Ms A. Chandani vs M/s Sryas Holistic Remedies Private Ltd

The ‘Appellant/Operational Creditor’ has preferred the instant Company Appeal (AT)(CH)(Ins) No.26/2022 being dissatisfied with the order dated 12.11.2021 in CP(IB)No.791/9/HDB/2019 passed by the ‘Adjudicating Authority’, (National Company Law Tribunal, Hyderabad Bench).

The ‘Adjudicating Authority’, (National Company Law Tribunal, Hyderabad Bench) while passing the impugned order dated 12.11.2021 in CP(IB)No.791/9/HDB/2019 (Filed by the ‘Appellant’/Operational Creditor/Applicant under Section 9 of the I&B Code 2016 r/w Rule 6 of the I&B (AAA) Rules, 2016) at paragraph 5 to 11 had observed the following:-

The Learned Counsel for the Appellant/Applicant/Operational Creditor submits that the ‘impugned order’ passed by the ‘Adjudicating Authority’, (National Company Law Tribunal, Hyderabad Bench) had failed to appreciate that the ‘Email correspondence’ exchanged between the Appellant/ Operational Creditor and the Respondent/Corporate Debtor, wherein it was admitted that her settlement would be made, based on the ‘Notice Rules’, i.e. payment of 2 months’ salary, in lieu of ‘Termination’ and the said fact was even mentioned in her ‘Appointment Letter’.

According to the Learned Counsel for the Appellant, the Appellant’s employment was terminated for taking ‘unsanctioned leave’ and that was the reason she was given two months’ salary in lieu of ‘Termination’ resting on ‘Notice Rules’ of the Company as per their employment letter.

The Learned Counsel for the Appellant points out that the ‘Appellant’ had spent a short vacation in ‘Bali’ with Doctor of the Respondent’s Company (including Dr. Charanya, Dr Charisma and Dr Divya) and after returning from Bali alongwith their colleagues, the other two colleagues, being the Doctors had not reported, but since the Appellant was just a ‘CRM Manager’ she was warned and condemned by the Respondent.

The Learned Counsel for the Appellant brings to the notice of this ‘Tribunal’ that the ‘Appellant’ was suspended from the Respondent’s company for a visit to ‘Bali’ as per Email dated 05.10.2018 and the Doctors were spared for reasons unknown.

The Learned Counsel for the Appellant points out that the Appellant had decided to take a break from her professional life, later the same was conveyed to the Respondent’s company Head HR(Mr. Kota) and the HR (MR. Gopal) who has known the Appellant, since the beginning and had assured the Appellant that a settlement would be made by December, 2018 with her employee benefit, as determined by the Managing Director, (Dr. Prashant), with pending ‘Back Wages’ through ‘Email Correspondence’ and was also assured of no legal impediment to join any other Organisation.

According to the Learned Counsel for the Appellant, the Appellant was not granted her salary for last month of work and all the requests made by the Appellant were in vain and that she was never given a due settlement, which she is supposed to receive. A salary of Rs.1,95,000/- is due, apart from other incentives, to be received by the ‘Appellant’ and she had left the employment with a hope that the said sum would be paid within a short span of time. Moreover, after due enquiry, it was found that since the Appellant was a friend with the Dr. Ms Charanya who allegedly was having disputes with the Company, the Appellant was denied her legal dues and further that the Respondent/Company had even paid the ‘Tax Deduction at Source’ for her unpaid salary and deducted her provident fund for the said months.

The Learned Counsel for the Appellant submits that the Appellant had issued a legal notice to the Respondent requesting for a full and final settlement dated 29.05.2019 and the same was replied by the Respondent dated 22.06.2019 wherein unreasonable excuses for settling the amount were given and that the ‘Appellant’ had issued a Notice on 22.07.2019 under ‘Form 3’, as per the I&B Code, 2016 claiming a sum of Rs.3,74,004/- from the Respondent Company and the same was replied dated 09.08.2019 with tall claims, though admitting the Appellant’s legal dues.

The Learned Counsel for the Appellant contends that the for the repayment of ‘Operational Debt’, the Appellant filed a CP(IB) No.791/9/HDB/2019, as per Section 9 of the I&B Code against the Respondent and since, the ‘Adjudicating Authority’ had dismissed the Application, the Appellant has filed instant Appeal before this Tribunal, challenging the impugned order dated 12.11.2021.

A perusal of the contents of Form 5 Application filed by the Appellant/Operational Creditor to initiate Corporate Insolvency Resolution Process under the I&B Code, 2016 (under Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016 under the caption Part IV Particulars of Operational Debt it is mentioned as under:

The Appellant in Form 3 ‘Demand Notice’ dated 22.07.2019 addressed to the Respondent/Company had claimed a payment of the unpaid ‘Operational Debt Due’ amounting to Rs.3,74,004/- (salary due of Rs.1,95,000/- -after deducting PF and IT) per month from September, 2018 to November, 2019 (3 months), the Provident Fund sum being Rs.1,79,004 (from March 2015 to December, 2018), last month which the amount fell January, 2018 and the interest for the aforesaid amount @ 18% per annum.

