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TMI Blog2024 (3) TMI 1046X X X X Extracts X X X X X X X X Extracts X X X X ..... seeking to bring the Corporate Debtor under the rigours of Corporate Insolvency Resolution Proceedings ('CIRP' in short). Aggrieved by this impugned order, the present appeal has been preferred. 2. Making his submissions, the Learned Counsel for the Appellant stated that the Appellant/Operational Creditor was appointed as General Manager in the Corporate Debtor company-M/s Collage Group Infrastructure Private Limited ('Collage' in short) on 10.10.2014. The Corporate Debtor also issued a confirmation of appointment letter which shows that the Appellant was an employee of the Corporate Debtor. In due course of time, the Corporate Debtor failed to release timely payments of salary and eventually salary payments came to a halt from 2015 onwards. The Appellant submitted his resignation on 26.01.2016 on the behest of the Corporate Debtor and sent an email to the Corporate Debtor on the same date indicating balance of his arrear salary and requested the Corporate Debtor to pay the same as soon as possible. Following this email, a full and final settlement statement was provided by the Corporate Debtor admitting an outstanding amount of Rs. 9,28,972/- as debt due and payable. It was ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified that the latter was governed and operated by the same staff/management of the Corporate Debtor and that there existed 100% shareholding between the two entities. It was further submitted by the Appellant that the Adjudicating Authority should have considered all relevant facts and evidence and pierced the corporate veil to find out the real status of MNT that it was not actually a separate entity. 7. The Learned Counsel for the Respondent refuting the submissions made by the Appellant submitted that the period for which the Appellant worked with the Corporate Debtor, that is, from October 2014 to March 2015, he got paid his monthly salary regularly by the Corporate Debtor. Subsequently, when the Appellant got transferred to MNT, there remained no privity of contract between the Appellant and the Corporate Debtor. 8. Consequent upon his transfer to MNT, all his dues thereafter could have been raised only against MNT. This is also borne out by the fact that the full and final statement of settlement that was signed by the Appellant was with MNT and the Corporate Debtor is not a signatory therein. Even the part payments made from time to time towards the full and final settle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and some entity other than the Corporate Debtor. Emphatically asserting that the doctrine of privity of contract is a settled principle of law under which a third party cannot be made liable under contract unless he is a party to the said contract and applying this principle, the Corporate Debtor was not liable in any manner to discharge the liability of a different legal entity. It was therefore contended that the Adjudicating Authority in the impugned order reached the correct finding that there exists no rightful claim of the Appellant against the Corporate Debtor as he was not an employee of the Corporate Debtor. 13. When we have a look at the impugned order, we notice the Adjudicating Authority has analysed in details the tenability of the contention of the Corporate Debtor that the Appellant was not its employee and therefore no dues were payable by the Corporate Debtor to the Appellant. The Adjudicating Authority in the impugned order after noticing the full and final settlement document has observed that the same was executed between the Appellant and MNT and not between the Appellant and the Corporate Debtor. The Adjudicating Authority has thereafter concluded while pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inal Settlement Agreement executed between the parties that, applicant rendered his services to M/s MNT Infratech Private Limited working under the same management. Therefore, it appears to us that the services of the Operational Creditor was placed with M/s MNT Infratech Private Limited, with is a separate Company and Operational Creditor continued his services with the side Company. 9. Taking into consideration all the aforesaid facts, we are of the view that, the Operational Creditor has failed to prove existence 'Operational Debt' which is payable by the Corporate Debtor. Thus, we have no hesitation to hold that, the claims raised by the Operational Creditor against the Corporate Debtor i.e. M/s Collage Group India Private Limited are neither tenable in the eyes of law nor on facts." 15. We are of the considered opinion that the reliance placed upon the Vodafone judgment supra by the Adjudicating Authority in the present facts of the case does not suffer from any infirmity and is very much in order. In this judgement the Hon'ble Supreme Court has carved out the basic legal principle with regard to relationship between subsidiary company and holding company by holding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that without going into the merits of the dispute, the appellant has raised a plausible contention requiring further investigation which is not a patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in characterizing the defense as vague, got-up and motivated to evade liability." 18. It is the case of the Respondent that the Appellant had sent a legal notice on 11.04.2017 as placed at page 40 of Reply Affidavit of the Respondent. The legal notice was duly replied to by the Corporate Debtor on 10.05.2017 as placed at page 44 of Reply Affidavit of the Respondent. We notice that in their reply, the amount claimed as operational debt has been unequivocally disputed by the Corporate Debtor and no liability has been admitted on this count. In the said reply, the Corporate Debtor has also stated that the Appellant was working for some other organisation and hence denied their claim. From the tone and tenor of the said reply, we have no hesi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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