NCLT Mumbai Rejects Plea Of Employee Seeking Salary As CEO After Resigning As Director
The National Company Law Tribunal (NCLT) in Mumbai has recently turned down an application filed by an ex-director of a company who was seeking operational dues from the company while serving in the capacity of a CEO.
The case of the Petitioner is that he was appointed as Executive Director / CEO w.e.f. 1st June 2017 vide letter dated 24.05.2017. Vide letter dated 23.10.2018, he tendered his resignation from the office of the Director of the Company.
The arguments advanced by the Petitioner is that his appointment was as Director as well as CEO.
He tendered his resignation as Director and hence he is entitled to his dues as CEO as he never tendered his resignation as CEO. To buttress his claim he drew attention to the ‘subject’ of the Resignation letter
Thus, he claimed dues from the company on part of his pending salary as he never tendered his resignation from the post of CEO.
In his submission, he argued that the Respondent Corporate Debtor is terminating his service from the post of CEO with immediate effect which is against the terms of clause 11.1 of the appointment letter dated 24.05.2017. The petitioner referred to the locking period stipulation of 3 years with the appointee from the date of appointment of this contract of appointment.
The counsel for the Corporate Debtor on the other hand submitted that the appointment of the Petitioner was as Executive Director cum CEO meaning thereby that he was holding collective charge/ responsibility.
The dual nomenclature in the appointment letter can not by any stretch of the imagination grant him the liberty of holding two independent posts and also the liberty to tender his resignation from one post and to continue on the other.
During the hearing, it was emphasized that the terms of appointment nowhere separately defined the set of responsibilities as Executive Director and/or as CEO.
The counsel further submitted that no separate salary was reflected in the appointment letter for the alleged two different posts.
The contention of the Corporate Debtor is that in view of the fact that the terms of the employment clearly enumerated that there is a lockin-period of 3 years before terminating his services. But the Operational Creditor resigned out of his own free will unilaterally. Thus the Operational Creditor does not deserve any relief, least of all the relief prayed for.
Dismissing the petition, NCLT was of the view that tendering resignation from the post of Executive Director and not that of CEO was a wilful and unilateral act on the part of the petitioner.
The tribunal further held that acceptance of his resignation and relieving him from company with immediate effect does not leave the Petitioner to claim his dues as CEO.
"It does not lie in the mouth of the Petitioner to state that he only tendered his resignation as Executive Director and not as CEO particularly when the offer of appointment nowhere refers different set of responsibilities as Executive Director and that of CEO."
"The case of the Petitioner/ Operational Creditor himself is that he resigned within one year out of his own free will and the same having been accepted immediately further dilutes the claim of the Petitioner", the tribunal added.
