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TMI Blog2022 (1) TMI 1219X X X X Extracts X X X X X X X X Extracts X X X X ..... ent (hereinafter referred to as 'Corporate Debtor') is a company incorporated under the Companies Act, 1956 for the purpose of establishment of cement plant. It is stated that Mr. Srinivasula Reddy is its Managing Director. It has its registered office at Hyderabad. * According to the applicant a Demand Notice dated 05.12.2018 (ANNEXURE-2) has been issued by the Operational Creditor to the Corporate Debtor stating that an amount of Rs. 7,50,00,000/- (Rupees seven crores and fifty lacs only) is due from Corporate Debtor towards the services rendered by the Operational Creditor in connection with the establishment of a cement factory by the company in Andhra Pradesh. The Operational Creditor in paras 2 to 5 of the said notice has stated the circumstances under which the applicant had agreed to work for the respondent/company on consultancy basis, besides that the salary agreed to be paid and the offer made by the respondent that the applicant will be entitled to Rs. 7.50 crores as sweat equity shares in the form of remuneration have been explained. It is stated in para 8 of the Notice that the Corporate Debtor despite receipt of the Demand Notice had failed to remunerate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er denied having made any offer of employment to the Operational Creditor under the Corporate Debtor or to have offered shares in the Corporate Debtor/company. It is further alleged that the e-mail communications annexed to the Notice dated 05.12.2018 are forged, hence no reliance can be placed on the said e-mails. 4. According to the respondent the applicant had offered to help the respondent/company in the work of establishment of cement factory in Andhra Pradesh. Reposing faith in the applicant Mr. Mule Srinivasula Reddy had handed over login details to the applicant. The applicant was also handed over letter-heads and other documents relating to the respondent/company. The applicant had voluntarily accompanied Mr. Mule Srinivasula Reddy occasionally. It is further claimed that the applicant invested a sum of Rs. 20,00,000/- in the respondent/company and within two months thereafter obtained refund of the same. Mr. Mule Srinivasula Reddy had never promised employment to the applicant. 5. As regards allotment of shares it is contended that unless the applicant makes substantial investments no shares can be allotted. The respondent/company has not employed any person so far. Eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and fraud committed by the petitioner. The respondent has filed a 'PROTEST' against the Police authorities and the same is pending before the Hon'ble Magistrate Court. (ii) That the closure of investigation does not warrant admission of the alleged debt. 12. The Operational Creditor filed Written Submissions contending, inter alia, that: * Respondent/company has resorted to a feeble legal argument that the applicant was never offered any employment nor remuneration. * Though the respondent denied legitimacy of the e-mail communications, they have failed to prove their claim by evidence. * By illustrating various communications exchanged between the applicant and the Corporate Debtor and those communications addressed to Operational Creditor on behalf of the respondent/company by various Government agencies/authorities and third parties, the applicant/Operational Creditor sought to prove his case. * Equitable jurisdiction, as available with Civil Courts, is not available with this AA while dealing with applications under section 9 of the I&B Code, 2016. * Police Closure report is not final since the same is challenged vide Criminal MP No. 162 of 2021 in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Evidence Act are satisfied. (vi) All the e-mails are not addressed to the personal e-mail of Mr. Mule Srinivasulu Reddy and were addressed only to msr(a)tejacement. com which was under the sole control of the applicant. The applicant is bound to establish that the said e-mails have in fact originated from Mr. Mule Srinivasulu Reddy by following the procedure established by law. (vii) There is no Board Resolution and approval by General Body of the company to appoint the petitioner as a Director. 15. In the light of the contest as above, the Tribunal framed the following points for consideration. (1) Whether application is barred by law of limitation? (2) Whether the applicant was not in the employment of the respondent? (3) Whether the applicant had obtained domain name "tejacement.com" without knowledge of the Directors of the respondent and created e-mail ID [email protected] purported to be that of Mule Srinivasula Reddy and had misused the same? (4) Whether there is no operational debt or default? (5) Whether admitting this petition would amount to exercising equitable jurisdiction by this Adjudicating Authority? 16. We have heard the learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent on consultancy basis and it was further agreed that the applicant will be paid salary as per the offer made by the respondent that the applicant will also be entitled to Rs. 7.50 crores as Sweat Equity Shares in the form of remuneration. It is stated that as the respondent/company had failed to remunerate the applicant for all the services that the applicant he had rendered from 01.04.2010 to 31.12.2016, the applicant got a Demand Notice dated 05.12.2018 issued to the respondent and as the said notice did not evoke any response from the respondent the present application for initiation of Corporate Insolvency Resolution Process against the respondent has been filed. 20. In support of the said contentions, learned counsel for the Operational Creditor Mr. Mayur Mundra invited our attention to the following letters/e-mail communications: (i) letter dated 25.07.2011 (ANNEXURE-5 of the petition), (ii) letter dated 29.01.2015 (ANNEXURE-7 of the petition), and (iii) letter dated 28.08.2016 (ANNEXURE-9 of the petition/page 82). 