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Judgment
[Per: Justice Mohd. Faiz Alam Khan, Member (Judicial)]
The instant appeal has been filed by the Appellant / Operational Creditor under Section 61 (1) of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) against the order dated 24th September, 2024 (impugned order) passed by the NCLT, Mumbai Bench, Court No. VI (the Adjudicating Authority) in CP (IB) No. 4400/MB/2019 whereby the application filed by the Appellant under Section 9 of the Code for a total operational debt of Rs. 7,04,508/- for initiation of the Corporate Insolvency Resolution Process (CIRP) against the Respondent has been rejected.
Ld. Counsel for the Appellant submits that on 26.03.2013 the Appellant and the Respondent had entered into an employment agreement where under the Appellant was appointed as Senior Manager (Mechanical) in terms of the conditions specified in the employment agreement and thereafter the Appellant worked on several assignments for the Respondent and discharged his duties affectively.
It is further submitted that as a matter of course ESOP’s cash out allowance and retention scheme, 2017 (ECAL Scheme) was provided to the Appellant providing certain additional allowances vide letter dated 19.09.2017 and the Appellant was informed that he has qualified for the said scheme and would be considered as being eligible for the benefits accruing therein.
It is further submitted that in 2017 the Appellant was designated as the project manager for the Bharatpur- Gangapur Hinduan Sewerage Project and also designated as the exclusive in charge of the aforesaid project areas, however, on 23.09.2017 an incident had occurred at Gangapur project site wherein no personnel was injured but having regard to the serious nature of the incident, the Appellant in collaboration with the Respondent took various corrective/remedial steps between October, 2017 and March 2018. On 08.02.2018 and 21.04.2018 another series of incidents occurred which resulted in injury to the workmen and senior management of the Respondent directed the Appellant to tender his resignation which was given by the Appellant by way of email dated 24.04.2018 and was provisionally accepted on 07.05.2018.
It is further submitted that the Respondent vide email dated 14.05.2018 converted the resignation to suspension and directed that during the suspension period the Appellant could not enter into the premises of the Respondent nor could leave the station without express permission and further the Appellant was not paid any remuneration until a final decision was taken by the management of the Respondent.
It is further submitted that the Appellant, due to the non-clearance of dues of June, 2018 along with non-clearance of ECAL and retention amount, drawn attention of the management vide email dated 06.07.2018 and also sought permission to be relieved from 14.07.2018 and also requested for his full and final payments and full and final payments was credited to the account of the Appellant on 10.09.2018 but the Appellant noticed that salary for the month of June, 2018 along with ECAL and retention amount of July, 2017 to June, 2018 as well as for the notice period has not been paid, which was brought to the attention of the management and several emails were exchanged between them but the management of the Respondent did not pay any heed to the request of the Appellant and the Appellant was left with no option but to issue the statutory demand notice under Section 8 of the Code on 30.01.2019 requesting the Respondent to pay the aforesaid dues of the Appellant which was replied by the Respondent on 23.02.2019 whereby they denied their responsibility, however, contents of the notice could not be believed as are false and concocted and may not amount to any prior dispute.
It is further submitted that the reply of the notice given by the Respondent it was also stated that there were glaring disputes between the Appellant and the Respondent, however, the contention is not truthful as had there been a glaring dispute between the parties the suspension of the Appellant would have not been revoked.
It is further submitted that the Adjudicating Authority by passing the impugned order has dismissed the application filed by the Appellant on the ground of threshold as well as prior dispute.
It is further submitted that by preferring the aforesaid application the Appellant has demanded a total operational debt of Rs. 7,04,508/-comprising salary for the month of June 2018 along with ECAL and retention pay from July, 2017 till June 2018 as well as of the notice period and also interest charges of Rs. 39,877/- @ 12% p.a from Sep, 2018 to Jan, 2019, however, the Tribunal enormously opined that keeping in view of the ECAL scheme and the employment agreement the Appellant is not entitled for any salary occurred in the period wherein he was retained and suspended without looking into the fact that the suspension of the Appellant was revoked by the Respondent and the Appellant was reinstated at his earlier position in the company of the Respondent.
