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2022 (11) TMI 1192 - AT - Insolvency and BankruptcyClaim of the workmen and employees - inclusion in the Stakeholders Consultation Committee ( SCC ) - Direction to Liquidator to immediately refund the fees of 11.5 crore (approx) taken by the Liquidator for or on account of illegal distribution of funds among the creditors of the corporate debtor to the bank account of the corporate debtor along with interest HELD THAT - A coordinate Bench of this Tribunal in UP Awas Evam Vikas Parishad (UP Housing and Development Board) Vs. JNC Construction Pvt. Ltd. Ors. 2022 (4) TMI 261 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , has observed that there is no subsisting Claims of the Employees and all the Employees are getting their salaries on a regular basis. Based on the submissions of the Liquidator it is also recorded that the gratuity claim of the Employee is also not existing and has partially allowed the Appeal - it is clear that the Corporate Debtor is being conducted as a Going Concern and that the Banks would return the money if they are not entitled in accordance with Regulation 43 of the IBBI (Liquidation Process) Regulations, 2016. Inclusion as a representative in the SCC or not - HELD THAT - Regulation 31 clearly specifies that the Liquidator shall prepare a list of Stakeholders, category wise, on the basis of proves of Claims submitted and accepted under these Regulations . In the instant case, the Claims made by the 16 Employees with respect to the one-month Notice Period was rejected and the same was not challenged vide an Appeal. Regulation 31-A(2), speaks of one representative of Workmen and Employees. Regulation 31-A flows from 31 and has to be read together and interpreted in its truest sense keeping the objective of the Code - Regulations 31 31-A specify that when the Employees have no subsisting Claim, they cannot be included in the list of Stakeholders, thereby meaning that if the Workers are not specifically includes in the list of Stakeholders, under Regulation 31, they cannot be made a part of the SCC under Regulation 31-A(1). Therefore, the contention of the Learned Counsel for the Appellant that one representative to be included whether the Claim is subsisting or not, is untenable. The Corporate Debtor is a Going Concern and an assurance as has been given by the Respondent that their Claims of gratuity as and when they arise would be paid as per the provisions of the Code, there are no illegality or infirmity in the Order of the Adjudicating Authority - appeal dismissed.
Issues Involved:
1. Refund of Liquidator's fee. 2. Inclusion of a representative of workmen/employees in the Stakeholders Consultation Committee (SCC). 3. Recovery of Rs. 26 crore paid to financial creditors. 4. Locus standi of the applicant. 5. Conflict of interest between the Liquidator and Central Bank of India. 6. Proper constitution of the SCC. Issue-wise Detailed Analysis: 1. Refund of Liquidator's Fee: The Learned Adjudicating Authority noted that the prayer for refund of the Liquidator's fee of Rs. 1.5 crore had become infructuous as the refund had already occurred via cheque dated 03.11.2020 under compelling circumstances. 2. Inclusion of a Representative of Workmen/Employees in the SCC: The Authority denied the inclusion of a representative of workmen/employees in the SCC, stating that the workers did not have a subsisting claim. It emphasized the symbiotic relationship between Regulations 31 and 31A of the Liquidation Regulations, asserting that inclusion in the SCC is contingent upon inclusion in the list of stakeholders. The Appellant argued that the Liquidator must include a representative of the Workmen/Employees in the SCC regardless of whether they have a subsisting claim. The Appellant contended that the Liquidator wrongfully rejected their claims for the notice period, citing Section 33(7) of the Insolvency and Bankruptcy Code, 2016, which states that liquidation does not constitute notice of discharge if the business continues during liquidation. The Appellant also highlighted that the Liquidator included six financial creditors in the SCC, exceeding the permissible limit of four under Regulation 31-A. The Respondent countered that the Liquidator had filed a list of stakeholders based on verified claims and that the Appellant's claim for leave encashment and notice period salary was rejected, with no appeal filed against this decision as per Section 42 of the Code. The Respondent maintained that inclusion in the SCC is subject to the existence of claims under Regulation 31. The Tribunal upheld the decision of the Adjudicating Authority, noting that the Appellant did not challenge the rejection of their claims and that Regulations 31 and 31-A must be read together, indicating that without a subsisting claim, workmen/employees cannot be included in the SCC. 3. Recovery of Rs. 26 Crore Paid to Financial Creditors: The Authority did not accede to the prayer for directing the Liquidator to recover Rs. 26 crore paid to financial creditors, as the order dated 26.06.2020, whose implementation was sought, was under challenge before the Hon'ble NCLAT. However, financial creditors were directed to file affidavits within fifteen days regarding keeping the amounts distributed to them in an interest-bearing account. 4. Locus Standi of the Applicant: The Authority affirmed the applicant's locus standi to file the application, clarifying that Section 50 of the Maharashtra Public Trust Act, 1950, applies only to suits and not to the present proceedings. It also noted that objections regarding locus were not raised in the Liquidator's reply and appeared to be an afterthought. 5. Conflict of Interest: The Authority observed a potential conflict of interest between the Liquidator and the Central Bank of India, noting that the interests of both parties were not completely aligned concerning the present application. 6. Proper Constitution of the SCC: The Authority directed the Liquidator to reconstitute the SCC immediately in accordance with Regulation 31A read with Regulation 31 of the Liquidation Regulations, as the SCC constituted with all nine financial creditors violated Regulation 31A(2). Conclusion: The Tribunal dismissed the appeal, affirming the Adjudicating Authority's order. It emphasized that the Corporate Debtor is being conducted as a going concern and that claims of gratuity would be paid as per the provisions of the Code when they arise. The Tribunal found no illegality or infirmity in the Adjudicating Authority's order.
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