IN THE NATIONAL COMPANY LAW TRIBUNAL

MUMBAI BENCH

CP 2912/I&BP/NCLT/MAH/2018
Under Section 9 of the I&B Code, 2016
In the matter of
Mr. Peter Johnson John
...Operational Creditor
v/s.

M/s KEC International Limited

…Corporate Debtor

Coram: Hon’ble Shri V.P. Singh, Member (Judicial)

Hon’ble Shri Ravikumar Duraisamy, Member (Technical)

For the Petitioner: Adv. Rajesh Kanojia a/w Adv. Deepika Prabhala i/b Res
Juris
For the Respondent: Adv. Alpana Ghone a/w Mr Chirag Dave & Mr.
Dhyaneshwar Jadhav i/b Legasis Partners

Per V.P. Singh, Member (Judicial)

ORDER
Oral order dictated in the open court on 20.12.2018
1. Petitioner has filed this Petition under Section 9 of the Insolvency and
Bankruptcy Code, 2016 against M/s KEC International Limited, Corporate
Debtor having its registered office at RPG House, 463, Dr. Annie Besant Road,
Worli, Mumbai – 400 030 for realization of amount of Rs.1,59,09,181
($2,37,026) by the labour court decree dated 7.4.2015 passed by Hon’ble
Labour Court, Kinshasa, Congo.

2. Brief facts of the case as per Form No. 5 of the Applicant are that the Applicant
is an individual who was appointed by the Corporate Debtor for an overseas
engagement as Assistant Manager – Coordination vide appointment letter dated
9th November 2011. The Applicant while performing his work overseas was
instructed to lead a technical project by the Corporate Debtor. Since the
Applicant was not recruited for technical works and fearing that losses may be
incurred due to lack of technical knowledge, the Applicant refused to lead the
said project. As a result, the Corporate Debtor asked the Applicant to report at
their Mumbai Office and pressurised to resign from the job. But the Applicant
refused to resign without any valid reasons for termination and returned to
Congo to continue his job. However, the Applicant was neither assigned any
work nor paid salary. The Corporate Debtor did not terminate or relieve or
issue any notice of termination of Applicant’s employment despite the
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CP 2912/I&BP/NCLT/MAH/2018

appointment letter requiring a 90 days prior intimation for such action. The
office, as well as the belongings of the Applicant, was also emptied/locked. Left
with no other alternative, the Applicant sought legal help as per clause 9 of his
offer letter and filed a suit in the Labor Court of DR Congo in case No. RT
16676. The findings of the Labor Court was forwarded to Hon'ble High Court,
Congo and the same was confirmed, and accordingly the Labor Court directed
to the Corporate Debtor on 7th April, 2015 to pay compensation of US$ 37,500,
i.e. INR 25,17,000/- towards abusive termination and US$ 13,997/- i.e. INR
9,39,478/- towards Final liquidation. The Court has also imposed US$ 1690,
i.e. INR 1,13,432/- towards repatriation cost in addition to US$ 80,000, i.e.
INR 53,69,600/- as arrears of salary from September 2012 till the date of
order. Interest was also calculated @18% which comes to US$ 69,956, i.e. INR
46,95,446/-. These developments were conveyed to the Corporate Debtor but
neither there was any compliance nor any reply from the Corporate Debtor,
and on enquiry, it was revealed that the Corporate Debtor wound up its
operations and project in Congo. The Operational Creditor then sheltered
before the Indian Embassy in Democratic Republic of Congo and returned to
India and filed a suit in the Hon'ble Bombay High Court bearing suit number
526 of 2017 under Section 13 of the Code of Civil Procedure, 1908. It is stated
that since the Operational Creditor is still an employee of the Corporate Debtor
and continues in the roll as an employee, the Debtor is bound to pay the salary
till the date he is relieved or issued certificate of termination of service. Thus,
the total unpaid operational debt is calculated as $2,37,026.00 i.e. INR
1,59,09,181.00.

3. Petitioner has also filed the demand notice which is dated 8.6.2018 alleging
that the alleged amount is due. Petitioner has annexed the details of the salary
dues. The demand notice was served upon the Corporate Debtor on
12.06.2018. The detail of the claim of the Applicant as annexed to the demand
notice is furnished as under:-

Description USD Present INR

Abusive termination (as $37,500.00 INR 25,17,000
per order)
Final Liquidation amount $13,997.00 INR 9,39,478
(as per order)
Repatriation cost to India $1,690.00 INR 1,13,432
(as per order)
Unpaid salary till $80,000.00 INR 53,69,600
07.04.2015 (As per Order)
Interests at 18% from $69,956.00 INR 46,95,446

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CP 2912/I&BP/NCLT/MAH/2018

07.04.2015 till 7.6.2018

(As per Order)
Costs awarded by labour $1,203.00 INR 80,745
court (as per order)
Salary arrears from $32,680.00 INR 21,93,480
07.04.2015 to 07.06.2018
(Basic+MA+OA) (240 +240
+380+USD)
USD 860 X 38 months
Total outstanding as on $2,37,026.00 INR 1,59,09,181
date

4. It is stated by the Petitioner that inspite of serving the Demand Notice on the
Corporate Debtor on 12.6.2018, Corporate Debtor failed to give reply within the
time limit.

