Mohit Chawla vs Gaurav Aggarwal & Ors

(Arising out of the Order dated 16.02.2023 passed by the National Company Law Tribunal, Chandigarh Bench in I.A. 583/ 2021 in CP (IB) No. 46/Chd/Pb/2018)

IN THE MATTER OF:

Mohit Chawla, Resolution Professional in the CIRP matter M/s J.R. Agrotech Pvt. Ltd. C/o SCO 2935-36, Sector 22-C, Chandigarh - 160022. Email ID: camohitchawla@gmail.com ...Appellant

Versus

1. Gaurav Aggarwal s/o Late Sh. Raman Kumar Aggarwal, r/o Adarsh Nagar, Backside Kaudu Mal Rikhi Ram Dharamshala, GT Road, Mandi Gurdaspur, Punjab-143531. Email : gaurav8687@yahoo.com ...Respondent No. 1

2. Raghav Aggarwal s/o Late Sh. Raman Kumar Aggarwal, r/o Adarsh Nagar, Backside Kaudu Mal Rikhi Ram Dharamshala, GT Road, Mandi Gurdaspur, Punjab-143531. Email : gaurav8687@yahoo.com ...Respondent No. 2

3. Gauri Aggarwal d/o Late Sh. Raman Kumar Aggarwal, r/o Adarsh Nagar, Bckside Kaudu Mal Rikhi Ram Dharamshala, GT Road, Mandi Gurdaspur, Punjab-143531. Email : gaurav8687@yahoo.com ...Respondent No. 3 -2- Comp. App. (AT) (Ins.) No. 656 of 2023

4. Renu Aggarwal w/o Late Sh. Raman Kumar Aggarwal, r/o Adarsh Nagar, Backside Kaudu Mal Rikhi Ram Dharamshala, GT Road, Mandi Gurdaspur, ...Respondent No. 4 Punjab-143531. Email : gaurav8687@yahoo.com

Present

For Appellant: Mr. Pulkit Goyal, Advocate..

For Respondents : Ms. Pallavi Singh, Advocate.

JUDGEMENT

(22.08.2024)

NARESH SALECHA, MEMBER (TECHNICAL)

1. The present appeal has been filed by Mohit Chawla, Resolution

Professional of M/s JR Agrotech Private Limited ('Corporate Debtor') against

the Impugned Order dated 16.02.2023, passed the by National Company Law

Tribunal, Chandigarh Bench ('Adjudicating Authority') in IA No. 583/2021

filed in CP (IB) No. 46/Chd/PB/2018 which by Raman Kumar Aggarwal, the

Appellant therein (now deceased) , whereby the Adjudicating Authority has

allowed the payment of Rs. 22,61, 661.60/- as an unpaid salary including interest

to Mr. Raman Kumar Aggarwal as General Manager of the Corporate Debtor.

2. Heard Counsel for the Parties and perused the records made available

including the cited judgements.

-3-

Comp. App. (AT) (Ins.) No. 656 of 2023

3. We note that insolvency petition bearing CP (IB) No. 46/Chd/PB/2018 was

filed by the Financial Creditor (Oriental Bank of Commerce) under Section 7 of

the Code which was admitted by the Adjudicating Authority and the Corporate

Debtor was pushed into CIRP vide order dated 27.07.2018 along with imposition

of moratorium under Section 14 of the Code.

4. The Appellant submitted that Suspended Directors and other Key

Managerial Personal ('KMP') of the Corporate Debtor i.e., Raman Kumar

Aggarwal, Gaurav Aggarwal, Disha Aggarwal and Vijay Pal Singh and Co.

withdrew certain amount from the account of the Corporate Debtor during

moratorium and as such the Appellant filed CA No. 574 of 2018 under 14(1)(b)

r/w Section 4 of the Code seeking the refund of withdrawn amount from the

suspended directors and other KMPs of the Corporate Debtor.

5. The Adjudicating Authority, vide order dated 18.05.2020, allowed the said

CA No. 574 of 2018 and directions were given to the Respondents herein and

Raman Kumar Aggarwal to refund the withdrawn amount.

