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TMI Blog2023 (9) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ch, Court - I), filed under Section 61 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as `The Code'), whereby and whereunder the Company Petition preferred by `Mr. Ravindra Hirashingh Rawat' (Respondent No. 1 herein) under Section 9 of the Code was admitted and further `Mr. Pankaj Ramandas Majithia' (Respondent No. 2 herein) was appointed as Interim Resolution Professional (`IRP') in the Corporate Insolvency Resolution Process (`CIRP') Proceedings. 2. The brief facts giving rise to the instant Appeal are as follows : i. That the Appellant herein is the Director of DB Group India Private Limited (Corporate Debtor). On 06.11.2006, the Corporate Debtor appointed by the Respondent No. 1 as a Senior Manager - Finance and Administration, effective from 06.12.2006. ii. On 30.09.2013, the Corporate Debtor issued a promotion and increment letter to the Respondent No. I promoting him to the position of Deputy General Manager. iii. On 01.04.2016, the Corporate Debtor issued a promotion letter and increment to the Respondent No. 1 to be promoted to the position of General Manager India. iv. On 01.02.2017, the Corporate Debtor issued an increment letter to the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no amounts were payable to Respondent No. 1. In the said email, the Corporate Debtor through Appellant, categorically and explicitly stated and clarified that: "Dear Mr. Ravindra, I have already checked the same and there is no such pending from our side." ix. By email dated 19.06.2018, the Respondent No. 1, once again made a demand for the said sum of Rs. 1,50,000 towards the Notice of discharge and the gross amount of Rs.1,50,000 in consideration of the execution of the NDA. Immediately, the next day, i.e., on 20.06.2018, the Corporate Debtor replied to the said email of Respondent No. 1, once again denying and disputing the claim of the Respondent No. 1, and stated as hereunder: "Dear Luca. Below email received from Mr. Ravindra for your ref. CC: Ravindra The NDA was prepared by Italy and per their instructions I have processed your dues. Nothing is pending from our side. For clarifications on the below clause, you need to speak to Mr. Luca." x. Hence, the claim made by the Respondent No. 1 in the Application was disputed by the Corporate Debtor, in series of correspondence, at the relevant time, and therefore there was a clear "Pre-Existing Dispute" between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each or default on the part of the Corporate Debtor and the claim made by the Respondent No. 1 was only to arm-twist the Corporate Debtor. f. The Respondent No. 1 never made references to monies claimed in its correspondences prior to 17.06.2018. g. The penalty clause in the NDA cannot be construed as an admitted liability, and h. The claim of damages does not come within the purview of the disputes adjudicated under the IBC. xvii. On 13.11.2019, Learned Counsel for the Respondent No. 1 had filed a Rejoinder denying the assertions made by the Corporate Debtor in its Reply Affidavit. xviii. The Application was heard on 14.07.2022 and thereafter reserved for Orders. During the hearing, both parties argued at length, and the Adjudicating Authority had in fact orally indicated that the Petition is not maintainable as it is premised on damages. However, on 23.09.2022, the Impugned Order was passed without even considering the arguments made and contentions raised by the Corporate Debtor. xix. Being aggrieved and dissatisfied by the Impugned Order, Comp. App. (AT) (Ins.) No.1239/2022 was preferred by the Appellant who is one of the Director of DB Group India Private Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Authority has to look into the correspondences wherein a `debt' has been disputed, and that a proceeding under Section 9 of the Code with respect to the disputed `debt' cannot be initiated. The Operational Creditor can only initiate CIRP against a Corporate Debtor in case where there are no real disputes exiting between the parties. iv. In the instant case, the Corporate Debtor had all throughout disputed the claims of the Respondent No. 1 and as such the Adjudicating Authority ought not to have initiated the CIRP against the Corporate Debtor. The principles governing dismissal of an Application filed under Section 9 of the Code on the grounds of `Pre-Existing Disputes', has been recently reiterated by this Tribunal. v. At this juncture, Learned Counsel placed reliance on the Judgement of this Tribunal in the matter of `Om Prakash' Vs. `Wipro Enterprises Pvt. Ltd.' in Comp. App. (AT) (Ins.) No. 31 of 2023 dated 04.05.2023. The relevant paras of the judgment are being reproduced as under: "29. Perusal of the impugned order makes it clear that the Adjudicating Authority simply relied on the email dated 09.01.2019 to come to the conclusion that there was debt and default and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ite receipt of the said payments under the NDA, the Respondent No. 1 has mala fide claimed a sum of Rs. 40,00,000/- from the Corporate Debtor, as a penalty towards alleged violation of the NDA. vii. It is a settled principle of law that Operational Debt does not include penalty or liquidated damages. It is also submitted that a claim for penalty does not become an Operational Debt until the liability is adjudicated upon by a Civil Court, and the damages/claims are assessed and crystallised. It has also been succinctly laid down in the Judgement of the Hon'ble Supreme Court in the matter of `Kailash Nath Associates' Vs. `DDA', reported in (2015) 4 SCC 136, wherein the Hon'ble Apex Court has laid down as follows: "43.1. Where a sum is named in a contract as a liquidated amount payable by way of damages, the party complaining of a breach can receive as reasonable compensation such liquidated amount only if it is a genuine pre-estimate of damages fixed by both parties and found to be such by the court. In other cases, where a sum is named in a contract as a liquidated amount payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leged submissions made by the Appellant in the present Appeal is contrary to his own submissions made in his Reply filed before the Adjudicating Authority and the Appellant has thereby attempted to mislead this Tribunal as and by way of a false declaration in the present Appeal. iv. In support of his submissions, he placed reliance on the Judgement of the Hon'ble Supreme Court in the matter of `Kishore Samrite' Vs. `State of U.P. & Ors.' in Criminal Appeal No. 1406 of 2012, whereby in Para 29, it has been observed as follows : "29. Now, we shall deal with the question whether both or any of the petitioners in Civil Writ Petition Nos. 111/2011 and 125/2011 are guilty of suppression of material facts, not approaching the Court with clean hands, and thereby abusing the process of the Court. Before we dwell upon the facts and circumstances of the case in hand, let us refer to some case laws which would help us in dealing with the present situation with greater precision. The cases of abuse of the process of court and such allied matters have been arising before the Courts consistently. This Court has had many occasions where it dealt with the cases of this kind and it has clearly s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Appellant on 27.02.2023, unilaterally offering Rs.1,50,000 as full and final settlement of all claims of Respondent No.1. For ready reference, the said letter is being reproduced as hereunder: vii. It was submitted by the Learned Counsel for the Respondent that he was employed with the Corporate Debtor for a period of about 11-12 years and his last designation was that of General Manager and after submission of his resignation letter, the Corporate Debtor had entered into the NDA on 22.01.2018 to confirm the terms of the end of the contract of employment with the Respondent No.1 and the same was signed by the Appellant and the Respondent No.1. The Appellant had agreed to pay Respondent No.1 the following amounts, as detailed in the following Clauses of the NDA: "Clause 1 - Resignation: (a) Following your resignation the corporation will pay you a monthly salary at the Gross Rate of 150,000 INR as notice of discharge. Clause 2(e): Covenant of Confidentiality: "In consideration of the execution of this Agreement, you shall receive a gross sum of INR 150,000; also, the corporation undertakes not to divulge, for any reason, any information concerning the conclusion of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Apex Court has held as follows: "27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes nonpayment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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