Subasri Realty Private Limited vs N. Subramanian & Anr

M/s. Subasri Realty Private Limited ...Appellant

Vs.

Mr. N. Subramanian & Anr. ...Respondents

Present: For Appellant: - Shri Mohan Parasaran and Shri R.C. Paul Kanagaraj, Senior Advocates assisted by Ms. D. Revathi Karthick, Mr. Vishnu and Ms. Aditi Dani, Advocates.

For Respondents:- Mr. S. Santanam Swaminadhan and Ms. Nishita Khurana, Advocates for Respondent No.1. Mr. Arnav, Advocate for IRP.

Mr. Senthil Jagadeesan, Shruti Iyer and Ms. Suriti Chowdhary, Advocates for Intervener.

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

This appeal has been preferred by 'M/s. Subasri Realty Private

Limited'., Shareholder of 'M/s. Aruna Hotels Limited'- ('Corporate Debtor')

against the order dated 17th November, 2017 passed by the Adjudicating

Authority (National Company Law Tribunal), Division Bench, Chennai,

whereby and whereunder the application preferred by the Respondent- Mr.

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N. Subramanian- ('Operational Creditor') under Section 9 of the Insolvency

and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code') has been

admitted, order of 'Moratorium' has been passed and 'Interim Resolution

Professional' was appointed with certain directions.

2. The main plea taken by the Appellant is that there is an 'existence of

dispute' and the claim also is barred by limitation and there is delay and

laches; therefore, the application was not maintainable.

3. Learned counsel appearing on behalf of the Respondent- ('Operational

Creditor') submitted that there was no 'existence of dispute' and the record

in Form-5 being complete, and taking into consideration the fact that there

is a debt and default, the Adjudicating Authority rightly admitted the

application.

4. Admittedly, the Respondent- ('Operational Creditor') was an employee

of 'M/s. Aruna Hotels Limited'- ('Corporate Debtor'). He claimed arrears in

salary from 1998 to till his retirement in 2013. At the time of his last tenure,

his salary was Rs. 35, 000/- per month and the difference in wages till the

date of retirement claimed to be Rs. 1,87,75,631/- (Rupees One Crore

Eighty Seven Lakh Seventy Five thousand Six Hundred and Thirty One

Only).

5. The demand notice under Section 8(1) was issued by the Respondent-

('Operational Creditor') on 29th June, 2017 showing total debt of Rs.

1,87,75,631/- (Rupees One Crore Eighty Seven Lakh Seventy Five thousand

Six Hundred and Thirty One Only). On the receipt of such notice, the

Company Appeal (AT) (Insolvency) No. 290 of 2017 3

'Corporate Debtor' by reply dated 5th July, 2017 intimated as follows:

Company Appeal (AT) (Insolvency) No. 290 of 2017 4

Company Appeal (AT) (Insolvency) No. 290 of 2017 5

Company Appeal (AT) (Insolvency) No. 290 of 2017 6

"

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6. From the aforesaid letter, it is clear that the Respondent-

('Operational Creditor') was working with the 'Corporate Debtor' and retired

on 1st February, 2013, when the 'Corporate Debtor' was under the control

of erstwhile management. After takeover by present management, on the

basis of record the 'Corporate Debtor' intimated the Respondent that

nothing was due except the gratuity amount. It was brought to our notice

that the 'Employees Provident Fund Organisation', Chennai by letter dated

13th April, 2016 intimated the 'Corporate Debtor' that the claim of the

Respondent- ('Operational Creditor') has already settled which is as follows:

"EMPLOYEES PROVIDENT FUND ORGANISATION NO. 37, ROYAPETTAH HIGH ROAD, OPPOSITE SWAGAT HOTEL, CHENNAI TAMIL NADU, 600014 Region: CHENNAI Office: CHENNAI

No: TN/XAS/145/REJECTION/ Dated: 13/04/2016

To ARUNA HOTELS LTD.

"ARUNA CENTRE" 745, STERLING ROAD, CEHNNAI, 685 TAMIL NADU, 600034

Ref. No. Claim ID: TNMAS160300026845/ Member ID:

TNMAS00056010000000136

Sub: Rejection of Claim ID: TNMAS160300026845 DATED 22/03/2016

Sir/Madam,

Your above mentioned claim Form 19 pertaining to Mr/Mrs/Km N. SUBRAMANIAN having A/C no. TN/MAS/0005601/000/0000136 under the EPF Scheme has been rejected/returned due to the following reason(s).

CLAIM ALREADY SETTLED

Initiator's Remarks: CLAIM ALREADY SETTLED

Note: - In case the return/rejection if for any additional information/document, the claim may be resubmitted after rectifying the discrepancies noted above.

Enclosure: - Claim Form-19

Task ID: 14502 Yours Faithfully,

Copy to :- N. SUBRAMAIAN AO/APFC"

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7. The Respondent- ('Operational Creditor') himself has pleaded that the

salary is due since 1998 which was not paid but delay of raising claim of

arrears of salary for the period 1998 to 2016 has not been explained.

8. The Hon'ble Supreme Court in "Innoventive Industries Ltd Vs. ICICI

Bank─ 2017 SCC OnLine SC 1025" while explaining the provisions of

Section 9 observed as follows:

"29. The scheme of Section 7 stands in contrast with

the scheme under Section 8 where an operational

creditor is, on the occurrence of a default, to first

deliver a demand notice of the unpaid debt to the

operational debtor in the manner provided in Section

8(1) of the Code. Under Section 8(2), the corporate

debtor can, within a period of 10 days of receipt of the

demand notice or copy of the invoice mentioned of a

dispute or the record of the pendency of a suit or

arbitration proceedings, which is pre-existing- i.e.

before such notice or invoice was received by the

corporate debtor. The moment there is existence of

such a dispute, the operational creditor gets out of the

clutches of the Code."

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9. In the present case as we find that there is an 'existence of dispute'

about arrears of salary and the Respondent has also failed to explain the

delay in making claim of arrears alleged to be done since 1998 to 2016

(delay of about 18 years), we hold that the application under Section 9

preferred by the Respondent was not maintainable.

10. For the reasons aforesaid, we set aside the impugned order dated 17th

November, 2017 passed by the Adjudicating Authority in

CP/597/(IB)/CB/2017.

11. In effect, order (s), passed by the Adjudicating Authority appointing

'Resolution Professional', declaring moratorium, freezing of account, and all

other order (s) passed by the Adjudicating Authority pursuant to impugned

order and action, if any, taken by the 'Interim Resolution Professional',

including the advertisement, published in the newspaper calling for

applications all such orders and actions are declared illegal and are set

aside. The application preferred by Respondent under Section 9 of the 'I&B

Code' is dismissed. Learned Adjudicating Authority will now close the

proceeding. The 'Corporate Debtor' (company) is released from all the rigour

of law and is allowed to function independently through its Board of

Directors from immediate effect.

12. The Adjudicating Authority will fix the fee of 'Resolution Professional',

and the 'Corporate Debtor' will pay the fees of the 'Interim Resolution

Professional', for the period he has functioned. The appeal is allowed with

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aforesaid observation. However, in the facts and circumstances of the case,

there shall be no order as to cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial)

NEW DELHI 16th July, 2018 AR

Company Appeal (AT) (Insolvency) No. 290 of 2017