It is further submitted that the Tribunal has also failed to take into consideration that having cancelled the suspension of the appellant, he became the employee of the Respondent and is entitlement to the benefits provided in the ECAL Scheme.
It is further submitted that after reinstating the Appellant vide email dated 23.06.2018 of the Respondent, the Appellant cannot be considered as an employee who has resigned and serving notice period in view of the terms of ECAL scheme which otherwise states that all future payments shall be provided to the employees who resigned or serving notice period on or before the date of payment of ECAL Scheme.
It is further submitted that the Tribunal has failed to take into consideration that the dispute raised by the Respondent is a moon shine dispute which is not having any substance and also ignoring that during whole time i.e. from 24.04.2018 till 23.06.2018 the Appellant in fact was serving the Respondent and he must be considered fit for the ECAL scheme benefits, therefore, the impugned order passed by the Adjudicating Authority is liable to be set aside.
Ld. Counsel for the Appellant submits that the Hon’ble Tribunal erred in concluding that the Reply by the Respondent dated 23.02.2019 (at Page 183 of Vol. 2) to the demand notice dated 30.01.2019 (at Page 102 of Vol. 1) of the Operational Creditor can be treated as a notice of dispute from the (Corporate Debtor to the Operational Creditor is a pre-existing dispute. It is stated that the Reply sent by the Respondent is nothing but a moon shine defense raised by the Respondent.
It is further submitted that the Hon’ble Tribunal failed to note despite a resignation was tendered by the Appellant vide email dated 24.04.2018, the Appellant cannot be disentitled from the benefits of the ECAL Scheme as the Appellant was under direct control/command of the Respondent which at first had converted the resignation of the Appellant into suspension and subsequently also revoked the suspension leading to reinstatement of the Appellant with the Respondent.
It is further submitted that the Hon’ble Tribunal failed to note that no valid grounds of pre-existing dispute were raised by the Respondent in its reply dated 23.02.2019 qua the employment of the Appellant once the Appellant was reinstated via email dated 23.06.2018 and hence on the basis of which the Appellant became entitled to the ECAL scheme benefits. Thus, there existed no pre-existing dispute between the parties to be resolved.
It is further submitted that the Hon’ble Supreme Court in the case of “Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited Civil Appeal No. 9405 Of 2017” has thoroughly discussed the “pre-existing dispute” and stated that in order to reject an application under Section 9 of the Code, the existence of the dispute and/or suit or arbitration proceedings must be pre-existing, meaning it must have existed before the receipt of the demand notice or invoice, as the case may be. That in the present case, once the Appellant was reinstated by the Respondent itself, there existed no dispute between the parties and hence the same cannot be termed as “pre-existing” dispute as has been erred by the Hon’ble Tribunal. Similarly, Hon’bIc Appellate Tribunal in the case of “Soham Polymers Private Limited Vs. Flocksur India Private Limited” Company Appeal (AT) (Insolvency) No. 924/2021, has held that in proceeding under Section 9 of the Code, the Court has to be satisfied that dispute truly exists in fact and is not spurious, hypothetical or illusory.
Ld. Counsel for the Respondent on the other hand submits that the Adjudicating Authority has passed a factually and legally sound order and no interference is required therein. Elaborating further, it is submitted that self-contradictory claims with regard to the amount claimed by the Appellant has been made vide various emails, notices and pleadings and therefore, it shows that the amount claimed by the Appellant was not crystallised and was disputed.