The Respondent/Company in its Reply dated 09.08.2019 addressed to the Appellant and other had mentioned that there were no dues payable to her and that the Appellant for the reasons went on a vacation to Bali despite the leave being not sanctioned which was in complete violation of the terms and conditions of the ‘Appellant’s appointment’ and thereby caused Termination of her services.

Continuing further, in the Reply Notice dated 09.08.2019 of the Respondent/Company, it was averred that subsequent to the resignation/termination, since the Appellant was the ‘CRM Manager’, the Final Settlement, if any, could happen only if no issues were reported in the Claim, and there were many issues that came up like many clients who were availing services, but abruptly cancelled their procedure apparently under the Appellant’s influence which was ‘poaching of clients’ thereby causing huge loss to the Respondent/Company and, therefore, the Appellant was guilty of ‘misconduct’ and that the ‘Respondent’ has full right to terminate the Appellant’s services without payment of any compensation by way of her salary/wage or otherwise, according to the undertakings given by the Appellant, while in service.

Besides the above, in the Reply Notice dated 09.8.2019, the Respondent/Company had mentioned that the Appellant left the organisation and apparently influenced other staff (including Doctor) to leave the organisation and join a competitor, which amounts to gross misconduct. Apart from that, the Respondent/Company had denied the sum of Rs.3,74,004/- together with interest @ 18% claimed in the Notice by the Appellant.

Before the ‘Adjudicating Authority’, the Respondent/Corporate Debtor had filed a Reply/Counter to CP(IB)No.791/9/HDB/2019 wherein it was among other things mentioned that there was an explicit admission in Email Correspondence of the Appellant/Operational Creditor that she was relieved from the job on 08.10.2018 and further the Appellant had confirmed that after being relieved from the job on 08.10.2018 she had not associated herself with any other company. Therefore, a plea was taken by the Respondent/Corporate Debtor that the Appellant’s claim for three months’ salary (which include October and November, 2018 salary) was utterly a false one and further that the Appellant/Operational Creditor has claimed two months’ additional salary and according to the Appellant’s own admission, she had not worked for the period.

The Respondent/Corporate Debtor in its Reply/Counter before the ‘Adjudicating Authority’ had proceeded to mention that the Appellant/Operational Creditor was fully aware that contributions to her provident fund account were regularly made and the provident fund statement for members’ pass book confirmed the amounts that were already remitted by the Respondent/Corporate Debtor to the Provident Fund Account of the Appellant/Operational Creditor. As such, there is no liability on the part of the Respondent/Corporate Debtor to an extent of Rs.1,79,004/- as claimed by the Appellant/Operational Creditor in the Application filed by her before the Adjudicating Authority.

The Respondent/Corporate Debtor in its Reply/Counter to CP (IB) No.791/9/HDB/2019 before the ‘Adjudicating Authority’ had mentioned the Clause 12 of the Appellant’s appointment letter which reads as under:-

It is to be relevantly pointed out that a ‘Contract’ comes into existence, when the ‘Terms and Conditions’ of the ‘Contract’ were finalised. A ‘proposal’ when accepted gives rise to an ‘Agreement’. The ‘Agreement’ if reduced into writing and a document is executed between the parties, affixing their signature/thumb impression, such an agreement is to be a lawful one as per decision of the Hon’ble Supreme Court in the matter of Tarsem Singh V. Sukhmider Singh, reported in AIR 1998 Supreme Court Page 1400.

It cannot be gain said that an ‘offer’ is accepted when the acceptance is communicated. In reality, the communication is to be made to the ‘offeror’ and a communication of acceptance made to a ‘third person’ does not create a ‘Contract’ as per decision reported in Felthouse V Bindely (1862) 6 LT 157.

It is to be remembered that the concept of an ‘offer’ and ‘acceptance’ must be cemented on (1) certainty (2) commitment and (3) communication. Even if anyone of the aforesaid requirements/component is lacking either in the ‘Offer’ or in ‘Acceptance’, then there is no valid contract, as per decision of the Hon’ble High Court of Bombay in Kilbern Engineering Ltd V. Oil and Natural Gas Corporation Ltd reported in AIE 2000 Bom 405.

One cannot ignore the vital fact that Section 73 of the Indian Contract Act, 1872 deals with ‘compensation for loss or damage’ caused by breach of contract. When a contract is broken, the party who has suffered by such violation is entitled to receive compensation for any loss or damage caused to him from the party which had breached the Contract as per decision K. Narayana Karup V. Sankaranarayanan reported in AIR 2000 Ker Page 296.

In case of violation/breach of contract, a party to the Contract is not to decide as to who had committed the breach. As a matter of fact, the damages can be recovered from the party who had committed the violation, only after the same is decided. Section 74 of the Indian Contract Act relates to ‘Compensation for breach of contract where penalty stipulated for’.

Furthermore, in Law, a party who had violated, is to make compensation, in regard to the direct consequences flowing from the said violation and not in respect of loss or damage indirectly or remotely caused as per decision Pannalal Jankidas V Mohanlal, AIR 1951 SC 145.

