NCLAT | Pre-existing dispute regarding salary payable renders S. 9 IBC application not maintainable

National Company Law Appellate Tribunal (NCLAT), New Delhi: The Bench comprising of S.J. Mukhopadhaya (Chairperson) and A.I.S Cheema, Member (Technical) and Kanthi Narahari, Member (Technical) declared an appeal filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 not maintainable in view of the pre-existing dispute.

In the present case, an appeal filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 by Respondent 1 against ‘Axiss Dental Private Limited’ (Corporate Debtor) was admitted by National Company Law Tribunal, New Delhi by the impugned order.

Counsel appearing for appellant Ruchin Middha and Iggu Chittiappa, stated that there was pre-existing dispute due to which application under Section 9 of I&B Code was not maintainable. Further, they placed reliance on Company Petition no. 96/241-242/ (PB) of 2018 preferred by Respondent 1 under Sections 241, 242 and 244 of Companies Act, 2013 alleging certain acts of ‘oppression and mis-management’.

Counsel appearing on behalf of Respondent 1 submitted that Respondent 1 is a shareholder, CEO and Director of the Company. It was stated that he was not paid salary for certain months and in spite of demand notice under Section 8(1), ‘Corporate Debtor’ defaulted to pay.

Tribunal found that the company petition under Sections 241 and 242 of Companies Act 2013 was still pending before NCLT, New Delhi.

Respondent 1 issued a demand notice under Section 8(1) of I&B Code when the above-stated application was still pending in respect to the payment of salary and the decision of NCLT was awaited in that regard.

Therefore, NCLAT on perusal of the facts as stated above found that there is a pre-existence of dispute with regard to salary payable to Respondent 1 and the decision for the same was awaited prior to issuance of ‘demand notice’ under Section 8(1) and held that the application under Section 9 of I&B Code was not maintainable.

Further, the orders passed by adjudicating authority in regard to the appointment of ‘Interim Resolution Professional’, declaring a moratorium, etc. pursuant to the impugned order of admission and action taken by ‘Resolution Professional’ were all declared illegal and set aside. ‘Corporate Debtor’ was released from all the rigour of law and allowed to function independently through its board of directors with immediate effect.

Thus, the appeal was allowed in the above terms and application under Section 9 of the I&B Code declared not maintainable in view of the pre-existing dispute. [Vivek Pasricha v. Amit Sachdeva, 2019 SCC OnLine NCLAT 467, decided on 02-09-2019]

Join the discussion

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.