N. Subramanian Vs. M/s. Aruna Hotels Ltd.

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Introduction 

The intervention request has been denied in the matter of I.A. No. 163654 of 2019. An application under Section 9 of the Insolvency and Bankruptcy Code, 2016 is the subject of the current appeal, which was submitted by a former worker of Respondent No. 1 Company. The appellant, who worked for the corporate debtor from 1983 to 2013, says the management of the firm admitted salary arrears totaling Rs. 1.87 crores. These acknowledgements were used by the National Company Law Tribunal (NCLT) to originally accept the case, rejecting the company’s arguments that the claim was time-barred. This decision was reversed by the National Company Law Appellate Tribunal (NCLAT), which is why the current appeal contests the NCLAT’s conclusions and asks for the NCLT’s ruling to be reinstated.

Facts 

• The appellant, a former worker for the Corporate Debtor, began employment on January 1, 1983, as a personal assistant. She advanced through the ranks multiple times, eventually holding the position of public relations manager before quitting in 2013.
• The appellant seeks wage arrears for the years 1998 through 2013 totalling Rs. 1.87 crores.
• The appellant produced many admissions of culpability, the most recent of which was a letter from the former managing director dated September 30, 2014.
• In order to collect the claimed sum, the appellant filed an application on July 21, 2017, in accordance with Section 9 of the Insolvency and Bankruptcy Code, 2016 (IBC).
• Based on the admission of liability letter, the National Company Law Tribunal (NCLT) determined that the principle sum of Rs. 1.06 crores should be admitted. The NCLT determined that the Corporate Debtor’s use of a payment voucher as evidence of only a partial payment was a red herring and rejected it.
• On July 6, 2017, the Corporate Debtor filed a civil lawsuit, requesting injunctions against the appellant’s claims as well as declarations to void earlier acknowledgements. This lawsuit was seen by the NCLT as a dishonest attempt to evade responsibility.
• The Employees Provident Fund Organization’s letter from April 13, 2016, which suggested settling the appellant’s claim, was cited by the National Company Law Appellate Tribunal (NCLAT), which also questioned the appellant’s delay in bringing up the claim for arrears from 1998 to 2016.

Issues 

• Whether there is a time limit on the appellant’s claims for salary arrears from 1998 to 2013?Is there a time limit on the appellant’s claims for salary arrears from 1998 to 2013?
• Whether there is a possibility that the acknowledgements of liability, namely the letter dated September 30, 2014, will extend the time limit for the appellant’s claims?
• Whether the Corporate Debtor’s legal lawsuit was an honest endeavour to settle the dispute or a deceptive ploy to evade payment.

Appellant’s Contentions 

According to the appellant, the statute of limitations is extended by the Corporate Debtor’s admission of liability, the NCLT appropriately recognized the claim and designated an Interim Resolution Specialist.

Respondent’s contention 

The Corporate Debtor contends that the claims are past due and that any acknowledgements are insufficient or erroneous in order to extend the statute of limitations.  The appellant’s claims are covered, according to the Corporate Debtor, by the settlement reached with the Employees Provident Fund Organization.

Judgement 

The NCLT found in favor of the appellant, discarding the Corporate Debtor’s payment voucher as inadequate proof of full settlement and admitting the claim based on the recognized liability. The NCLT determined that the Corporate Debtor’s civil lawsuit was maliciously brought with the intention of avoiding acknowledged liabilities. The NCLAT overturned the NCLT’s ruling, pointing to the appellant’s tardiness in bringing up the claim and implying that the Employees Provident Fund Organization’s letter resolved the appellant’s claim.

Analysis 

Examination The Supreme Court of India heard an appeal by a former employee of the Corporate Debtor seeking unpaid wage arrears under Section 9 of the Insolvency and Bankruptcy Code, 2016 in the matter of N. Subramanian v. M/S Aruna Hotels Ltd. & Anr. With reference to time-barred claims and contested debt existence, the National Company Law Appellate Tribunal (NCLAT) overturned the National Company Law Tribunal’s (NCLT) admission of the application and recognition of an acknowledged debt. By ruling that the acknowledgements of obligation prolonged the statute of limitations, the Supreme Court upheld the NCLT’s judgment and reversed the NCLAT’s ruling, so approving the employee’s claim for unpaid wages.

Conclusion 

The NCLT found in favor of the appellant, discarding the Corporate Debtor’s payment voucher as inadequate proof of full settlement and admitting the claim based on the recognized liability. The NCLT determined that the Corporate Debtor’s civil lawsuit was maliciously brought with the intention of avoiding acknowledged liabilities. The NCLAT overturned the NCLT’s ruling, pointing to the appellant’s tardiness in bringing up the claim and implying that the Employees Provident Fund Organization’s letter resolved the appellant’s claim.

References

• https://indiankanoon.org/doc/191075711/ 
• https://main.sci.gov.in 
• https://nclat.nic.in 

This Article is written by Deepika student at G.H.G Institute of Law, Intern at Legal Vidhiya.

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