Case Title:- Omega Laser Products B.V v Anil Agrawal

The National Company Law Appellate Tribunal, Principal Bench dealt with an appeal filed against an order passed by NCLT Delhi wherein an application u/s 9 of the Insolvency and Bankruptcy Code was filed seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, for arrears of salary not paid to him between 16.01.2010 to 14.05.2019 and the interest accrued therein on such arrears. The Application was admitted by the Adjudicating Authority and CIRP was initiated against the Corporate Debtor on 15.02.2022. 

Thus, aggrieved by the same, the Appellate moved NCLAT in appeal u/s 61 of the IBC. 

The facts, in brief, are that the Operational Creditor moved the Adjudicating Authority u/s 9 of the Code on the ground that he was entitled to Rs.3Lakhs/- per month as remuneration from 16/01/2010, which was revised with effect from 01/08/2014 to Rs.4 Lakhs/- per month, but the payment was also short of the agreed sum. He alleged that he was told that the shortfall in the salary of the MD would be paid when the financial position of the Company improves. However, in May 2019, the MD was removed by the Corporate Debtor with effect from 14/05/2019 without clearing his salary dues. 

On the other hand, it is the case of the Corporate Debtor that there was no signed Board Resolution increasing the salary from Rs.3 Lakhs/- to Rs.4 Lakhs/- to Rs.5 Lakhs/- or to Rs.7.5 Lakhs/- as claimed by the MD in his Section 9 Application. The counsel for the Corporate Debtor also produced a ‘payslip’ that depicted that the MD was receiving Rs 3,43,100/- in April 2019 and the allegation of shortfall owing to a financial crunch was absolutely biased. 

After a bout of strong arguments and documentary shreds of evidence produced by both sides, the Corporate Debtor made a submission that whatever the arrears be, the initiation of CIRP by the Adjudicating Authority was patently wrong as the same is barred by limitation. To rebut this submission, he relied upon an Apex Court’s judgment titled Sakal Deep Sahai Srivastava’ V. Union of India & Anr., wherein with regard to arrears of salary it has been observed :- 

“.......... that the question appears to us to be no longer open for consideration afresh by us, or, at any rate, it is not advisable to review the authorities of this Court, after such a lapse of time when, despite the view taken by this Court that Article 102 of the Limitation Act of 1908 was applicable to such cases, the Limitation Act of 1963 had been passed repealing the law, contained in Articles 102 and 120 of the Limitation Act of 1908, in identical terms without any modification. The Legislature must be presumed to be cognizant of the view of this Court that a claim of the nature before us, for arrears of salary, falls within the purview of Article 102 of the Limitation Act of 1908. If Parliament, which is deemed to be aware of the declarations of law by this Court, did not alter the law, it must be deemed to have accepted the interpretation of this Court even though the correctness of it may be open to doubt……”

Therefore, in light of the above and other pieces of evidence that came forward during the course of the hearing such as the Financial Statements and exchange of emails, the Appellate Authority was of the earnest view that the Section 9 Application filed on 27/08/2021 is ‘barred by Limitation’ as the claims of Rs.96,92,000/- and Rs.18,00,000/- pertaining to the period prior to 31/03/2016 and more than three years have elapsed since.