Ld. Counsel for the Respondent in order to buttress his aforesaid submissions has drawn our attention to the fact that in application moved under Section 9 of the Code precisely in part iv Rs. 7,04,508/-/- comprising of Rs. 6,96,660/- along with interest of Rs. 39,877/- from Sep, 2018 till Jan, 2019 were claimed, however, two scenarios given in Annexure C to the part iv different amounts i.e Rs. 5,48,260/- and Rs. 6,64,631/- have been claimed while in legal notice dated 05.01.2019 amount of Rs. 7,28,480/-and vide email dated 20.09.2018 amount of Rs. 6.99 Lac and vide email dated 29.11.2018 Rs. 7.35 Lac has been claimed and no explanation has been given in this regard and it also shows that the Appellant has taken inconsistent stand regarding the heads under which amounts are being claimed.
It is further submitted that genuine dispute pertaining to the alleged operational debt claimed by the Appellant was pre-existing between the parties and was a long standing dispute much prior to the issuance of demand notice dated 30.01.2019 and thereafter a legal notice was issued by the Appellant on 05.01.2019 and in reply to the said notice the answering Respondent has categorically denied its liability disputing both the entitlement and the quantum of the amount and despite the aforesaid denial/dispute shown by the Respondent, the Appellant proceeded to issue statutory demand notice under Section 8 of the Code and while replying the same on 23.02.2019 the Respondent once again denying the alleged operational debt and again disputed the entitlement under ECAL scheme and retention pay which has already been recorded by the Adjudicating Authority in the impugned order.
Ld. Counsel for the Respondent while drawing our attention towards the correspondence held between the parties vide emails of date 20.09.2018, 02.11.2018, 29.11.2018, 01.11.2018 and 30.11.2018 submits that the dispute also reflected from the correspondence of the Appellant as well as the reply given by the Respondent and these conflicting issues cannot be adjudicated in summary proceedings under the Code which requires an opportunity to the parties to tender oral as well as documentary evidence and the dispute between the parties requires detailed adjudication on facts.
It is further submitted that the pre-existing dispute between the parties is not a moon shine defence and the parties are in dispute since the illegal demand of salary and the entitlement of the ECAL scheme during the notice serving period was raised by the Appellant and therefore there appears no illegality in the conclusions drawn by the Adjudicating Authority.
Ld. Counsel for the Respondent in the last submits that by filing the application which has been correctly dismissed by the Adjudicating Authority a provisions of the Code were attempted to the used as a recovery proceeding on the basis of serious employment dispute which is not permissible. It is also submitted that new document would be placed at the appellate stage.
Ld. Counsel for the Respondent in support of his submissions has relied on the law laid down by the Hon’ble Supreme Court as well as by this Appellate Tribunal in following case laws: -
Mobilox Innvoations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. (Civil Appeal No. 9405 of 2017)
Yash Nachrani, Director of Suspended Board of Directors Coppertun Brewing Pvt. Ltd. vs. Pardesi Construction Pvt. Ltd. and Ors. (CA (AT) (Ins.) No. 625 of 2022.
Akhilesh Kulshrestha vs. M/s SAAB India Technologies Pvt. Ltd. (CA (AT) (Ins.) No. 353 of 2020.
Ruchira Green Earth Pvt. Ltd. vs. KLB Komaki Pvt. Ltd. (2025 SCC Online NCLAT 1256)
Agarwal Veneers vs. Fundtonic Service Pvt. Ltd. (2022 SCC Online NCLAT 3355).
Babulal Vardharji Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Ltd.
Power Finance Corporation Ltd. vs. M/s Shree Maheshwar Hydel Power Corporation Ltd. 2018 SCC Online NCLAT 110.
We have heard Ld. Counsel for the parties and have perused the record.
There are certain facts which appears to be not disputed between the parties. It is not in dispute that the Appellant was employed by the Respondent and they entered into an employment agreement on 26.03.2013. It is also not in dispute that during the course of employment vide letter dated 19.09.2017 addressed to the Appellant the management of the Respondent has included the Appellant in the ECAL Scheme whereby certain additional allowances were to be paid to the Appellant.