21. According to the learned counsel the above correspondence clinchingly establishes that the applicant was associated with the respondent/company for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cement Limited shall have the Right of First Refusal. Your salary of Rs. 5,00,000/- (Rupees five lakhs) per month will be paid from the month of August 2011. You will receive salary and all other benefits forming part of your remuneration package, after deduction of taxes and other statutory deductions in accordance with applicable laws. I formally welcome you into the Teja Cement Limited family and I hope that you will have a long and fruitful relationship with us." (ii) Communication dated 29.01.2015 (ANNEXURE-7), is the computer typed letter purportedly addressed by said M. Srinivasula Reddy to the applicant signifying that the applicant will be paid remuneration in the form of shares. (iii) Communication dated 10.08.2016 (Annexure-9, Page 85, Volume-1 of the petition) is another computer typed letter purportedly addressed by said M. Srinivasula Reddy to the applicant offering the Corporate Debtor position as Full Time Director, which is as follows. "Dear Mr. I.V. Nanda Gopal. You have been working for Teja Cement Ltd. since 1st April 2010 and have been a very important part of the company and involved in all aspects of its progress since 2010. As we have discuss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccessfully managing an enterprise. He has been with Teja Cement Limited for over 4 years and is actively involved in all aspects of the company." 26. The above statement was purportedly made made by the respondent/Corporate Debtor in "Techno-Economic Feasibility Report" submitted in connection with setting up of a cement plant by the respondent- company. The reason for mentioning the credentials of the applicant including the applicant's active involvement in all aspects of the company for the last four years, obviously to strengthen the feasibility report for setting up a cement plant, which the respondent admittedly intended to set up. Therefore, when the report submitted was for the benefit of the respondent, firstly the theory of forging the said document shall fall to ground and nextly having admitted the credential of the applicant in the said report the respondent cannot now be allowed to approbate and reprobate as the same is impermissible under law. It is also to be noted that according to the applicant he was offered employment in the respondent-company by the Managing Director of the respondent- company vide correspondence dated 25.07.2011 and since then he has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 21.12.2018 (Page 35 of this Reply) before the CID, TS, Hyd Police Station has been investigated by Police and Final Report under section 173 of the Code of Criminal Procedure has been submitted stating that: "... As such the allegations against I.V. Nanda Gopal are not established with clinching evidences. It is, therefore, the case is closed as 'UNDETECTABLE. UN' and the Hon'ble Court is prayed the Final Report may be approved and necessary proceedings may be issued." 32. The Corporate Debtor has challenged the same vide Criminal MP No. 162 of 2021 in Crime No. 4 of 2018 (CID Hyderabad) filed before the Court of the VI Addl Chief Metropolitan Magistrate at Hyderabad. Learned Magistrate has not passed any interim order and the matter is sub-judice. It is thus, clear that for want of evidences the case is closed by the Police authorities. No doubt, the respondent has challenged the final report, but nothing is said or placed before us, indicating that the final report is stayed or suspended. Therefore, when a report from a competent authority negating the plea of forgery is on record, we find no reason to discard the same and believe the oral and inconsistent v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of employee of the respondent. As such the plea of misuse of e-mail ID of Srinivasula Reddy by the applicant is totally unfounded and mischievous. Hence we hereby reject the same. Point No. (3) is answered accordingly. POINT No. (4) - Whether there is no operational debt and default? 36. To determine whether there is an operational debt and default, we need to look at section 5(21) of the I&B Code, 2016, which is reproduced hereunder: "5(21). 'operational debt' means a claim in respect of the provision of goods or services including employment or a debt in respect of the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government or any local authority;" 37. Relying on the following ruling of the Hon'ble Supreme Court of, India supra, the respondent contended that there is no operational debt. In our discussion under the point, we have held that the applicant was offered employment in the respondent/company though his position could not be clearly designated, as such we have no hesitation to hold that the claim of the Operational Creditor comes within the meaning of section 5(21) of the I&B Code, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mple and irrefutable evidence of association of the Operational Creditor with the Corporate Debtor/Company and the services rendered by Operational Creditor for the Corporate Debtor/company. While appreciating the covenants/contracts entered into between individuals in private sector, it is to be borne in mind that the perfection as is available in public sector/government sector in the matter of appointments cannot be expected in private sector. Private sector is a group of individuals, which owns private-sector business. For example, an individual or group of individuals might own a sole proprietorship or LLC, while shareholders own corporations. Whereas, Governmental agencies are not owned by individuals; they are owned by and operated on behalf of the public and they are governed by written laws, which have been enacted in the constitution or in legislation. In other words, the level of perfection practised in Union Public Service Commission or Staff Selection Commission in the matter of appointments cannot be expected in a private sector. 42. Therefore, having heard the learned counsel for both parties, considering the submissions made by the learned counsels, on perusal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period. (F) That the order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process or until this Bench approves the Resolution Plan under Sub-Section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33, whichever is earlier. (G) That the public announcement of the initiation of Corporate Insolvency Resolution Process shall be made immediately as prescribed under section 13 of Insolvency and Bankruptcy Code, 2016. (H) That this Bench hereby appoints Shri P.M.V. Subbarao, having IBBI Registration No. IBBI/IPA-002/IP-N00924/2019-2020/13001 as Interim Resolution Professional to carry the functions as mentioned under the Insolvency & Bankruptcy Code. His Authorisation for Assignment is valid upto 07.06.2022. This information is also available in IBBI Website. Thus, there is compliance of Regulation 7A of IBBI (Insolvency Professionals) Regulations, 2016, as amended. Therefore, the proposed IRP is fit to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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