Companies with salary dues of more than Rs 1 lakh better watch out. In perhaps the first such ruling under the Insolvency and Bankruptcy Code (IBC), the National Company Law Tribunal (NCLT), New Delhi bench, has initiated corporate insolvency resolution proceedings (CIRP) against Noida-based Applied Electro Magnetic for failing to pay employee’s salary dues on time.
Nitin Gupta, a manager with the company, filed a petition against Applied Electro Magnetic, which provides embedded systems and solutions, under IBC as an operational creditor. Unpaid salary worked out to Rs 46.77 lakh since 2008 due to delayed and irregular payments by the company, he said in his petition. Operational creditors, which includes vendors and employees, is one of the two categories who are allowed to initiate CIRP against corporate debtors (companies). Financial creditors includes banks and financial institutions can also initiate CIRP under IBC.
The company, while disputing the employee’s claim, admitted that salary dues worked out to Rs 28.84 lakh. Applied Electro Magnetic, however, contended that the employee’s claim is barred by limitation as it pertains to the period from May 7, 2008.
NCLT, however, dismissed it stating that salary dues between 2015 and 2017 cannot be termed as being barred by limitation. “Under the provisions of the code even if the claim of the applicant is only Rs 1 lakh and default has been committed by the respondent in payment of such amount, the application (for initiating insolvency) is to be accepted,” the tribunal stated.
As carried in TOI