Baiju Pupala & Ors vs Committee Of Creditors Of Unity ...
- CitationCompany Appeal (AT) (Insolvency) No. 158 of 2024
Ratio decidendi
The rule this decision rests on
In a liquidation, a claim for salary for the CIRP period is to be classified under section 53(1)(c) of the Code, and not treated as CIRP costs under section 53(1)(a), where the claimants have not shown by evidence that they actually worked during that period; the mere admission of their employment and proof of salary payment does not by itself establish such work. Where a claim for CIRP-period salary is advanced by a composite application covering several employees without individual evidence of work performed by each, the liquidator does not err in accepting the claim only as a section 53(1)(c) claim, and the adjudicating authority does not err in rejecting the application seeking to have it treated under section 53(1)(a).
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Baiju Pupala & Ors. ....Appellants Vs. CoC of Unity Infraprojects Ltd. & Anr. ...Respondents For Appellant Mr. Gaurav Mitra, Ms. Bandana Grover, Mr. Aditya Gauri, Mr. Amar Vivek, Mr. Ishan Roy Chowdhury, Advocates. For Respondents Mr. Divyanshu Rai, Mr. Vishal Sharma, Ms. Taruna, Advocates for R2
ORDER
(Hybrid Mode)
26.02.2024: Heard Learned Counsel for the Appellant and Counsel for
the Liquidator.
2. This Appeal has been filed by the Appellant against an order passed by
the Adjudicating Authority dated 21.11.2023 by which IA No.1887 of 2022
filed by Bajju Pupala and 21 Ors. has been dismissed. In the present case,
CIRP commenced vide order dated 20.06.2017 and thereafter liquidation order
was passed by the Adjudicating Authority on 08.04.2021. The Liquidator has
admitted the claim of the Appellants towards the payment of salary for 12
months prior to the commencement of the liquidation. Appellant filed an IA
No. 1887 of 2022 claiming that their dues of salary be treated as CIRP costs
which application has been rejected by the Adjudicating Authority.
Adjudicating Authority in the impugned order has observed that the
applicants have failed to bring on record any cogent evidence, except proof of 2
payment of salary of CIRP period to then during CIRP period in lieu of their
employment. The said finding of the Adjudicating Authority is returned in
paragraph 4.4, which is as follows:-
"4.4. We find that the Liquidator has not disputed their employment, but what question is whether the employees have actually worked during that period. We find that the applicant have failed to bring on record any cogent evidence, except proof of payment of salary of CIRP period to them during CIRP period in lieu of their employment which is not disputed, to demonstrate that they actually worked to keep the Corporate Debtor as going concern. Accordingly, we do not find merit in the prayer of the Applicants that their dues of salary for the period from 1.4.2020 to 31.3.2021 be treated as CIRP costs payable in terms of section 53(1)(a) of the Code, and not in terms of Section 53(1)(c) of the Code as proposed by the Liquidator."
3. Learned Counsel for the Appellants submits that there are ample
evidences available with the Appellants to show that they were working during
the CIRP period prior to commencement of the liquidation.
4. Learned Counsel for the Liquidator submits that the Appellants were
not working and the work of the Corporate Debtor was mainly outsourced to
carry out contracts given to the Corporate Debtor. It is submitted that one
Composite Application was filed without details of evidence of each employees
regarding their claims of working during the CIRP period, hence, Adjudicating
Authority has rightly rejected the application.
Company Appeal (AT) (Insolvency) No. 158 of 2024 & I.A. No. 497 of 2024 3
5. Learned Counsel for the Appellant contends that the Appellants have
ample evidence. He has referred to certain e-mails which were responded by
some of the employees which indicate that they are working which
submissions are refuted by Counsel for the Liquidator.
6. In facts of the present case when IA No.1887 of 2022 was filed by
compositely for all 22 employees and there was no material available to proof
that they were working, no error has been committed by the liquidator in
accepting their claims as under Section 53(1)(c). We, thus, do not find any
error in the order of the Adjudicating Authority rejecting the application.
However, in view of the submission of the Appellant that there is ample
evidence to proof their working. Liberty is given to the Appellants to submit
their evidence of working of each employees separately before the liquidator
and it shall open for the liquidator to take appropriate decision.
7. Subject to liberty as granted, this Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical)
[Arun Baroka] Member (Technical) Anjali/nn
Company Appeal (AT) (Insolvency) No. 158 of 2024 & I.A. No. 497 of 2024
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