Also that the principles of awarding damages for a reasonable period/reasonable period of notice will come into play, only when the ‘Contract of Employment’ is not for a fixed period as per decision S.S Shetty V Bharat Nidhi Ltd reported in (1958) SCR Page 442. That apart, the damages are to be awarded as compensation for any loss or damage arising naturally in the usual course of things from the breach of contract as per decision of Hon’ble Supreme Court in Karsandas H Thacker V Saran Engg Co Ltd, reported in AIR 1965 SC 1981.

According to the Respondent, the Appellant/Operational Creditor was the ‘CRM Manager’, an important position of the branch and that many clients of the Respondent, who were availing the services of the ‘Branch’ had abruptly cancelled their procedures under the influence of the ‘Appellant/Operational Creditor’. Which was ‘poaching of clients’, thereby causing huge loss to the Respondent/Corporate Debtor and, therefore, the Appellant is guilty of gross misconduct. In fact, the amounts which was to be refunded by the Corporate Debtor/Respondent is Rs.2,13,000/-, during the period September 2018 to January, 2019 and that the Respondent/Corporate Debtor was seriously considering taking legal action for recovery of the amounts from the Appellant/Operational Creditor. Under these circumstances, the Respondent/Corporate Debtor denies the claim of the Appellant/Operational Creditor of Rs.3,74,004/- together with interest @ 18% p.a.

The ‘CIRP’ under the I&B Code, 2016 is not to be determined by a ‘Court of Law’. Further, ‘CIRP’ is not an adversarial litigation. The proceedings under the I&B Code are summary in character. The ‘Adjudicating Authority’ does not determine a ‘Money Claim’ or ‘Suit’. I&B Code is not a ‘Debt Enforcement Procedure’.

While scrutinising/examining a petition/application under the I&B Code, an ‘Adjudicating Authority’ is to decide (a) whether there is an operational ‘Debt’ as per Section 4 of the Code (b) whether the documentary material/evidence submitted alongwith the Application exhibits that the aforesaid ‘Debt’ is ‘Due & Payable’ and was not yet paid (c) whether there is an existence of ‘Dispute’ between the Litigants/parties or the record of pendency of a ‘Suit’ or ‘Arbitration Proceedings’ filed by the receipt of ‘Demand Notice’ of the unpaid ‘Operational Debt’ pertaining to the ‘Disputes’ as per decision of the Hon’ble Supreme Court in Mobilox Innovations Pvt Ltd. V. Kirusa Software Pvt Ltd reported in AIR 2017 Supreme Court Page 4532.

If anyone of the above aid stipulations is not there, then the Application is liable to be rejected. An ‘Adjudicating Authority’ is required to adhere to the ingredients of Section 9 of the Code and especially, the requirement of Section 9(5) of the Act and ‘admit’ or ‘reject’ the application, depending upon the factors adumbrated under Section 9(5) of the Code, as per decision in K. Kishan V Vijay Nirman Company Pvt Ltd reported in (2018) 146 CLA 1 (SC).

An ‘Adjudicating Authority’, in examining an ‘Application’ (Filed under Section 9 of the Code) is to ascertain whether a Notice of Dispute was received by the ‘Operational Creditor’ or whether there is a ‘Record of Dispute’ in the Information Utility. Further, an ‘Adjudicating Authority’ is to find out whether the ‘Dispute’ in issue needs further investigation and the said ‘Dispute’ is not a weak one. To put it succinctly, if an ‘Adjudicating Authority’ is subjectively satisfied that the ‘Dispute’ in question is plausible one and was raised as specified under Section 8(2)(a) then the ‘Adjudicating Authority’ as per Section 9(5)(ii)(d) is to reject the ‘Application’, filed by the Applicant praying for the initiation of ‘Corporate Insolvency Resolution Process’.

In the instant case, as per Clause 13 of the Appointment Letter of the Appellant/Operational Creditor, ‘the Employment may be terminated without notice or payment in lieu of Notice, in the event of any breach of any terms of the Contract’.

Be that as it may, in view of the detailed upshot, this Tribunal taking note of the surrounding facts and circumstances of the present case, in an holistic manner and on a consideration of contentions advanced on behalf of the Appellant, this Tribunal comes to an irresistible conclusion that there is an existence of ‘Dispute’ relating to the ‘Contract of Employment’ of the Appellant with the Respondent coupled with the ‘breach’ and the ‘Dispute’ in question is not an illusory or moonshine one. Viewed in that perspective the conclusion arrived at by the ‘Adjudicating Authority’ in CP(IB) NO.791/9/HDB/2019 (Filed by the Appellant) in dismissing the ‘Application’ does not suffer from any material irregularity or patent legality in the ‘Eye of Law’. Resultantly, the Appeal sans merits.

In fine, the instant Company Appeal (AT)(CH)(Ins) No.26/2022 is dismissed. No costs. IA No.50 and 51 of 2022 are closed.