5. It is further stated that the Corporate Debtor made a reply to the Demand
Notice wherein it is stated that Operational Creditor has initiated suit in
Bombay High Court bearing No.526/2017 and copy of the Plaint has been
annexed as Annexure 1 with the reply. It is further stated in the reply that the
suit before the Hon’ble High Court was filed on 10.8.2017 after that Petitioner
has issue demand notice under Section 8 of the IBC and again filed Insolvency
Petition under Section 9 of the Code before this Tribunal.

6. Corporate Debtor has filed reply dated 22nd October 2018 in the present
petition. Ld. Counsel for the Corporate Debtor has contended that this Petition
has been filed under Insolvency Code which is not maintainable by existence of
dispute. It is also stated that Applicant was insincere towards his work and the
Corporate Debtor had expressed concerns over it. The misconduct of the
Applicant has been recorded in the emails. It is also stated that the
representative of the Corporate Debtor could not attend the proceedings at the
Labor Court at Congo due to Civil War in Congo. It is further stated that since
the Applicant was in breach of duty and guilty of gross misconduct, the
Corporate Debtor was not liable to issue any notice for termination. Also that
the Applicant himself requested to tender formal resignation. Therefore there
was no question of giving any prior notice to the Applicant. It is further alleged
that Civil Suit is pending before the Hon’ble High Court of Judicature at
Bombay. The Petitioner has annexed the copy of the Civil Suit alongwith the
Petition which is from Page No. 91 to 123. In the said Civil Suit relief has been
sought regarding declaration that the said foreign decree, i.e. order/decree
dated 7.4.2015 passed by Hon’ble Labour Court is conclusive and executable

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by the Plaintiff and further direction has been sought against the Respondent
for making payment of $133,187, i.e. decretal amount under the said foreign
decree with interest thereon at the rate of 18% till the filing of the present suit.
It has also been stated that the ex-parte decree obtained in Congo is not
binding until adjudication of the Civil Suit and for enforcement of the ex-parte
decree, the Applicant has to establish the conclusiveness of the ex-parte decree
and existence of debt for maintainability of the present petition.

7. The Operational Creditor has filed his Affidavit in Rejoinder dated 13th
November 2018 whereby he submitted his detail reply along with a copy of
order issued by the Hon'ble Bombay High Court, whereby the Respondent has
undertaken to file Affidavit disclosing its assets (movable and immovable). The
Rejoinder further states that the Suit before the Hon’ble Bombay High Court is
for execution of the foreign decree and not for adjudication of any dispute per
se between the parties. The decree of the Labour Court, Kinhasa is a proof of
conclusive adjudication of disputes between the parties and is a valid record of
default under the IBC. The reply of the Corporate Debtor proceeds on an
erroneous footing that the Suit pending before the Hon’ble Bombay High Court
tantamount to a pre-existing dispute and hence the petition u/s 9 of IBC is not
maintainable. It has also been stated that the Applicant’s claim for arrears of
salary towards employment is an independent claim and not based upon the
decree/ order passed by the Hon’ble Labour Court of Kinshasa.

8. We have heard the argument of both the parties and perused the record. It is
undisputed that Petitioner has filed this Petition on the basis of the claim on
account of salary dues adjudicated by the Labour Court of Kinshasa and the
Civil Suit is pending regarding the same and the Hon’ble High Court of Bombay
whereby declaration has been sought that decree passed by the Labour Court
of Kinshasa is executable in India.

9. Ld. Counsel for the Operational Creditor has relied on the judgement of
Hon’ble NCLAT in the matter of Usha Holdings LLC & Anr in Company Appeal
(AT) (Insolvency) No. 44 of 2018 wherein Hon’ble NCLAT has held that
“Adjudicating Authority not being a Court or “Tribunal” and “Insolvency
Resolution process” not being a litigation, it has no jurisdiction to decide whether
a foreign decree is legal or illegal. Whatever findings the Adjudicating Authority
has given about legality and propriety of foreign decree in question being without
jurisdiction is nullity in the eye of law.”

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10. Ld. Counsel for the Operational Creditor submitted that this Petition has been
filed on the decree of the Labour Court of Kinshasa and this Tribunal does not
have power to go into the merits to decide the legality and illegality about the
foreign decree.

