RFA(OS)--72/2018. Case: CARGILL INDIA PVT LTD & ORS Vs. DEEPAYAN MOHANTY. High Court of Delhi (India)

Case NumberRFA(OS)--72/2018
Judgement DateDecember 09, 2019
CourtHigh Court of Delhi (India)


* IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment Reserved on: 09th July 2019 Judgment pronounced on: 9 December 2019. + RFA(OS) 72/2018


Through: Mr. Sandeep Sethi, Sr. Advocate with Mr. Shadan Farasat,

Atif Shamim, Mr. Jasmeet Singh & Ms. Rashmi Advocates.


DEEPAYAN MOHANTY ..... Respondent Through: Mr. Rohit Puri, Ms. Pragya Puri,

Mr. Mizan Sidiqqui, Advocates.



1. This is an appeal against the judgment passed by a learned Single Judge of this Court in a suit instituted by the respondent under the Order XXXVII of the Code of Civil Procedure, 1908 (hereinafter referred to as “the Code”) for recovery of Rs. 3,25,56,496/- along with For the sake of convenience, the appellant shall be referred to as ‘Cargill’ and the respondent/plaintiff as ‘DM’.

2. On 17.10.1996, DM joined the services of Bharat Cargill Holding Ltd. as a Manager, Trade Finance. He completed his probation year 1997. Post confirmation, his services were transferred to DM continued to serve Cargill till he resigned on 07.12.2009.

3. The suit of DM was based on a claim for bonus, which was guaranteed to him for the years 2006-2007, 2007-2008 and 2008-2009. The relevant

clause on which the deferred incentive was to be provided to an employee is extracted below along with the forfeiture provisions:


Deferred incentives will be deferred for a period one (1) to three

(3) Fiscal Years measured from the Grant Date of the award, as a function of the Individual Incentive Award amount, accordance with the schedule below. Deferred Incentives be paid out in annual installments over the deferred period. Each annual installment is computed by dividing the total outstanding Deferred Incentive balance (plus accrued interest thereon) as of May 31 preceding the relevant distribution date, by the years remaining in the deferral period.

Individual Incentive Award

$74,999 and below

Deferred Incentive Percentage and Deferral Period

0% No Deferred Incentive

$75,000-$199,999 50% of Individual Incentive Award deferred for 1 Fiscal Year from Date


50% of Individual Incentive Award deferred for 2 Fiscal Years from Grant Date (2 annual payments)

$400,000 and greater

50% of Individual Incentive Award deferred for 3 Fiscal Years from Grant Date (3 annual payments)

Interest Rate Applied to Deferred Incentive

Deferred Incentive amounts will earn interest at the one-USD LIBOR plus one percent per annum spread, which will be compounded annually. The USD LIBOR +1% will be set each Fiscal Year based on the prevailing one year USD LIBOR quoted by Cargill Treasury on June 1st (or the next working day) of each succeeding Fiscal Year, Interest will be calculated annually over the remaining deferral period based on remaining unpaid balance (including previous interest amounts calculated but not paid).


Deferred incentives that have been awarded but distributed will be forfeited if the Participant (1) is Terminated for Cause, or (2) (a) voluntarily separates from service with the Company or is Terminated for Sub-standard Performance, and (b) continues a career within the financial or commodity trading industry outside of the Company within a period of 2 years from the date of termination (referred to as the Two year, Non-compete period). Continuance of a career within the financial or commodity trading industry is defined employment by consulting with, establishing, or having substantial ownership interest in any organisation, which competes with the Company for employees, customers, clients, market share, or financial/commodity resources or deals.

Deferred incentives will not be forfeited under the following circumstances:

● A Participant’s Reduction In Force (RIF), Disability or death.

● A Participant who voluntarily separates from service with the Company, Retires from the Company, or Terminated for Sub-standard Performance and who does not compete within the Two-year, Non-compete period.

In the event that a Participant seeks to engage in an activity or an employment relationship that may violate the Two-Non- compete period, Participants may seek clarification relative to the acceptability of this relationship from Business Unit or Platform leader .


