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Synopsis

The National Company Law Tribunal (NCLT) has recently rejected a joint application filed by 29 operational creditors seeking the initiation of the Corporate Insolvency Resolution Process (CIRP) against a corporate debtor.

The NCLT observed that the one-crore threshold requirement should be met by each operational creditor individually.

The application was heard by the NCLT bench in Mumbai comprising Judicial Member Lakshmi Gurung and Technical Member Charanjeet Singh Gulati.

The joint application was made by the 29 operational creditors to recover dues totalling Rs. 3,50,75,185.

The 29 operational creditors involved in this case were former employees of the corporate debtor, and they had worked in various positions and for different durations at the company.

During their employment, they were granted different appraisals and promotions by the corporate debtor.

However, the corporate debtor argued that none of these operational creditors individually met the pecuniary threshold of Rs. 1 crore, which is a requirement for initiating a case under Section 9 of the Insolvency and Bankruptcy Code.

The corporate debtor argued that the operational creditors tried to aggregate their alleged claims together merely to create the appearance of meeting the pecuniary threshold, thereby preventing their application from being dismissed at the outset due to falling below the required pecuniary limit.

In response, the operational creditors contended that employees and workmen are treated differently within the category of "operational creditors." Therefore, they asserted that they were permitted to file a joint application under Section 9 of the Insolvency and Bankruptcy Code.

The tribunal agreed that workmen/employees can file a petition individually or jointly but said that they did not individually cross the threshold limit of 1 crore.

“In view of the above judgments, it is a settled law that workmen/employees (Operational Creditors) may file an application to initiate CIRP in an individual capacity or as a joint capacity by the authorized person. Therefore, the application to initiate CIRP under Section 9 of the Code can be initiated by the Operational Creditors individually or jointly. However, none of the above judgements state in the favour of Operational Creditors that they can jointly file the Application to touch or cross the financial limit of One Crore to file the Petition under Section 9 of the Code,” the order reads.  

Therefore, the tribunal proceeded to dismiss the applications of all the operational creditors.

Ms. Sanjana Panday a/w. Mr. Rishab Aggarwal i/b. Krishnamurthy & Co appeared for the operational creditors.

Mr. Shadab S Jan a/w. Ms. Shivam Bhagwati a/w. Mr. Mufaddal Paperwala i/b. M/s. Crawfor Bayley & Co. appeared for the corporate debtor

Case title: Mr. Atanu Kumar Chatterjee & Ors vs Rolta Defence Technology Systems Private