2019 (11) TMI 1563 - AT - Insolvency and Bankruptcy

Payment out of Liquidation estate - Appellants claimed that Corporate Debtor had failed to make payment of wages of the workmen - case of appellant is that Provident Fund of employees, Gratuity have not been remitted to them since 2011-2013 and that the same should be considered with the Resolution Plan - seeking assurance regarding continuance of employees in the Resolution Plan - Seeking representation in the monitoring agency - HELD THAT - The present impugned order is partly in the nature of giving direction to the Resolution Professional and Resolution Applicant to consider the aspects as pointed out by the Adjudicating Authority in the impugned order and which observations have been referred above. The order approving the Resolution Plan is not in challenge before us. What was finally included or not included cannot be looked into in the present appeal - Request was made by learned Counsel for the Appellant if in the Resolution Plan there could be assurance of continuation of service but nothing is shown what provides for this. Considering further developments which have taken place, including that application for resorting to liquidation has already been filed, it would not be proper for us to pass any specific order in this appeal - When Resolution Plan is already approved, Appellants may raise issues if Resolution Plan does not take care of dues of Employees/workers for which we give liberty. It may be subject to limitation for Appellant. But then any other employee also can raise issue if Resolution Plan is not as per law. Appeal disposed off.

Issues:
1. Appellants claiming to be workers of Corporate Debtor seeking to be party to Company Petition for Resolution Plan consideration.
2. Dismissal of Appellants' application and approval of Resolution Plan by Adjudicating Authority.
3. Grievances of workers regarding provident fund, pension fund, gratuity fund, and wages considered by Resolution Professional and CoC.
4. Applicability of IBC provisions on provident fund, pension fund, and gratuity fund in the distribution of assets.
5. Approval of Resolution Plan by separate order and subsequent application for liquidation filed by Resolution Professional.
6. Reference to judgment on the overriding effect of IBC provisions in case of inconsistency with other laws.
7. Interpretation of Section 36(4) of IBC regarding assets not included in the liquidation estate.
8. Direction to consider workers' grievances in Resolution Plan implementation without challenging the approved Resolution Plan.
9. Absence of assurance for continuation of service in Resolution Plan.
10. Refraining from passing specific orders due to ongoing developments, including the liquidation application.
11. Liberty granted to Appellants to raise issues regarding dues in Resolution Plan, subject to limitations and rights of other employees.

Analysis:
1. The appeal involves workers of the Corporate Debtor seeking to participate in the consideration of the Resolution Plan. The Appellants claimed non-payment of wages and sought inclusion of their claims in the Resolution Plan. They requested representation in the monitoring agency and assurance of employee continuance in the Plan.

2. The Adjudicating Authority dismissed the Appellants' application, approving the Resolution Plan. It held that the Resolution Professional and CoC considered the workers' grievances regarding provident fund, pension fund, and gratuity fund in accordance with the law.

3. The judgment referenced the workers' claims under the IBC, emphasizing the non-inclusion of provident fund, pension fund, and gratuity fund in the liquidation estate for asset distribution. The Resolution Professional was directed to consider the remaining grievances during the Resolution Plan implementation.

4. Separate orders were mentioned for the Resolution Plan approval and a pending liquidation application filed by the Resolution Professional, indicating ongoing developments in the case.

5. The judgment cited a previous case on the overriding effect of IBC provisions, clarifying the treatment of funds like provident fund, pension fund, and gratuity fund in asset distribution.

6. Section 36(4) of the IBC was interpreted to exclude certain assets from the liquidation estate, specifically mentioning assets like provident fund, pension fund, and gratuity fund belonging to employees.

7. The order focused on directing the Resolution Professional and Resolution Applicant to address the workers' concerns without challenging the approved Resolution Plan, emphasizing the workers' rights in the process.

8. Concern was raised about the lack of assurance for service continuation in the Resolution Plan, highlighting a potential issue for the workers.

9. Due to ongoing developments, including the liquidation application, the judgment refrained from issuing specific orders, indicating a need to monitor the situation closely.

10. Appellants were granted liberty to raise concerns about dues in the Resolution Plan, subject to limitations and the rights of other employees, with further instructions to engage with the liquidator if a liquidation order is passed.

← Previous Next →