the instant company petition is liable to be dismissed by granting liberty to the petitioners to pursue other rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntracts of construction of villas/buildings. It was not carrying on any business of buying and selling either land or sites for construction of villas/ building. MetroCorp Infrastructure was converted to MetroCorp Infrastruc ture Ltd., was incorporated on October 29, 2008 under Part IX of the Com panies Act, 1956 a company limited by shares. The business of the erstwhile partnership firm M/s. MetroCorp Infrastructure along with all assets and liabilities were vested with the company by operation of law on its incorporation. The main object of the company is property development and construction. Its authorised share capital is ₹ 20,00,000 and paid-up share capital of ₹ 20,00,000. (3) It is stated that the directors of M/s. MetroCorp Infrastructure Ltd., as on date as per the Registrar of Companies website is as follows : 1. Mr. Deepak Krishnappa Director DIN 01151247 2. Mr. Jasson Van Hoong Chew Director DIN 02225511 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner No. 5 - 1-9-2005 1-5-2009 6. Johnson (C.) Petitioner No. 6 19-5-2007 - 1-8-2008 7. Kabilan (V.) Petitioner No. 7 - 25-1-2006 1-5-2009 8. Late Somana (C. D.) represented by his wife Latha Somanna Petitioner No. 8 - - 1-4-2007 9. Mamatha (S.) Petitioner No. 9 - - 1-2-2010 10. Muktha Kadam Petitioner No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-11-2007 21. Vishwanath Rao (B. S.) Petitioner No. 21 - 12-9-2005 1-5-2009 (5) It is stated that the petitioners have worked in the respondents-company from the date of inception and few of them still continue to be on rolls of the company. Employee by name C. D. Somana expired on June 8, 2014 while in service and he is represented by his wife Mrs. Latha Somana in this petition. The respondent's company has stopped paying the salary and other consequential benefits to the petitioners from October, 2010 to March, 2014 and the respondent's company has accrued the legal liability/ debts and the petitioners are entitled to receive an amount as stated in statement A. In total the respondent's company is liable to pay an amount of ₹ 1,78,25,555 as on March 31, 2014 towards salary, gratuity, imprest and reimbursement of fuel expenses and net salary payable amount of ₹ 1,62,13,739. (6) It is stated that there are 62 employees, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Provident Funds and Miscellaneous Provisions Act, 1952 and enquiry under section 7A of the Act is going on against the establishment for non-payment of PF and allied dues. Eight employees have fried petition under Payment of Gratuity Act, 1972 before the Controlling Authority, Labour Department, Government of Karnataka seeking for payment of gratuity and petitions recorded vide SAKAABen-2/PGA/CR146/14 to 153/14, dated November 26, 2014. Paper notification has already been issued on January 30, 2015 by the controlling authority advising the company to appear before them. Company has failed to appear before the Controlling Authority, forty-seven employees have filed petition under Payment of Wages Act, 1936 before the Labour Department, Government of Karnataka for non-payment of salary by the company. The Labour Department has registered the petition vide No. SakaAaBa-02/PWA/CR-62/2014-15 and it is pending. One employee by name Mrs. Shwetha Vishal had filed Suit No. 9/2012 for recovery of salary and other dues before the Principal Labour Court, Bangalore and it was decreed on January 6, 2014 in favour of the employee. (9) It is submitted that following are the list o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho are majority shareholders in the company have filed petition before the Company Law Board, Chennai vide C. P. No. 7 of 2013 under section 397/ 398 of the Companies Act, 1956 and they have filed two petitions vide C. C. No. 15955 of 2013 and Crl. Misc. No. 5753 of 2014 (under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Inter est Act, 2002) which are coming up before IVth Additional Metropolitan Magistrate, Bengaluru March 25, 2015. As per the Ministry of Company Affairs web site, no annual general body meeting has been conducted since September 30, 2010. Last balance-sheet has been audited and uploaded in the Registrar of Companies website only up to March 31, 2010. periodic returns have not been uploaded to the Registrar of Companies website. (11) It is stated that Pramerica Cyprus ASPF II Holding Ltd., who are majority shareholders has nominated two directors on the board, as such it is indirectly responsible for the irregularities/mismanagement. Pramerica has invested large amount in other projects in India and it may not be interested to continue in MetroCorp Infrastructure Ltd. due to lot of liti gations/liabilities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total assets of the company. The provisions of section 433 read with section 434 of the Companies Act has no application ; these provisions were attracted only where there was a debt owed by the company to a peti tioner ; in the present case there was no debt owned by the company to the petitioner ; no such debt could arise when the amount paid as and when it was due. The respondent's company made payments to the peti tioners as scheduled. Hence the question of winding up under section 433 read with section 434 of the Companies Act does not arise. (3) It is true that at some point of time, various litigations are pending against the respondent's-company. However, as on today, most of the cases mentioned in the list are disposed off either by way of settlement or on merits. The periodic returns could not be uploaded/filed with the Regis trar of Companies in view of the various frivolous litigations which are initiated by one of the investor Pramerica Cyprus, as such directly Pramerica Cyprus is responsible for all the misdemeanours. Though the project has come to stand still and due to which the project is in the interregnum, which run into rough weather ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 crores from its clients towards land and constructions. The pro ject received an overwhelming response from the general public and in view of various frivolous litigations, the project has come to stand still and due to which the project is in the interregnum which run into rough weather and could not be implemented in its true terms. (8) It is admittedly by the petitioner, the company stopped paying sal ary and other consequential benefits since 2010 and due, if any, would become payable, if made on or before June 2013 but the claims in relations to due raised in 2015 would be barred by limitation. Therefore, the claim of the Respondent in relation to any of claim made after three years from 2010 is barred by limitation and such claims are therefore stale claims which cannot be entertained by this Tribunal. (9) It is not true that petitioner having priorities over other rights. It is to be noted that the petitioners who were on rolls with the company was paid as and when it was due and some of the petitioners herein are not at all employees of the respondent's-company. 