Both above mentioned documents appears to be necessary for just disposal of the instant appeal and relevant extracts of the same are being reproduced as under: -
“15. Termination of Contract
This contract may be terminated at any time by either party giving 3 months' notice in writing to that effect to-the-other, subject however, to the Company's right to pay 3 months' salary in lieu of such-notice to you. Further, in the event of your giving a notice of termination shorter than the above period of 3 months, the Company shall have, at its sole discretion, the right to adjust any leave due to you and/or recover from you such amounts towards notice pay for the shortfall in the period of notice. The Company may at its sole discretion terminate the Contract of Employment without notice and/or salary in lieu of notice, if in the opinion of the Company, the continuance of your employment is detrimental to the interest of the Company. Provided that, in the event of termination as provided hereinabove, all benefits/perquisites/allowances shall stand forfeited immediately, and you will only receive any statutory benefits as applicable. to you on the date of your termination.”
ECAL-2017C and Retention Pay-2017C
The Management is pleased to introduce ECAL-2017C and Retention Pay-2017C with a view to retain good performers.
Accordingly, you will be eligible to receive the following:
A. ECAL-2017C
You will be paid ECAL-2017C of Rs. 83000 per quarter at the end of each quarter, along with the salary for the months of March, June, September & December, commencing the quarter July-Sep 2017, till 30 June, 2021
B. Retention Pay-2017C
You will be eligible to receive a total Retention Pay-2017C of 1770000, spread over 4 years, commencing 19 July 2017 as follows;
Payable at the %age of total end of year amount payable as retention pay
For 01.07.2017 – 30.06.2018 25% For 01.07.2018 – 30.06.2019 25% For 01.07.2019 – 30.06.2020 25% For 01.07.2020 – 30.06.2021 25% Total amount payable as retention pay 100% Tax liability, if any, on the above payments will be to your account.
In addition to the above, you will be paid additional ECAL'and additional Retention Pay @ 12.5% of the respective above mentioned amounts when posted at project sites. This additional amount is payable on pro-rata basis only for, the duration you are posted at project sites
This is to bring to your kind attention that all future payments due on account of ECAL-2017C & Retention Pay-2017C-shall be forfeited for employees who resigned and or are serving notice period on or before the date of payment-of-ECAL-2017C & Retention Pay-2017C.
The Company reserves the right to withdraw or to reduce these payments for a employees or for any individual employee, at any time and for any reason whatsoever.
Total confidentiality of the amounts awarded is very important: Disclosure of the same will be treated as breach of trust and will be viewed seriously.
All other terms and conditions of your existing employment shall continue to be force and effect.
We wish you success in your efforts to achieve your objectives.
Yours faithfully, for LARSEN & TOUBRO LIMITED
(Emphasis given by us)
It is also not in dispute that after happening of certain incidents wherein some employees of the Respondent were injured the Appellant has tendered its resignation on 24.04.2018 which was also provisionally accepted by the Respondent on 07.05.2018 and also that on 23.06.2018 the suspension of the Appellant was revoked and he was directed to resume his duties after meeting with Sr. Management officials.
In Mobilox Innovations Pvt. Ltd. vs. Kirusa Software Pvt. Ltd. (Civil Appeal No. 9405 of 2017), Hon’ble Supreme Court held as under:
“40.It is clear, therefore, that once the operational creditor has filed an application, which is otherwise complete, the adjudicating authority must reject the application under Section 9(5)(2)(d) if notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility. It is clear that such notice must bring to the notice of the operational creditor the “existence” of a dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties. Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible contention which requires further investigation and that the “dispute” is not a patently feeble legal argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is not spurious, hypothetical or illusory, the adjudicating authority has to reject the application”.