6. The Appellant submitted that subsequent to this order, Mr. Raman Kumar

Aggarwal sent letter dated 01.06.2020 to the Appellant with a request to release

his pending salary w.e.f. 10.07.2018 to 01.06.2020 @ Rs. 90,000/- per month and

calculated the claim of Rs. 22,61, 661.60/- which includes Rs. 20,43,871/- as

principal amount and Rs. 2,17,790.60/- as interest over the pending salary. -4-

Comp. App. (AT) (Ins.) No. 656 of 2023

7. The Appellant, vide letter dated 15.06.2020, rejected the claim of the

Respondent's stating that the Appellant never availed his services and the claim

lodged by the Respondent was false.

8. The Appellant also stated that the so-called appointment letter dated

10.07.2018, appointing Raman Kumar Aggarwal was forged and antedated as the

same was uploaded with MCA on 01.08.2018 during the moratorium.

9. It has been brought out that Raman Kumar Aggarwal filed IA No. 378 of

2020 for his outstanding salary claims which was allowed by the Adjudicating

Authority.

10. The Appellant submitted that company slipped into CIRP on 27.07.2018,

which was just few days before Raman Kumar Aggarwal resigned from the

directorship of the Corporate Debtor and in less than one month of the CIRP date,

Raman Kumar Aggarwal has allegedly claimed to be appointed as General

Manager of the Corporate Debtor.

11. The Appellant submitted that the alleged appointment letter is a fabricated

and forged letter as it is claimed to be approved in the board meeting of the

Corporate Debtor dated 12.07.2018 which was never supported by any

independent document like minutes of the board meeting claimed to be held on

12.07.2018 and even the notice for BoD meeting was not linked.

12. The Appellant submitted that in the director's report of the Corporate

Debtor for the year ending 31.03.2019 as part of 'Annual Report' signed by -5- Comp. App. (AT) (Ins.) No. 656 of 2023

suspended directors of the Corporate Debtor which included son of Raman Kumar

Aggarwal (Respondent No. 1 herein Gaurav Aggarwal) stated that no board

meeting of the Corporate Debtor was held during the entire financial year i.e.,

from 01.04.2018 to 31.03.2019, whereas Raman Kumar Aggarwal claimed that

his appointment was approved in the board meeting dated 12.07.2018.

13. The Appellant also emphasized that the Raman Kumar Aggarwal never

claimed the salary and almost after two year of CIRP, that too after the order of

Adjudicating Authority dated 18.05.2020 passed in CA No. 574 of 2018 whereby

Raman Kumar Aggarwal and other suspended directors were asked to refund the

money which they withdrew illegally during moratorium, for the first time wrote

a letter to the Appellant on 01.06.2020 claiming outstanding dues which is

nothing but a fraud.

14. The Appellant submitted that during his period as Resolution Professional,

he had never availed the services of Raman Kumar Aggarwal.

15. It has been brought out that during the pendency of IA No. 378 of 2020,

Raman Kumar Aggarwal expired and his legal heirs were impleaded as

Applicants who are now Respondents in the present appeal.

16. The Appellant assailed the Impugned Order which has been passed

ignoring the vital facts that the letter of appointment of Raman Kumar Aggarwal

was a fabricated document and also ignoring the fact that the Appellant as

Resolution Professional never availed the services of Raman Kumar Aggarwal -6- Comp. App. (AT) (Ins.) No. 656 of 2023

and further the Adjudicating Authority failed to take into consideration that no

board meeting took place during 2018 - 2019 as per directors report of the

Corporate Debtor. The Appellant submitted that the letter dated 10.07.2018

claimed by Raman Kumar Aggarwal is an antedated document, in order to

defraud the Corporate Debtor.

17. The Appellant submitted that as per Section 17(1)(c) of the Code, after the

appointment of Interim Resolution Professional, the officers and managers of the

Corporate Debtor are required to report to the Resolution Professional but Raman

Kumar Aggarwal never reported to him during the entire period.

