NCLT rejects employee’s plea for CEO dues after resigning as director

The National Company Law Tribunal (NCLT) in Mumbai, recently dismissed a Section 9 request made by a former company director, who claimed unpaid operational expenses from the company during his tenure as CEO.

The individual in question held the dual role of director and chief executive officer (CEO) at the company. The applicant assumed his position within the company on 1 June, 2017, but later on formally submitted a resignation from the role as director on 28 October, 2018, which the company duly accepted.

Nonetheless, the applicant asserted that his resignation pertained solely to the position as director and emphasised that he had never tendered a resignation as the CEO. Hence, he is entitled to receive the CEO-related dues.

However, the company clarified that the appointment terms did not provide distinct definitions for the responsibilities of an executive director and a CEO. Moreover, the appointment letter did not outline distinct salaries for these purportedly distinct roles.
After careful consideration, the tribunal ruled that resigning from the director’s position did not grant the petitioner the right to demand compensation as a CEO. The tribunal emphasised that the reference to two terms did not imply that the petitioner held two distinct positions.

The tribunal also concluded that the petitioner’s unilateral resignation from the position of executive director, as opposed to CEO, along with its acceptance by the company, did not grant the petitioner the right to claim dues as a CEO. The fact that the petitioner voluntarily resigned within one year, with the company promptly accepting the resignation, weakened the petitioner’s claim further. As a result, the petition was dismissed by the tribunal.