Mr Babubhai Shrimali And Ors vs The Committee Of Creditors And Anr

Babubhai Shrimali & Ors. ...Appellants

Versus

The Committee of Creditors & Anr. ...Respondents

Present: For Appellants : Appeared but did not mark appearance.

For Respondents : Mr. Bishwajit Dubey and Ms. Srideepa Bhattacharya, Advocates for RP.

ORDER

11.01.2023 Heard learned Counsel for the Appellant. This appeal is

directed against the order dated 19.10.2022 passed by the Adjudicating

Authority (National Company Law Tribunal, Ahmedabad Bench) by which the

Application filed by the suspended Directors of the Board of Directors of the

Corporate Debtor seeking a direction to make payment of their salaries after the

initiation of CIRP has been rejected.

2. The appellants were suspended Directors whose claim was that they were

drawing salaries of Rs.3,00,000/-, Rs. 5,83,334/- and Rs. 6,17,980/- before

CIRP commenced. After commencement of CIRP, the case is that they have

rendered services on the direction of IRP but the emoluments have not been

paid. It is submitted, however, immediately within one month and twenty eight

days they have submitted their resignations on 28.10.2021. CIRP commenced

on 01.09.2020.

Company Appeal(AT)(Insolvency) No. 16 of 2023 Page 1 of 2

3. The claim of the Appellant for payment of salary during the period of CIRP

was taken before the CoC on several occasions. CoC after deliberations, refused

to make the payment holding that it is a related party transaction and prior

approval of the CoC was required.

4. Learned Counsel for the Appellant submits that the Appellants were

entitled for salary since they were directed to work by IRP and had they not been

directed, they would have got work elsewhere.

5. We have considered the submissions of the Appellant and perused the

records. The Adjudicating Authority has rightly taken the view that as per

requirements of Section 28 of IBC for any payment to the related parties

transaction, prior approval of the CoC was required. There being no approval of

the CoC either prior or subsequent, the claim of the Appellant for payment of

their salaries within period of CIRP has rightly been refused.

6. We do not find any error in the impugned judgment.

The Appeal is dismissed.

(Justice Ashok Bhushan) Chairperson

(Mr. Barun Mitra) Member(Technical) akc/Nn

Company Appeal(AT)(Insolvency) No. 16 of 2023 Page 2 of 2