18. The Appellant drew our attention to the judgment of the Hon'ble Supreme

Court of India in the matter of Sunil Kumar Jain Vs/ Sundaresh Bhatt Reported

at [(2022) ibclaws.in 23 SC] whereby the Hon'ble Supreme Court of India held

that the workers and employee who have not worked are not entitled to get salary.

19. The Appellant submitted that no board meetings or notice regarding

conduct of the board meeting, as prescribed under Section 173 (3) of the

Companies Act, 2013, were produced to substantiate true facts regarding board

meeting actually taken place ratifying the appointment of Raman Kumar

Aggarwal.

20. The Appellant submitted that the Corporate Debtor was involved in milling

of paddy and one of associate company of the Corporate Debtor i.e., M/s RDA

Enterprises, which is a partnership firm (in which wife of Raman Kumar -7- Comp. App. (AT) (Ins.) No. 656 of 2023

Aggarwal and wife of Gaurav Aggarwal were partners), also operated in the same

premises and as such Raman Kumar Aggarwal might have come to the premises

as claimed by him but never worked for the Corporate Debtor.

21. Concluding his arguments, the Appellant submitted that the Impugned

Order is illegal and need to be set aside.

22. Per contra, the Respondent Nos. 1,2,3 & 4 (in short Respondents) (who

are the legal heirs of late Raman Kumar Aggarwal) denied all the averments made

by the Appellant treating there as misleading and malicious.

23. The Respondent submitted that the Adjudicating Authority have taken all

the facts into consideration along with legal position and then only passed the

Impugned Order allowing the payment of outstanding salary to Raman Kumar

Aggarwal.

24. The Respondents submitted that Raman Kumar Aggarwal has resigned

from the post of director on 13.06.2018 which were prior to initiation of CIRP.

The Respondent also brought out that the Corporate Debtor is in the business of

milling of paddy for which personal contacts and personal relationship/ liasoning

is very critical and Raman Kumar Aggarwal possessed all these qualities. The

Respondents stated that looking to the work and contacts of Raman Kumar

Aggarwal, he was appointed as General Manager of the company on 12.07.2018

with a monthly salary of Rs. 90,000/-.

-8-

Comp. App. (AT) (Ins.) No. 656 of 2023

25. The Respondents alleged that the Corporate Debtor never paid any amount

to Raman Kumar Aggarwal and after waiting for considerable period of time,

Raman Kumar Aggarwal wrote a letter to the Appellant for his outstanding dues

which was turned down by the Appellant. Aggrieved by the same, Raman Kumar

Aggarwal filed an Interlocutory Application bearing I.A. No. 378 of 2020 for his

outstanding salary claim which was allowed by the Adjudicating Authority vide

the Impugned Order.

26. The Respondents submitted that the Resolution Professional, if required,

could have terminated the services of Raman Kumar Aggarwal which was not

done and as such Raman Kumar Aggarwal, is entitled to his salary and to make

such payments are within the powers of the Resolution Professional under Section

20(2)(b) of the Code.

27. The Respondents submitted that the Appellant never pleaded nor produced

any document that the services of Raman Kumar Aggarwal were terminated under

Section 25(2)(d) of the Code.

28. The Respondents stated that the Corporate Debtor was running as going

concern till January, 2021 as such the salary payable to Raman Kumar Aggarwal

should have been treated as cost incurred in running the Corporate Debtor during

the CIRP and should have become part of the CIRP cost.

29. The Respondents submitted that the resignation of Raman Kumar

Aggarwal was duly got reflected in the portal of MCA.

-9-

Comp. App. (AT) (Ins.) No. 656 of 2023

30. The Respondents submitted that the order arising in I.A. 571 of 2018 based

on the application filed by the Appellant was w.r.t. refund of money by Raman

Kumar Aggarwal and other directors, as directors of the Corporate Debtor,

whereas IA no. 378 of 2020 was filed by Raman Kumar Aggarwal for his

outstanding salary dues as General Manager, as such these are two different

issues.

31. The Respondents submitted that merely for non issuance of notice under

Section 173(3) of the Companies Act, 2013, the BoD meeting is not questionable

and would not negate the appointment of Raman Kumar Aggarwal.

