Ashit Dhirajlal Doshi vs Bijay Murmuria-Liquidator of Doshion Pvt. Ltd.

04.07.2024: Heard learned counsel for the parties. These two Appeals have been filed by the Suspended Directors of the Corporate Debtor challenging order of the Adjudicating Authority by which the Adjudicating Authority has upheld the order of the Liquidator rejecting the claim filed by the Appellant. Both the appeals arise out of similar set of facts and issues and it shall be suffice to refer to facts in Company Appeal (AT) (Insolvency) No. 1051 of 2024 for deciding both the appeals.

CIRP against the Corporate Debtor commenced on 31.08.2021. The Adjudicating Authority directed for liquidation. Before the Liquidator, Appellants filed the claim in Form E claiming their salary during the CIRP period, which according to the Appellants was in lieu of the work done as Executive Director. The Liquidator rejected their claim and communicated the same through email dated 11.12.2023. Aggrieved by the said order, I.A. No.144 of 2024 was filed by the Appellant – Akshit Dhirajlal Doshi, which came to be rejected by the impugned order.

Learned counsel for the Appellants challenging the order submit that consequent to the initiation of CIRP is only to suspend the functions of the Directors as part of the Board of Directors, however, they are entitled to function as Directors after initiation of CIRP and receive emoluments which they were receiving prior to CIRP period. It is submitted that the Appellants have rendered their services and assisted the IRP/RP in carrying out the functions of the Corporate Debtor, hence, they are entitled for salary.

Learned counsel for the Respondent refuting the submission of the Appellants submits that the Appellants being Ex-Director were not entitled for any salary after commencement of CIRP and the IRP/RP at no point of time directed the Appellants to carry any work. It is submitted that the Appellants’ claim was submitted before the Liquidator and there was no material to indicate any direction of IRP/RP to carry on work. It is submitted that under Section 19, Ex-Director are obliged to render cooperation to IRP/RP and it was statutory obligation of the Appellants and they cannot claim emoluments.

Learned counsel for the parties have relied on judgments of this Appellate Tribunal as well as Hon’ble Supreme Court in support of their submissions.

We have considered the submissions of learned counsel for the parties and perused the record.

Present is a case where claim was filed by the Appellant in Form E before the Liquidator. The copy of the claim form has been brought on the record as Annexure A-6 which is form for proof of claim by workman or employee. When we look into the claim, it is clear that the claim is from the date 01.09.2021 i.e. from the next date of CIRP commencement to 15.07.2022 and under Column 10 document relied were appointment letter, ledger and PF TRF Form. The appointment letter which is relied by the Appellant was appointment letter issued prior to commencement of CIRP in favour of the Appellant. In the entire claim form there is no assertion or any material to prove appointment after commencement of CIRP or order issued by IRP/RP to permit them to work on emoluments.

After commencement of CIRP, the management of the Corporate Debtor is vested in IRP/RP and it is IRP/RP who has to take steps to engage the employees and workmen who will work after commencement of CIRP. The Appellant may be right in his submission that in event Ex-Directors are permitted to work, they may claim their emoluments but in the present case the Appellants at no point of time were appointed on payment of emoluments by the IRP or RP, which is clear from their claim form. The mere fact that they were getting salaries prior to commencement of CIRP is no ground to claim same salary after commencement to CIRP.

We, thus are of the view that no error has been made by the Liquidator in rejecting claim filed by the Appellant for payment of salary after commencement of the CIRP.

Now coming to the judgment which has been relied by the learned counsel for the Appellant i.e. judgment of this Tribunal in “Company Appeal (AT) (Ins.) No. 290 of 2017, Subasri Realty Private Limited vs. Mr. N. Subramanian & Anr.” where this Tribunal has made following observations:

The above observation was not in case where payment to suspended directors was claimed after commencement of the CIRP and such issue which was not under consideration before this Tribunal in the said case, hence, the judgment in the above case does not render any assistance to the Appellant.

The next judgment relied by learned counsel for the Appellant is judgment of Hon’ble Supreme Court in “(2022) 7 SCC 540, Sunil Kumar Jain and Others vs. Sundaresh Bhatt and Others”. The Hon’ble Supreme Court in the said judgment has clearly held that those workmen who were directed to actually worked during CIRP were entitled for wages. Reliance has been placed on Para 18 of the judgment, which is as follows:

There is no dispute to the proposition laid down in the above case. The issue remains as to whether those workmen who has actually worked when the corporate debtor was a going concern during the CIRP are entitled for salary. As observed above, in the present case there is no material to indicate that the Appellants – Ex-Directors were directed to work on payment of emoluments during the CIRP, hence, the said judgment cannot render any help in the present case.

Learned counsel for the Appellant has lastly referred to letter dated 18.10.2021, where it appears that it has referred to various works carried out by the Appellant. Be that as it may. The said letter was issued by the Appellant himself and cannot be treated to be any order of the IRP/RP directing the Appellant to work on payment of emoluments. Thus, the said letter also does not render any aid to the Appellant.

We, thus, are of the view that no error has been committed by the Adjudicating Authority in rejecting the IA filed by the Appellant. There is no merit in the Appeal. Appeal is dismissed.