5. The petitioner has filed rejoinder to the objections, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... frastructure, a partnership firm which was converted into a public limited company. Other petitioners have directly jointed the company or have been transferred from MetroCorp or other allied companies. The husband of petitioner No. 8 was attending his duties regularly up to March 31, 2014 and with effect from April 1, 2014 he was not regularly attending his duties due to piling up of his dues. Hence, his claim is only up to March 31, 2014. It is submitted that the husband of peti tioner No. 8 has not submitted his resignation and expired while on duty on June 8, 2014. He is being represented and expired while on duty on June 8, 2014. He is being represented by his wife Mrs. Latha Somanna, petitioner No. 8 in this company petition claiming the dues. (6) It is submitted that petitioner No. 1 joined MetroCorp Infrastruc ture Ltd. on July 1, 2009. Since his salary was not paid, he stopped attend ing to his work with effect from September 1, 2012. On August 31, 2012 he has submitted a letter to the respondent-company stating that the respondent-company has failed to pay his salary and will not be attending to his duties from September 1, 2012. Also, has informed that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted that while issuing the order, the Provident Fund Department has taken the figure of July 2011 provident fund contribution/ remittance as base figure and calculated arrears. As a result of considering the July 2011 provident fund contribution as the base figure, it has not con sidered the increment in salary sanctioned to petitioners Nos. 12, 13, 16, 18 and 19. Also the PF Department has not considered restoration of gross salary of petitioner No. 17 ₹ 1.75 lakhs per month to ₹ 2.50 lakhs per month with effect from October 2011. His salary was reduced from ₹ 2.50 lakhs to ₹ 1.75 lakhs with effect from February 1, 2010 due to austerity measures. (11) They have relied upon the judgment passed by the hon'ble Supreme Court in Appeal (Civil) Nos. 14772-14773 of 2010 between Maharashtra State Co-op. Bank v. Kannada Sahakari Sakhar Karnataka Ltd. wherein the hon'ble apex court has upheld dues assessed under sec tion 7A but interest under section 7Q and damages under section 14B and dues to be treated as priority dues under section 11 of the EPF and MP Act, 1952. Employees Provident Fund Organisation (EPFO), Head Office, New Delhi vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decreed on June 27, 2014. The employees had to suffer mentally and financially as the respondent-company failed to remit monthly salary of petitioner No. 7 at Vijaya Bank, R. T. Nagar, Bengaluru. 6. Heard Shri K. Manjunatha Rao Bhonsle, learned counsel for the petitioner and Shri Bharath (K.) learned counsel for the respondent. We have carefully perused the pleadings of the parties and extant provisions of the Companies Act, 1956/2013 and the law on the issue. 7. Learned counsel for the petitioner, while reiterating various averments made in the instant company petition, as briefly stated supra, has further submitted that in pursuance to transfer of case to the Tribunal, they have complied with all the provisions of the Code by seeking to initiate corporate insolvency resolution process, under section 9 of the IBC, 2016, the instant company petition is filed in accordance with law and, there is an admitted debt and default of the corporate debtor and the same is not in dispute, and the company is commercially insolvent to pay its liabilities to the petitioner as well as to the other parties, and a qualified resolution professional namely, Mrs. Ram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16, 2016. The eight petitioners have filed a petition under the Payment of Gratuity Act, 1972 before the controlling authority for the payment of gratuity, Labour Department, Government of Karnataka for payment of gratuity of ₹ 9,57,696 plus interest at 10 per cent. Similarly, they have approached several authorities seeking to recover the alleged outstanding amount as claimed in the petition. 11. Initially, C. P. No. 7 of 2013 (T. P. No. 43 of 2016) and also C. P. No. 9 of 2015 (T. P. No. 71 of 2016) was filed by M/s. Pramerica ASPF-II Cyprus Holding Ltd. (petitioner) against M/s. MetroCorp Infrastructure Ltd. (respondent herein) under sections 397, 398, 399, 402, 403, 406 and 542, read with Schedule XI to the Companies Act of 1956, by, inter alia, seeking to declare the meetings of the board of directors of respondent No. 1-company as purportedly held on November 2, 2009, November 10, 2009, October 25, 2010 as illegal, null and void with consequential relief ; to declare the mortgage deeds dated November 10, 2009, November 19, 2009, November 2, 2010 signed pursuant to the aforesaid meetings and ostensible resolutions passed therein, by respondent No. 2 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional debt in relation to such dispute ? If any one of aforesaid conditions is lacking, the application would have to be rejected. 14. As stated supra, the petitioners not only failed to establish their claims beyond dispute but also failed to prove that the respondent-company is insolvent. And mere pendency of cases would not ipso facto prove that the company is insolvent. Moreover, it is stated by the respondent that several of cases have been settled and thus the company cannot be justified to put under the corporate insolvency resolution process (CIRP) as urged by the petitioners. It is also to be pointed out here that several of civil disputes, which requires to be adjudicated by various civil courts cannot be resolved in summary proceedings, as contemplated under the provisions of the Code. Therefore, the petitioner failed to make out any case so as justify to initiate the corporate insolvency resolution process as sought for. 15. For the aforesaid reasons and circumstances, we are of the considered opinion that the petitioner failed to make out any case so as to initiate corporate insolvency resolution process as prayed for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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