32. The Respondents submitted that due to hard work of Raman Kumar

Aggarwal during CIRP, the Corporate Debtor could earn reasonable money and

at this stage Raman Kumar Aggarwal cannot be denied his outstanding dues.

33. The Respondents submitted that it was for the Resolution Professional to

take any work from the employees and Raman Kumar Aggarwal who never

denied any work and if Resolution Professional was not happy with the services

or did not require the services of Raman Kumar Aggarwal, the same should have

been terminated by Resolution Professional.

34. The Respondents submitted that judgment of Sunil Kumar Jain (Supra) is

not applicable in the present case as Raman Kumar Aggarwal worked on the post

of General Manager, which is evident from the affidavits of the business

customers and employees.

-10-

Comp. App. (AT) (Ins.) No. 656 of 2023

35. The issue in the present appeal, to be decided by us, is limited i.e., whether

the appointment of Raman Kumar Aggarwal as General Manager of the Corporate

Debtor was correct, backed by the documentation and whether Raman Kumar

Aggarwal was entitled for the outstanding salary for the alleged services rendered

by him to the Corporate Debtor ?

36. It is a fact that the Corporate Debtor was admitted into CIRP on 27.07.2018

and Raman Kumar Aggarwal had resigned from the directorship of the Corporate

Debtor on 13.06.2018 which was just a few days before the CIRP date.

37. We note the contention of the Appellant that obviously Raman Kumar

Aggarwal and the Respondent knew very well about the likely initiation of CIRP

and they did all action of appointing Raman Kumar Aggarwal as General

Manager of the Corporate Debtor to defraud Corporate Debtor and its other

creditors.

38. It is worth noting that in less than one month from resigning from the

directorship of the company, Raman Kumar Aggarwal was appointed as General

Manager who claimed to have been appointed in the board meeting held on

10.07.2018 on a the monthly salary of Rs. 90,000/-.

39. We note from the submissions that in the director's report (annual report)

of the Corporate Debtor, for the relevant year i.e., 2018-19, it has been

categorically mentioned in director's report that no board meeting took place

during the period.

-11-

Comp. App. (AT) (Ins.) No. 656 of 2023

40. We wonder that when the director's report mentions that no BoD meeting

took place they how the BoD meeting was held on 12.07.2018 in which the

appointment of Raman Kumar Aggarwal was approved. Incidentally, the

appointment letter is claimed to have been issued on 10.07.2018, whereas the

alleged board meeting was conducted on 12.07.2018 i.e., after the appointment

letter claimed to have been issued. The appointment of KMP, if so required to be

approved by board, it should have been done before hand and not subsequent to

the issue of appointment letter.

41. These facts, therefore, prima-facie do not support the claim of the

Respondents to make it reliable and convincing. Moreover, no board meeting

minutes or the board notice as required under Section 133 of the Companies Act,

2013 has been placed on record.

42. We also find it strange that Raman Kumar Aggarwal who was promoter

director of the Corporate Debtor and resigned from the company has claimed to

have been appointed as General Manager. We also note that Raman Kumar

Aggarwal has further claimed that he has worked from 10.07.2018 to May, 2020

claiming outstanding amount of Rs. 22,61, 661.60/- which includes the interest

for the delayed payment at the rate of 12%. However, Raman Kumar Aggarwal

never claimed any amount during the entire period, whereas the appointment

letter issue dated 10.07.2018 clearly stated that "your monthly carry salary will -12- Comp. App. (AT) (Ins.) No. 656 of 2023

be directly credited to your account. The pay role administrator will provide the

details to you."

43. If this appointment letter dated 10.07.2018 is the basis then obviously the

salary should have been claimed and paid to the Raman Kumar Aggarwal

regularly by the Corporate Debtor which has not happened . It is again undisputed

fact that the claim of outstanding salary by Raman Kumar Aggarwal vide its letter

dated 01.06.2020 which is after more than two years of CIRP and that too after

the order of the Adjudicating Authority dated 18.05.2020 passed in IA No. 574

of 2018 whereby Raman Kumar Aggarwal along with other directors were

directed to refund the money taken from the Corporate Debtor during moratorium

period.