In Akhilesh Kulshrestha vs. Saab India Technologies Pvt. Ltd. (CA (AT) (Ins) No. 353 of 2020 it was held by this Appellate Tribunal as under:
“13.The Appellants’ claims that the Respondent has failed to pay the salary and other dues for the period from March 2, 2019 to May 20, 2019, amounting to Rs. 30,01,999/-, during which period, he claims that he was working as a Director, post termination of his services as CFO. The Appellant contends that the documents of the Respondent, which were filed by the Respondent before various statutory authorities indicate that the Appellant was receiving the salary in dual capacity as the Whole-Time Director and Chief Financial Officer. He specifically relies on e-form MR-1 which is a return of the appointment of key managerial personnel dated 14th October 2015 filed by the Respondent. This document is filed under Sections 196 and 197 of the Companies Act 2013, which is a document to notify the Registrar of Companies about the appointment and remuneration of the Managing Director or Whole Time Director (WTD). Per contra the Respondent claims that the Appellant was only liable to be paid the salary of ₹9,50,000 per month as the Respondent’s CFO, in accordance with the Employment Contract, and no remuneration was separately payable to the Appellant for the position of a Whole-time Director. It is also claimed that as a company policy, Respondent’s employees are not paid any additional remuneration for sitting on the board. Accordingly, the Appellant was not paid any remuneration for his role as the Whole-time Director - either for holding the position as a Whole-Time Director or a sitting fee for attending a board meeting, as is evident from the minutes of the board meeting and AGM appointing the Appellant as Whole-Time Director - which mention no remuneration to be paid to the Appellant. Minutes of the AGM meeting are at @ Pg. nos. 147-148 of Vol I of the APB”.
“32.The Respondent also claims that the relationship between the Appellant and the Respondent arises out of the employment contract and the dispute raised by the Appellant before the NCLT was one arising out of the employment contract and was therefore purely contractual in nature and ought to be resolved in terms of the dispute resolution process agreed by the parties in the employment contract. The employment contract, under Clause 9, provides for resolution of disputes through arbitration by a sole arbitrator. Accordingly, the NCLT and this Tribunal are not the appropriate for adjudication of a contractual dispute. Therefore, the Petition was not maintainable in any case. Without going into further details on this issue, we only note that there is a pre-existing dispute for deciding the case in hand”.
This Appellate Tribunal in M/s Agarwal Veneers vs. Fundtonic Service Pvt. Ltd. (2022 SCC Online NCLAT 3355) held as under:
“18.In ‘Mobilox Innovations Private Limited’ Vs. ‘Kirusa Software Private Limited’, (2018) 1 SCC 353, the Hon’ble Apex Court has examined in detail the United Nations Legislative Guide on Insolvency, in which the IBC finds its roots. Any Application to commence CIRP can be denied when the Creditor is using Insolvency as an inappropriate substitute for Debt Recovery Procedures.
19.If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of ‘Reorganising’ or ‘Resolution of the Company’ does not arise. This Tribunal in ‘Binani Industries Limited’ Vs. ‘Bank of Baroda & Anr.’, Company Appeal (AT) (Ins.) No. 82 of 2018, has differentiated between ‘Recovery’ and ‘Resolution’ and has observed that IBC is not a Recovery Proceeding. ‘Recovery’ dispossesses the ‘Corporate Debtor’ of its assets while a Resolution is an effort to keep it afloat. Further, this Tribunal in ‘Asset Advisory Services’ Vs. ‘VSS Projects’, CP (IB) No. 96/7/HDB (2017), and also in ‘Praveen Kumar Mundra’ Vs. ‘CIL Securities Ltd.’, 2019 SCC OnLine 21 | P a g e Company Appeal (AT) (Insolvency) No. 512 of 2021 NCLAT 334, has noted that CIRP cannot be initiated with fraudulent intent ‘for any purpose other than the Resolution of Insolvency or Liquidation’ and therefore it is clearly covered under Section 65 of the Code”.
Same Principle has been upheld by this appellate tribunal in Power Finance Corporation Ltd. vs. M/s Shree Maheshwar Hydel Power Corporation Ltd. (2018 SCC Online NCLAT 110)
Ld. Counsel for the Respondent has also relied on the law laid down by this appellate tribunal in Power Finance Corporation Ltd. vs. M/s Shree Maheshwar Hydel Power Corporation Ltd. (2018 SCC Online NCLAT 110) having regard to the law laid therein, we find that it is not applicable to the facts and circumstances of this case.