Cash Awards

Cash Awards will be paid no later than August 15th after Grant Date. For Non-US Participants, payment will be based on the foreign exchange rates in effect on the date to be specified in accordance with corporate policy. Non-US. Participants should confirm the payment date and foreign exchange rate with local Human Resources.

Deferred Incentives

1.For current Participants:

Deferred Incentive awards will be paid in one or more instalments (as applicable) over the Participant's respective deferral period. Payments will begin one Fiscal Year following the Grant Date, and each payment will be distributed within 60 days of each Fiscal Year end.

2. For terminated Participants, due to a RIF, Disability, death:

Deferred Incentive amounts will be paid within sixty (60) days of the date of RIF, Disability, Retirement or death ("Qualifying Event Date") as a lump sum payout of outstanding Deferred Incentive amounts due plus any accrued interest as of Qualifying Event Date.

3. For all other terminated Participants, including Retirees, whose Deferred Incentives have not been forfeited accordance with the Forfeiture provisions: Deferred Incentives will be. paid within 60 days after the Two-year Nan-compete Period expires at which time the Participant will receive a lump sum payout of outstanding Deferred Incentives and accrued interest. The final period accrual is calculated based on timeframe between June r ' of the prevailing Fiscal Year and the day the Two-year Non-compete period expires.

Participants will be required to complete a statement to certify that they have successfully fulfilled the Two-year Non-compete period before they will be eligible for payment. determination of whether or not the non- compete provisions have been successfully fulfilled will be determined at the discretion of the Business Unit Leader and Platform Leaders.”

No Participant will be eligible to receive a distribution of Individual Incentive Award other than as specified in Plan.”

4. According to the respondent, the following incentive awards for financial years as detailed above, stood vested in him and form basis of the suit filed under Order XXXVII of the Code:

“9. Thus, in order to summarize, the following Incentive Awards for the following years stood vested in Plaintiff:

(a) USD 525, 000 for the fiscal year 1st June, 2006 – 31st May, 2007;

(b) USD 510, 000 for the fiscal year 1st June, 2007 – 31st May, 2008; and

(c) USD 575, 000 for the fiscal year 1st June, 2008 – 31st May, 2009.”

5. After a period of two years came to an end, a communication

11.01.2012 was addressed to the respondent by the appellant calling upon him to provide details to enable the company to access his eligibility receive the deferred award. However, no favourable response received thereafter, and thus a legal notice was issued by the respondent on 23.05.2012 calling upon the company to release the incentive. communication was replied to by a letter dated 06.06.2012 by which the appellants refused to pay the said amount. The respondent again letter dated 10.09.2012 called upon the appellant to release the of the incentive. The respondent was informed on 04.10.2012 deferred incentive amount was forfeited as per the forfeiture of the grant of incentive awards. The appellant thus disputed and denied the incentive to the respondent relying on the forfeiture provision.

6. Respondent was dissatisfied with the denial of the incentives, and this to filing of the suit under the provisions of Order XXXVII

The appellant No.1 filed an application seeking leave to defend was dismissed and the suit was decreed in favour of the respondent with

interest at the rate of 12%. The present appeal arises out of the denial of leave to defend and passing of the decree.

7. Mr. Sethi, learned senior counsel appearing for the appellants that post the resignation of the respondent on 07.12.2009, the learnt that during the period of employment, the respondent had indulged in carrying out business activities and that too competing activities. This fact came to light when in a routine scan of the company’s laptop, which was handed back by the respondent, it was discovered the basis of some e-mails that two companies had been floated respondent. These companies were established in the last few years of his employment with the appellant, to carry out competing business activities without the knowledge, consent and concurrence of the appellant thus, a fraud was being played by the respondent upon the ap where he was gainfully employed.

8. In the leave to defend, emails exchanged between the respondent one Divya Dhawan, who was a Director of the competing company were relied upon, certain other emails were also produced in support stand taken and defence raised seeking unconditional leave to defend. It was submitted that a company by the name of Kredence was floated two independent Directors. Another company by the name of Consulting India Pvt. Ltd., of which father of the respondent and Divya Dhawan were the Directors, was also floated. Reliance was placed on an email dated 16.02.2009, more particularly a portion, which as: “Kredence was known to Cargill and was procuring clients Cargill”. In fact, the said e-mail shows that Kredence was introduced...

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