The National Company Law Tribunal (NCLT) in Mumbai recently denied a Section 9 request made by a former company director who claimed unpaid operational expenses from the company while he was CEO.
The individual in question served as both a director and the company’s chief executive officer (CEO). The applicant began working for the company on 1 June 2017, but formally resigned from the position of director on 28 October 2018, which the company accepted.
Nonetheless, the applicant claimed that his resignation was limited to the position of director and that he had never submitted a resignation as CEO. As a result, he is entitled to the CEO-related benefits.
However, the company clarified that the appointment terms did not clearly define the roles of an executive director and a CEO. Furthermore, the appointment letter did not specify separate salaries for these ostensibly distinct roles.
After careful consideration, the tribunal determined that resigning from the position of director did not give the petitioner the right to seek compensation as CEO. The tribunal made it clear that the use of two terms did not imply that the petitioner held two distinct positions.
The tribunal also determined that the petitioner’s unilateral resignation from the position of executive director, rather than CEO, and the company’s acceptance of the resignation did not give the petitioner the right to claim dues as a CEO. The petitioner’s claim was weakened further by the fact that he voluntarily resigned within one year, and the company promptly accepted his resignation. As a result, the tribunal dismissed the petition.