44. We note that the Adjudicating Authority while disposing IA 378 of 2020,

after recording the submissions of the Appellant and the Respondents has

allowed, based on records available and the Adjudicating Authority has found that

Raman Kumar Aggarwal has been rendering continued service to the Corporate

Debtor and further no approval or extension has been made by the Resolution

Professional who was in charge of the management of the Corporate Debtor. The

Adjudicating Authority also noted that since appointment letter has not been

cancelled by the management as evidenced from the affidavits of the employees

therefore there was no justification to deny the outstanding dues of Raman Kumar

Aggarwal and based on this finding, IA No. 378 of 2020 was allowed. -13-

Comp. App. (AT) (Ins.) No. 656 of 2023

45. During the arguments, our attention was drawn to the affidavits filed by

Deepti Aggarwal partner of Corporate Debtor enterprises claiming that Raman

Kumar Aggarwal has worked for the Corporate Debtor. Similar affidavit has been

placed by Parshotam Lal, Lokesh Kumar, Raman Kapoor.

46. The Respondents relied upon four affidavits one by Dipti Aggarwal i.e.,

Partner of M/s RDA Enterprises and three of his old employees i.e., Parshotam

Lal, Lokesh Kumar, and Rakesh Kapoor who certified that Raman Kumar

Aggarwal worked during the CIRP period.

47. The Appellant submitted that the alleged affidavits appended by Raman

Kumar Aggarwal in support of his contention that he worked during the CIRP

period are also false and frivolous and the same was procured from related parties.

Deepti Aggarwal is the daughter-in-law Raman Kumar Aggarwal and wife of

Respondent No. 1 Gaurav Aggarwal whereas Parshotam Lal and Lokesh Kumar

are the old employees of the Corporate Debtor and the third employee Raman

Kumar Aggarwal had already stated that his affidavit was procured by undue

influence from Raman Kumar Aggarwal. This reads as under :- -14-

Comp. App. (AT) (Ins.) No. 656 of 2023 -15- Comp. App. (AT) (Ins.) No. 656 of 2023

48. We note from the submissions of the Respondent that Raman Kumar

Kumar Aggarwal never worked with the Resolution Professional. He further

stated that Raman Kumar Aggarwal attended most of the meeting of the CoC and

during almost 2 years Raman Kumar Aggarwal never demanded his unpaid salary

but once the breach of moratorium application was held against him on

15.08.2020, Raman Kumar Aggarwal for the first time demanded the unpaid

salary on 01.06.2020.

49. On the pointed query by this Tribunal regarding relationship with persons

who filed the affidavits before the Adjudicating Authority which was recorded in

the Impugned Order, the Appellant reconfirmed that they are related party/ family

members/ employee of the Corporate Debtor and as such the letters are not

genuine. The fact was not specifically denied by the Respondents. However,

they reiterated that as evident from such affidavits, the work was indeed done by

Raman Kumar Aggarwal.

50. After going through all the records including the Impugned Order, IA 378

of 2020, we find that the entire claim has been made by Raman Kumar Aggarwal

based on the letter dated 10.07.2018. This appointment is supposed to have been

approved in the board meeting held on 12.07.2018 which is after two days of the

appointment. And the directors report stated that no board meeting took place

during 2018 - 2019.

-16-

Comp. App. (AT) (Ins.) No. 656 of 2023

51. We also take into account that Resolution Professional has categorically

stated that Raman Kumar Aggarwal had never performed any work and in the

light of judgment of Sunil Kumar Jain (Supra) such employees who have never

performed any work during CIRP are not entitled to claim any wages.

52. Based on above, we find merit in the appeal and find that the Adjudicating

Authority has not taken all the entire and record into consideration while passing

the Impugned Order and as such the Impugned Order is not valid and legal.

53. In fine the appeal succeeds. The Impugned Order dated 16.02.2023 is set

aside. No Costs. IA, if any, are closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

Sim