It may also be recalled that this appellate tribunal in Ruchira Green Earth Pvt. Ltd. vs. KLB Komaki Pvt. Ltd. (2025 SCC Online NCLAT 1256) has reiterated that in presence of a genuine pre-existing dispute the Section 9 application may not be allowed.
Ld. Counsel for the Respondent has relied by the Hon’ble Supreme Court in Babulal Vardharji Gurjar vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr. (2020) 15 SCC 1 has held in:
“21.The expositions abovementioned make it clear that the Insolvency and Bankruptcy Code, 2016 has been enacted to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons and other entrepreneurs in a time-bound manner so as to ensure maximisation of value of assets of such persons and to balance the interest of all the stakeholders. As regards corporate debtor, the primary focus of the Code is to ensure its revival and continuation by protecting it from its own management and, as far as feasible, to save it from liquidation. As tersely put by this court in Swiss Ribbons, the Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors”.
Bone of contention of the parties appears to be that the contention of the Appellant is that he was forced and pressurised to tender his resignation and his resignation was converted into his suspension and he was further asked not to enter the premise and also not to leave the station without prior permission of the management and therefore for all purpose, in that period, he was serving the Respondent and thus he is entitled to the salary of that period including the emoluments which he must get under the ECAL Scheme. Contrary to this the claim of the Respondent appears to be that though the suspension of the Appellant was revoked but he did not join his duties and keeping in view the specific clause provided in the ECAL Scheme of 2017 read with Agreement of employment, all future payments due on account of this scheme shall be forfeited for employees who has resigned and / or are serving notice period on or before the date of payment of ECAL 2017 scheme and therefore as per the Respondent the Appellant was not entitled for this scheme during the period for which the claim has been made by the Appellant and therefore, his claim was barred at first being below the threshold limit, if the allowances which has been claimed under the ECAL Scheme are deducted from the claim of the Appellant and also on the ground that a serious and genuine pre-existing dispute was in existence between the parties, which could not be termed as moon shine dispute and also that the provisions of the Code could not be used as recovery mechanism for payment of salary which has not been crystallised yet.
At this juncture, it is also required to be seen as to how this conflicting issues have been dealt with by the Adjudicating Authority and we notice that for the purpose of adjudicating the dispute between the parties the Adjudicating Authority has formulated following three issues: -
(i)Whether there is an 'operational debt’ exceeding the threshold limit under Section 4 of the Code;
(ii)Whether the documentary evidence furnished with the Application shows that the aforesaid debt is due and payable and has not yet been paid; and
(iii)Whether there is existence of a dispute between the parties or the record of pendency of a suit or arbitration proceeding filed before the receipt of the Demand Notice of the unpaid operational debt in relation to such dispute?
So far as the first issue is concerned, the Adjudicating Authority found that the claimed amount of the employment dues (excluding interest) fails within the definition of operational debt as defined under Section 5(21) of the Code.
We also notice that with regard to the 2nd issue and in order to determine whether the amount claimed is exceeding the threshold, the Adjudicating Authority has opined as under: -
“5.4………In this connection, it is noticed from the record that the total amount claimed in column (2) of Part-IV of the Application is stated as "Rs. 704,508/- comprising of Rs.6,96,660/- along with interest of Rs. 39,877/-@12% p.a. from September, 2018 till January, 2019 collectively. As per column (1) of Part-IV, total amount of debt due from the Corporate Debtor is shown at "Rs.6,96,660/-consisting of salary for the month of June, 2018 along with ECAL and Retention Pay from July 2017 till June 2018 as well as the notice period payment”. However, it is observed from perusal of Annexure-C on Page 27 of the Application that the Operational Creditor has provided calculation of amounts due from the Corporate Debtor under two scenarios. In the first scenario (Case A), the Operational Creditor has calculated his dues at Rs.5,48,200/- (excluding interest) and in the second scenario (Case B), he has calculated the unpaid dues at Rs 6,64,631/-(excluding interest). Notably, neither of these amounts matches with the claim amount shown in Part-IV of the Application viz., Rs.6,96,660/- A perusal of the Corporate Debtor's response to the Demand Notice vide letter dated 23.02.2019 reveals that the claim raised by the Operational Creditor in the Demand Notice was for Rs.8,55,270/- As per the legal notice dated 05.01.2019 sent by the Operational Creditor to the Corporate Debtor, the former had sought payment of outstanding dues of Rs. 7,28,480/- from the latter. All these discrepancies or variations in the claimed amounts indicate that the amount of unpaid debt is far from being a crystallised debt.
