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Judgment
Per: DR.DEEPTI MUKESH, MEMBER (JUDICIAL)
This Application has been filed by one Mr. R. Chandru (hereinafter referred to as 'Operational Creditor') on 08.12.2020 under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) r/w Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, against SPEL Semiconductor Limited (hereinafter referred to as 'Corporate Debtor'). The prayer made is to admit the Application, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare moratorium and appoint Interim Resolution Professional (IRP).
From Part - I of the Application and the Affidavit dated 03.12.2020 in support of the Application, it is seen that the Operational Creditor is a former employee of the Corporate Debtor residing at No. 1, 11th Street, Lakshmipuram Extension, West Tambaram, Chennai – 600 045. It is seen that 32 employees of the Corporate Debtor vide 'Authorisation Letter' dated 27.11.2020 have authorised the Operational Creditor to represent before this Adjudicating Authority.
Part - II of the Application lays down the details of the Corporate Debtor. It can be seen that the Corporate Debtor is a Company incorporated under the Companies Act, 1956 on 26.12.1984 with CIN: L32201TN1984PLC011434 registered office of the Corporate Debtor is situated at No. 5, Thiru Vi Ka Street, CMDA Industrial Estate, Maraimalai Nagar, Tamil Nadu – 603 209.
From Part - III of the Application, it is seen that the Applicant has not proposed the name of the Interim Resolution Professional (IRP).
From Part - IV of the Application, it is seen that the Operational Creditor, collectively, along with 32 other employees of the Corporate Debtor, has claimed a sum of Rs. 1,61,67,055/- consisting of 'Salary', 'Leave Salary', 'Medical Reimbursement', 'Gratuity', 'Thrift Society' and 'Interest Accrued' which are due and payable by the Corporate Debtor. The date of default is mentioned as 30.09.2020.
Part - V of the application discloses about the details of the documents which have been filed by the Operational Creditor in order to prove the 'Operational debt', which are extracted as follows;
i.Employee ID Card ii. Employment Offer & Confirmation iii. Salary details / Revision / Salary Slip iv. Resignation / Acceptance / Relieving Letter
v.Service Certificate vi. Statement of Computation of Claims vii. Consolidated Claim Statement (Extract from Computation of Claims of 33 Employees) viii. Original RPAD Receipts (Form 3 Dispatch) ix. Copy Acknowledgement Cards
x.Bank Statements of Employees (Last Credit)
It is stated that the Applicant along with 32 other employees of the Corporate Debtor are relieved from their service to the Corporate Debtor and that they were not paid their respective dues. It is stated that despite their effort and attempt to get their dues settled from the Corporate Debtor, their settlements were still pending.
The Corporate Debtor filed its preliminary reply dated 01.11.2021 against the present Application wherein the date of default as per the application are false and baseless. It is stated that the claims of individual employees are independent from each other and some of them were relieved from 2016 – 17, thus hit by limitation. The interest component as per the Application is disputed by the Corporate Debtor.
Without adverting to the arguments on merit, during the course of hearing on 19.12.2022, this bench had posed a question to the counsel for the Operational Creditor as to the date of default under the present Application. Learned counsel for the Applicant had referred to Part – IV of the Application and submitted that 30.09.2020 is the date of default. Extract of Part – IV is as below:
| 1 | Total amount of debt, details of transactions on account of which fell due, and the date from which such debt fell due | Salary: Rs. 67,48,354 Leave Salary: Rs. 4,42,678 Medical Reimbursement: Gratuity: Rs. 51,96,461 Thrift Society: Rs. 13,44,932 Interest Accrued: Rs. 21,95,798 Total Amount (As on 30-Sep-2020) Rs. 1,61,67,055 |
In this regard, it is pertinent to refer Section 10A of the Code which reads as follows:
"Section 10A. Suspension of initiation of corporate insolvency resolution process:—Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf:
Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.
Explanation.—For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020."
The relevant Notifications reads as follows:
"Notification No. S.O. 3265(E), dated 24-9-2020: In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) [as inserted by section 2 of the Insolvency and Bankruptcy Code (Second Amendment) Act, 2020 (17 of 2020)], the Central Government hereby notifies further period of three months from the 25th September, 2020 for the purposes of the said section.
Notification No. S.O. 4638(E), dated 22-12-2020: In exercise of the powers conferred by section 10A of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies further period of three months from the 25th December, 2020, for the purposes of the said section."
Thus, it is clearly understood from the above provision and the notifications that there is an explicit bar for filing application for any default arising on or after 25th March, 2020 till 24th March 2021. In the present case, the Operational Creditor at Part – IV of the Application has construed 30.09.2020 as the date of default, thus falls within the period covered under 10A of the Code. Moreover, the Hon’ble Supreme Court in Ramesh Kymal Vs. Siemens Gamesa Renewable Power Pvt Ltd decided as follows:
"25.Section 10A does not contain any requirement that the Adjudicating Authority must launch into an enquiry into whether, and if so to what extent, the financial health of the corporate debtor was affected by the onset of the Covid-19 pandemic. Parliament has stepped in legislatively because of the widespread distress caused by an unheralded public health crisis. It was cognizant of the fact that resolution applicants may not come forth to take up the process of the resolution of insolvencies (this as we have seen was referred to in the recitals to the Ordinance), which would lead to instances of the corporate debtors going under liquidation and no longer remaining a going concern. This would go against the very object of the IBC, as has been noted by a two-Judge bench of this Court in its judgment in Swiss Ribbons (P) Ltd. v. Union of India. Speaking through Justice Rohinton F Nariman, the Court held as follows:
"27.As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganisation and insolvency resolution of corporate debtors. Unless such reorganisation is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximisation of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme—workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximise their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. (See ArcelorMittal [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] at para 83, fn 3)."
Hence, the embargo contained in Section 10A must receive a purposive construction which will advance the object which was sought to be achieved by enacting the provision. We are therefore unable to accept the contention of the appellant."
It is also pertinent to note that during the course of hearing of the matter, the Corporate Debtor admitted substantial portion of the 'Debt' and undertook repayment of the said amount in three equated monthly instalments i.e., 08.04.2022, 13.05.2022 and 10.06.2022. Thereafter, the Corporate Debtor had filed IA(IBC)/851/2022 seeking the following relief:
"In light of the facts stated above, it is only due to circumstances beyond the control of the Applicant Company that the Applicant is now seeking the said extension of time, and for no other reasons. Therefore, the Applicant herein humbly prays that this Hon'ble Tribunal provides for a short extension of 5 weeks from 10th August for the payment of 3rd instalment and thus render justice."
It is further seen that on 19.12.2022, this Tribunal disposed the above said application as follows:
"Ld. Counsel Ms. Akshaya Giridharan for the Applicant is present. Ld. Counsel Mr. Ganesh V Arnala is present for the Respondent.
Both the counsels state that entire amount has been received by the claimants in IBA/766/2020, hence IA(IBC)/851 (CHE)/2022 has become infructuous.
The statement of the Counsels are taken on record, Accordingly, IA(IBC)/851(CHE)/2022 is disposed as infructuous."
Thus, considering the fact that the entire claim pertains to the dues under the present Application has been paid by the Corporate Debtor, this Application has become redundant. In view of the same, nothing survives in this application IBA/766/2020 and stands disposed of.