2020 (12) TMI 756 - Tri - Insolvency and Bankruptcy

Permission to applicant to be impleaded as a party respondent in Applications - Section 60 (5) (a) (c) of the Insolvency Bankruptcy Code, 2016 - HELD THAT - The applicant being an unsecured financial creditor, will be directly affected if any amount over and above what is actually payable is paid to the Workmen. They have further stated that the applicant has averred that the Respondent has admitted and entertained certain claims which were filed beyond the last date for submission of the claims. In this regard, the Respondent submitted that these amounts are admitted liability in the books of accounts maintained by the Corporate Debtor and hence the Liquidator is duty bound to accept the same in accordance with Regulation 19 (4) and Regulation 25. Despite the same, certain employees/workmen without knowing that their claims were already accepted as reflected in the books of accounts had also obtained orders of this Tribunal to submit the same before the Respondent - The Respondent liquidator stated that he has executed his duties as per provisions of law and the present application deserves to be adjudicated as per judicial discretion of this Tribunal. Maintainability of Intervention Application filed by Respondent 1 - Section 60 (5) (a) of the Insolvency Bankruptcy Code, 2016 read with Rule 11 and 32 of the NCLT Rules - HELD THAT - It is seen that there is a collusion by the Liquidator with the applicant M/s Kopran Limited in filing the present M.A in order to defeat the rightful claims of the ex-workers of their legitimate dues. This will be clear from the counter filed by him in the present M.A. The Liquidator can make the legitimate payment of the applicant Kopran Limited but that should not be at the costs of the workmen of Excel Glasses Limited - The application is liable to be dismissed as not maintainable. Applications disposed off.

Summary

Issues Involved:
1. The maintainability of MA/148/KOB/2020 filed by an unsecured financial creditor to be impleaded in the applications filed by workmen/employees.
2. The legitimacy of the claims made by the workmen/employees and their priority under the Insolvency and Bankruptcy Code.
3. Allegations of collusion between the Liquidator and the unsecured financial creditor.

Issue-wise Detailed Analysis:

1. Maintainability of MA/148/KOB/2020:
The applicant, an unsecured financial creditor, filed MA/148/KOB/2020 seeking to be impleaded as a party respondent in various applications filed by the workmen/employees of the Corporate Debtor. The Tribunal noted that this application was filed in IBA 258/CHENNAI BENCH, which had already been disposed of. Consequently, a prayer to implead in a non-existent case cannot be accepted. The Tribunal emphasized that the applicant should have filed separate impleading applications in each of the applications filed by the workmen, serving copies to them to allow for objections. Filing a single application without involving the ex-workmen was deemed an unfair practice. Therefore, MA/148/KOB/2020 was dismissed as not maintainable.

2. Legitimacy and Priority of Workmen/Employees’ Claims:
The workmen/employees filed applications seeking to be recognized as necessary parties in the liquidation process and requested that their dues be paid without including them in the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code. The Tribunal highlighted that the Code prioritizes workmen’s dues over other creditors, including unsecured financial creditors. The workmen argued that their claims, including gratuity dues, should be paid preferentially, as upheld in the NCLAT decision in State Bank of India v. Moser Baer Karamchari Union. The Tribunal acknowledged that the workmen’s claims are given utmost priority under the Code and that the Liquidator has a duty to disburse these dues accordingly.

3. Allegations of Collusion:
The Tribunal observed potential collusion between the Liquidator and the unsecured financial creditor, Kopran Limited, aimed at defeating the rightful claims of the workmen. The Liquidator’s counter supported the unsecured financial creditor’s application, raising suspicions of collusion. The Tribunal stated that while the Liquidator could make legitimate payments to Kopran Limited, it should not come at the expense of the workmen’s dues.

Conclusion:
The Tribunal dismissed MA/148/KOB/2020 filed by the unsecured financial creditor as not maintainable and highlighted the importance of following proper procedures. The Tribunal reiterated the priority of workmen’s dues under the Insolvency and Bankruptcy Code and expressed concerns about potential collusion between the Liquidator and the unsecured financial creditor. Consequently, IA/189/KOB/2020, which sought to dismiss the intervention application, was disposed of as it became redundant following the dismissal of MA/148/KOB/2020.