5.5.Be that as it may, it is noticed that the amounts claimed in the Demand Notice as well as the Application fall under four heads- Retention Pay (Rs.4.42,000), ECAL (Rs. 83,000), salary for June, 2018 and the notice period recovery amount. It is observed from the record that the aforesaid claims of the Operational Creditor were never admitted (except notice pay recovery) at any stage by the Corporate Debtor. As a matter of fact, in its email dated 01.11.2018, the Corporate Debtor had categorically informed the Operational dated 19 Creditor that "in terms of the ECAL/RP reference letter September, 2017 read with Clause No. 15 of the Offer Latter (Employment Contract) dated 26.03.2013 you are not entitled for payment of either ECAL or RP and hence the same is not payable. However, the notice pay recovery should be for 8 days' shortfall. Accordingly, your F&F will be revisited and the excess amount recovered towards notice pay will be refunded". This was followed by another email dated 30.11.2018 sent by the Corporate Debtor to the Operational Creditor reiterating that ECAL, Retention Pay and salary for the period of suspension were not payable to him. This email also brings out that on 04.07.2018, the Operational Creditor had met and informed the Senior Management of the Corporate Debtor that he had decided to proceed with his resignation dated 24.04.2018, as he had got an offer from a competitor at a higher remuneration and requested for being relieved by 14.07.2018. Once again, the Corporate Debtor vide email dated 26.12.2018 categorically informed the Operational Creditor "that the amounts you claim (by way of ECAL, Retention Pay and salary for period of suspension) are not payable consequent upon your resignation". Further, as regards salary for the period of suspension which lasted till 22.06.2018, the Corporate Debtor had vide email dated 14.05.2018 clearly informed the Operational Creditor that "no remuneration will be paid to you for this period........."”
While discussing the aforesaid facts, the Adjudicating Authority came to a conclusion that vide various emails the Respondent has categorically informed the Appellant that the amount claimed by ECAL and retention pay and salary for the period of suspension are not payable consequent upon the resignation of the Appellant, in view of clause 15 of the employment contract and relevant provisions of ECAL Scheme 2017 and if this amount is deducted the rest would not be above the threshold limit of Rs. 1 lac, which was prevalent at that time.
So far as the issue no. 3 pertaining to the existence of the prior dispute is concerned, the Adjudicating Authority has taken into consideration various emails exchanged between the parties as well as the demand notice and statutory notice sent by the Appellant and the reply of date 23.02.2019 made by the Respondent and came to a conclusion that the emails which has been sent by the Appellant himself as well as response given by the Respondent and also reply of the notice dated 30.01.2019 given by the Respondent on 23.02.2019 clearly makes out a case that a genuine dispute was in existence between the parties which was not a moon shine dispute and thus dismissed the application of the Appellant on above score.
This Appellate Tribunal in Company Appeal (AT) (Ins.) No. 1145 of 2025, Bhuvan Kumar Gupta vs Maverick Developers and Colonisers Pvt. Ltd. & Anr., decided on 11th December, 2025, held as under: -
"21.It was thereafter on 11.07.2024 that a Demand Notice was issued by the Operational Creditor, demanding a payment of Rs.3,05,95,276/-. The above notice was immediately replied by the CD vide its reply dated 20.07.2024, refuting the claim. In paragraphs 1 and 2 of the reply to Demand Notice, following have been pleaded
We, thus, are of the view that Section 9 application also deserved rejection under Section 9(5)(ii)(d) on the first ground that is notice of dispute having received by the Operational Creditor. The reply to Demand Notice on 20.07.2024 was clearly notice of dispute received from the CD. In view of above discussions and our conclusion, we are of the view that order of the Adjudicating Authority admitting Section 9 application is unsustainable and deserves to be set aside."
