2020 (9) TMI 557 - Tri - Insolvency and Bankruptcy

CIRP process - employee- employer dispute - employees who resigned after the Resolution Plan is approved - stakeholders of the Corporate Debtor or not - Jurisdiction of Tribunal - HELD THAT - The primary object of the I B Code is to balance the interests of all the stakeholders including the workers, who need to be paid. Any Resolution Plan not adhering to the I B Code, 2016 is against the interest of all the stakeholders and would defeat the spirit of the I B Code. Thus, taking into consideration the primary objectives of the I B Code, 2016, we are not inclined to accept the contention of the new management of the Corporate Debtor that the issue pertains employee-employer dispute and that this Tribunal does not have jurisdiction. The applicants, who resigned on 28.02.2019 from the Corporate Debtor-company with one month notice were the employees of the Corporate Debtor when new management was inducted in the Board of the Directors of the Corporate Debtor. Therefore, the successful Resolution Applicant cannot escape the responsibility by hiding behind the wheel of the employee-employer dispute. Thus these employees who resigned after the Resolution Plan is approved are also an integral part of the stakeholders of the Corporate Debtor.

Summary

Issues Involved:
1. Payment of pending salaries and statutory dues to resigned employees.
2. Issuance of Service Certificate and Relieving Letter to resigned employees.
3. Jurisdiction of the Tribunal over employee-employer disputes post-CIRP.

Detailed Analysis:

Issue 1: Payment of Pending Salaries and Statutory Dues to Resigned Employees
The Tribunal approved the Resolution Plan on 21.01.2019, and the new management took over on 24.01.2019. Employees listed in Annexure-I resigned on 28.02.2019. Despite resignations, salaries and statutory payments for February and March 2019 were not paid. The Tribunal had previously directed the new management to clear these dues by 17.02.2020. The new management argued that the resignations were voluntary and unrelated to the CIRP, and thus the application was not maintainable. However, the Tribunal emphasized that the primary objective of the I&B Code is to balance the interests of all stakeholders, including workers. The Tribunal directed the Resolution Applicant to clear all pending salaries for February 2019 and one month salary for the notice period (March 2019) within one month.

Issue 2: Issuance of Service Certificate and Relieving Letter to Resigned Employees
The resigned employees were not issued Service Certificates and Relieving Letters, hindering their ability to join new organizations. The Tribunal directed the new management to issue these documents to the resigned employees, recognizing their importance for the employees' future employment opportunities.

Issue 3: Jurisdiction of the Tribunal Over Employee-Employer Disputes Post-CIRP
The respondents contended that the issues raised pertained to employee-employer disputes beyond the Tribunal's jurisdiction. They also argued that the CIRP of the Corporate Debtor had attained finality with the Supreme Court's order dated 22.01.2020. The Tribunal, however, referred to the Supreme Court's judgment, which emphasized protecting the interests of all stakeholders, including workers. The Tribunal concluded that it had jurisdiction over the matter as the employees were on the rolls of the Corporate Debtor when the Resolution Plan was approved. The Tribunal rejected the contention that the matter was purely an employee-employer dispute and affirmed its jurisdiction to adjudicate the issues raised.

Conclusion:
The Tribunal directed the Resolution Applicant to:
1. Clear all pending salaries for February 2019 and one month salary for the notice period (March 2019) within one month.
2. Clear statutory dues towards Provident Fund and Gratuity accrued to the resigned employees.
3. Issue Service Certificates and Relieving Letters to the resigned employees.

The application was disposed of accordingly.