11. Ld. Counsel for the Operational Creditor has also relied on the judgement of
the Co-ordinate Bench of NCLT, Chennai Bench in case of Stanbic Bank Ghana
Ld. V/s. Rajkumar Impex Pvt Ltd. Wherein it has been held that “it is well
settled law that courts need not go beyond a decree made in favour of a party
and this case the decree made by the Hon’ble High Court of Justice, Queen’s
Bench Division, Commercial Court, London. Since the respondent failed to defend
its case before Hon’ble High Court of Justice, Queen’s Bench Division,
Commercial Court, London, now it cannot contend that the said order is not on
merits. The case laws relied by learned counsel for the petitioner is in support of
the clarification to the queries raised by the respondent. Given all the
submissions made by the parties and the observations made, the Tribunal
concludes that the Petitioner/Financial Creditor has made out a prima facie case
under the IB Code, 2016.”

12. Relying on the judgement of NCLT, Chennai and the judgement of Hon’ble
NCLAT supra, Ld. Counsel for the Operational Creditor emphasized on the
admission of the Petition. However, Ld. Counsel for the Corporate Debtor has
vehemently opposed the admission on the ground that since the matter is
pending before the Hon’ble High Court of Judicature at Bombay, therefore, the
matter comes under the purview of the existing dispute. Therefore, the Petition
is not maintainable under IBC.

13. Counsel for the Corporate Debtor has also relied on the case law of Hon’ble
Supreme Court 2018 SCC Online SC 1013, Civil Appeal No.21824 of 2017 in the
matter of K. Kishanvs M/s. Vijay Nirman Company Pvt Ltd, wherein Hon’ble
Supreme Court has held that “Operational Creditor cannot use the Insolvency
Code either prematurely or for extraneous considerations or as a substitute for
debt enforcement procedures. The alarming result of an operational debt
contained in arbitral award for a small amount of say, two lakhs of rupees,
cannot possible jeopardise an otherwise solvent company worth several crores of
rupees. Such a company would be well within its rights to state that it is
challenging the Arbitral Award passed against it, and the mere factum of
challenge would be sufficient to state that it disputes the Award. Such a case

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would come within para 38 of Mobilox Innovations, being a case of a pre-existing

ongoing dispute between the parties. The Code cannot be used in terrorem to
extract this sum of money of Rs.2,00,000 even though it may not be finally
payable as adjudication proceedings in respect to it are still pending. We repeat
that the object of the Code, at least in so far as Operational Creditors are
concerned, is to put the insolvency process against a corporate debtor only in
clear cases where a real dispute between the parties as to the debt owned does
not exist.”

14. Here, in this case, it is undisputed position that Labour Court has passed the
decree in favor of the Operational Creditor .Counsel for Operational Creditor
contended that Section 44A of Civil Procedure Code, 1908 specifically provides
that “where a certified copy of a decree of any of the superior Court of any
reciprocating territory has been filed in a District Court, the decree may be
executed in India as if it had been passed by the District Court.”

15. Ld. Counsel for the Operational Creditor has admitted that there is no
reciprocating treaty with Kinshasa, Congo, whereby decree passed by the
Labour Court of Kinshasa can be executed in India. Therefore, the case is not
covered under Section 44A of the Civil Procedure Code, whereby decree passed
by the Kinshasa can be executed in India directly .Since the decree of the court
of Kinshasa cannot be executed in India till a court in India adjudicates upon
the decree in view of Section 13 of the Code of Civil Procedure, 1908. Therefore,
the Petitioner has filed the Petition in Hon’ble High Court of Judicature at
Bombay for declaration that decree passed by the Labour Court of Kinshasa is
executable in India and that suit is still pending in the Hon’ble High Court.
During pendency of the suit in the Hon’ble High Court of Bombay, the
Petitioner has filed this Petition under Insolvency Code. Petitioner’s claims is
based on the decree passed by the Labour Court of Kinshasa, Congo. Thus it is
clear that there was existing dispute between the parties on the day when the
case was filed under IBC.

16. Hon’ble Supreme Court has laid down the law in case of Mobilox supra and
further in case of K. Kishanvs M/s. Vijay Nirman Company Pvt Ltd. that IB Code
cannot be used in terrorem to extract the money. The object of the Code, at
least in so far as Operational Creditors are concerned, is to put the insolvency
process against a corporate debtor only in clear cases where a real dispute
between the parties as to the debt owned does not exist.

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17. Here, dispute is existing between the parties regarding the debt owned,
therefore, Petition under Section 9 is not maintainable and on this ground,and
is therefore liable to be rejected.

18. This Petition is rejected as not maintainable under I & B Code2016. However,
Petitioner is at liberty to approach the appropriate forum for realisation of his
dues.

19. The Registry is directed to communicate this order to the Operational creditor
and the Corporate Debtor immediately by email and speed post.

Sd/- Sd/-

RAVIKUMAR DURAISAMY V.P. SINGH

Member (Technical) Member (Judicial)

DT. 20th December 2018.