We have carefully perused the judgment of the Adjudicating Authority in the background of the submissions made by the Ld. Counsel for the parties and find that the relevant clause of the ECAL Scheme as well as the clause 15 of the employment agreement has been correctly interpreted by the Adjudicating Authority in order to hold that prima facie the Appellant while has resigned from the employment may not be entitled for any allowance required to be paid in ECAL Scheme and also during the notice serving period.
We have also noticed various emails exchanged by the parties which reflects that even after revocation of the suspension by the Respondent the Appellant did not join the services. These emails have already been noted by the Adjudicating Authority in the impugned order at appropriate places.
So far as the emergence of the dispute between the parties is concerned, it is also established from the record that since beginning the Respondent is denying the amount claimed by the Appellant under ECAL Scheme 2017, salary for the notice serving period and other emoluments and it could not be said that this dispute has been carved out subsequently after receiving of demand notice under Section 8 of the Code and therefore there appears no infirmity in the conclusions drawn by the Adjudicating Authority in holding that the pre-existing dispute between the parties was in existence since beginning and is genuine and not a moon shine dispute.
We also notice that a complex question of disputed facts more so when it is related to the employment agreement, payment of dues, which has been disputed by the employer may not be adjudicated by the Adjudicating Authority under the scheme of the Code and these conflicting issues requires opportunity to the parties to tender their oral and documentary evidence and therefore must better be left for the adjudication of appropriate forum, as the thrash hold limit for entertaining the Application under Section 9 of the Code is dependent on the amount which may crystallised with regard to the entitlement of the Appellants to the emoluments under the scheme and the salary for the relevant period. Therefore, we do not find any illegality in the conclusions drawn by the Adjudicating Authority with regard to the fact that keeping in view the complicity of the issue pertaining to payment of employment dues in the background of employment agreement and ECAL Scheme be left to be adjudicated by the proper forum and could not be adjudicated without affording the parties to tender oral and documentary evidence.
It is also noticed by us that though the suspension of the Appellant was admittedly revoked by the respondent on 23.06.2018 but even thereafter he did not join the service and there is no documentary evidence on record which may show that the resignation tendered by the Appellant was withdrawn at any later stage even after the revocation of the suspension of the Appellant. Contrary to this Appellant vide his email dated 06.07.2018 he informed the management to have handed over the Charge and also requested to relieve him. There is another email of date 13.07.2018 where in apart from other fact the Appellant has shown his inability to extend his stay, which clearly demonstrates that he did not join his duties after 23.06.2018 on which day his suspension was revoked by the management.
It was subsequently he wrote emails of tendering his resignation under duress. whether the resignation of the appellant was wilful or under duress or pressure applied by the management of the Respondent may not be decided in these summary proceedings. But keeping in view the fact that the appellant at no point of time after tendering his resignation has withdrawn the same and also that he did not join his duties even after revocation of suspension, suggests that perhaps he was not willing at that point of time to resume his duties and under this scenario he has written an email of date 13.07.2018 wherein he shown his inability to extend his stay, Thus it is not a case where there was no dispute with regard to the rendering of services by the Appellant after tendering of his resignation on 23.04.2018 and prime facie it appears that he did not join the service after tendering his resignation. If it is so, he appears to be not entitled for the emoluments under ECAL scheme 2017. It is reiterated at the cost of repetition that there is no confusion that there is a genuine pre-existing dispute was present between the parties. Thus to our understanding no illegality appears in the conclusions drawn by the Adjudicating Authority.
Having considered all the facts and circumstances of this case, we do not find any good ground to interfere in the impugned order and as a result, the appeal is dismissed without any order as to costs.
Pending I.A.s, if any, are hereby closed.