The court’s in-depth legal analysis in a recent judgment on the resolution of an arrears dispute provides valuable insights into the significance of acknowledgments and the impact of delay in claiming arrears. The case sheds light on the complexities surrounding disputed claims and the importance of timely legal action. Stay tuned to unravel the intricate legal analysis presented by the court.
Facts
- Appellant avers he is owed Rs.1.87 Crores as arrears of salary from 1998 to 2013.
- NCLT acknowledges liability letter dated 30.09.2014 for principal amount of Rs. 1.06 Crores.
- Payment voucher claimed as full settlement of arrears is disputed by NCLT.
- NCLT refers to a Civil Suit filed by Corporate Debtor after notice under Section 8 of IBC.
- Suit seeks declaration of certain letters as null and void and injunction against Corporate Debtor.
- NCLT calls the suit a desperate attempt to evade liabilities and labels it as ‘mala fide, fraudulent, and mischievous’.
- Application to restore the suit to the file is pending.
- The NCLT held in favor of the Appellant based on an acknowledgment dated 30.09.2014.
- The petition was admitted, an Interim Resolution Professional was appointed, and a moratorium was imposed under Section 14 of the IBC.
- The NCLT cryptically discussed the point of limitation.
- In an appeal by a shareholder of the Corporate Debtor, the NCLAT referred to a letter from the Employees Provident Fund Organisation dated 13.04.2016, stating that the Appellant’s claim had been settled.
Also Read: Limitation Period in Arbitration Disputes: Court’s Legal Analysis
Arguments
- Mr. Ritin Rai, learned Senior Advocate for the Appellant, states that the suit was dismissed for non-prosecution.
- Mr. Mohan Parasaran, learned Senior Advocate for the Respondent Company, argues that a new management took over the Company in 2015.
- Mr. Parasaran points out that the amounts due to the Appellant were not reflected in the annual reports of the Corporate Debtor or in a Due Diligence Report from 27.07.2015.
- The Respondent Company contends that the salary claimed by the Appellant since 1998 was not paid, but the delay in raising the arrears claim for the period 1998 to 2016 has not been explained.
Also Read: Interpretation of Section 43B: Debentures vs. Interest Payment
Analysis
- The NCLAT held that there is a dispute regarding the arrears of salary owed to the Appellant.
- The NCLAT found that the Respondent failed to provide a satisfactory explanation for the delay in claiming arrears from 1998 to 2016, spanning 18 years.
- The NCLAT concluded that the Section 9 application filed by the Respondent was not maintainable due to the existence of a dispute and the unexplained delay.
- Acknowledgements of arrears of payment made by the Corporate Debtor were deemed valid until at least 30.09.2014, making the amounts payable to the Appellant.
- Mr. Rai, representing the Appellant, highlighted the significance of the acknowledgements dated 30.09.2006 and 30.06.2013, emphasizing their relevance to the case over the Employees Provident Fund letter of 13.04.2016.
- NCLT judgment is restored to the file
- Acknowledgement of liability indicates no dispute about amounts owed to the Appellant
- Mr. Parasaran’s alternative argument is dismissed based on the judgment
- NCLAT judgment is set aside
Also Read: Judicial Scrutiny of Arbitrary Taxation Statutes
Decision
- Permission to file the Civil Appeals are rejected.
- 7 Civil Appeal Diary No. 34841 of 2018, Civil Appeal Diary No. 34836 of 2018 & Civil Appeal Diary No. 34839 of 2018 12.
- The Appeal is allowed.
Case Title: N.SUBRAMANIAN Vs. M/S. ARUNA HOTELS LTD (2021 INSC 144)
Case Number: C.A. No.-000187 / 2019
