2024 (11) TMI 1141 - AT - IBC

Rejection of liquidator's claim by the workmen - closure of factory - violation of the provisions of the Industrial Dispute Act, 1947 - HELD THAT - From the facts brought on the record, it is clear that the corporate debtor ceased to work from June, 2010 and according to the case of the Appellants themselves, they worked in the factory till April 2012 only. The claim was filed by the Appellants who were asked by the liquidator to submit evidence to substantiate the claims. No satisfactory evidence having been produced by the Appellant that they were in the employment of the corporate debtor on the date of commencement of the liquidation, the Liquidator rejected the claims and sent communication dated 02.03.2019. In the present case, according to own case of the Appellants that they could not work after April, 2012. They had not taken any proceedings before the Industrial Court or Labour Court for their wages and other claims. For violation of provisions of the Industrial Disputes Act, 1947, the remedy available to the workmen was to approach the Industrial Court or Labour Court. Adjudicating Authority has rightly observed that the workmen/ employees have slept over their rights for years together and they filed the claim only when CIRP/ liquidation has commenced - The NCLT while exercising its jurisdiction on the liquidation process of the corporate debtor is not entitled to enter into issue as to whether the closure of the factory from June 2010 was in violation of the Industrial Dispute Act, 1947. The said issue ought to have been raised by the Appellants before the Industrial Court or Labour Court. Reference made to the judgment of this Tribunal in Era Labourer Union of Sidcul, Pant Nagar, through its Secretary vs. Apex Buildsys Ltd. 2024 (9) TMI 1323 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB . In the above case also, labourer union of Sidcul, Pant Nagar had filed a claim in the CIRP of the corporate debtor which commenced on 20.08.2018. Direction for liquidation was also passed by the Adjudicating Authority on 09.01.2020. Before the Adjudicating Authority, IA was filed by Era Labourer Union where declaration of the lockout on 31.07.2017 was under challenge and Appellant claimed for payment from date of the lockout till the commencement of the liquidation proceedings. The liquidator had not accepted the claim from date of lockout till the commencement of the CIRP. The claims of the Claimants were not verified from the date of closure. Adjudicating Authority rejected the application of the Labourer Union questioning the layoff. Challenging the said order, the appeal was filed. The above judgment fully supports the submission of the Liquidator that the issue of closure of the factory from June, 2010 cannot be questioned and the issue which ought to have been raised by the Appellants before the Industrial Court or Labour Court. Before the liquidator, no material having brought by the Appellants to prove their employment and working till 31.12.2018, the Liquidator did not commit any error in rejecting the claims. There are no infirmity in the order of the Adjudicating Authority warranting interference by this Tribunal in exercise of Appellate Jurisdiction - There is no merit in the Appeal - The Appeal is dismissed.

Summary

Issues Involved:
1. Validity of the liquidator's rejection of claims by the workmen.
2. Compliance with the Industrial Dispute Act, 1947 regarding factory closure.
3. Jurisdiction of the Adjudicating Authority in addressing claims related to factory closure.
4. Requirement of evidence to substantiate claims by workmen.

Issue-Wise Detailed Analysis:

1. Validity of the Liquidator's Rejection of Claims by the Workmen:

The appeal challenges the order dated 18.01.2024, where the liquidator's decision to reject the claims of 271 workmen was upheld. The liquidator required proof of employment within two years preceding the liquidation commencement date, which the appellants failed to provide satisfactorily. The liquidator communicated the rejection of claims on 02.03.2019, citing the limitation set by the Insolvency and Bankruptcy Code (IBC) for dues distribution. The appellants claimed dues till 31.12.2018, but the liquidator found insufficient evidence to establish employment during the relevant period, leading to the rejection of claims. The Adjudicating Authority upheld this decision, noting the lack of timely assertion of rights by the workmen.

2. Compliance with the Industrial Dispute Act, 1947 Regarding Factory Closure:

The appellants argued that the factory closure was not compliant with the Industrial Dispute Act, 1947, as no permission was obtained from the State Government. They contended that under Section 25-O(6) of the Act, the workmen should be deemed continuously employed and entitled to benefits. However, the Adjudicating Authority observed that the appellants did not pursue any remedies available under labor laws to challenge the closure, which was deemed illegal due to the lack of permission. The tribunal emphasized that the appellants had not raised any industrial disputes or sought redressal for their grievances in a timely manner.

3. Jurisdiction of the Adjudicating Authority in Addressing Claims Related to Factory Closure:

The tribunal clarified that the National Company Law Tribunal (NCLT) does not have jurisdiction to adjudicate issues related to the legality of the factory closure under the Industrial Dispute Act, 1947. Such matters should have been raised before the Industrial Court or Labour Court. The tribunal referenced a precedent where it was held that challenges to closure notices could not be entertained by the NCLT, as these issues are beyond its scope in insolvency proceedings.

4. Requirement of Evidence to Substantiate Claims by Workmen:

The appellants relied on identity cards and pay slips from 2010 to substantiate their claims, which the liquidator found inadequate. The tribunal noted that under Regulation 19(3) of the IBBI (Liquidation Process) Regulations, 2016, workmen must provide relevant documents to establish their dues. The absence of sufficient evidence, such as contracts of employment or court orders, led to the rejection of claims. The tribunal emphasized the principle of "vigilantibus non dormientibus jura subveniunt," highlighting the importance of timely assertion of rights.

In conclusion, the tribunal found no merit in the appeal, affirming the Adjudicating Authority's decision to dismiss the claims due to lack of evidence and jurisdictional limitations. The appeal was dismissed, upholding the liquidator's rejection of the workmen's claims.