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2025 (4) TMI 1399 - AT - IBCAdmission of claim filed by the Applicant - Claim of Worker (ex-employee) - Layoff having not challenged by the Appellant - collation of claim and calculation of the salary payment till date of layoff - HELD THAT - In the present case the Resolution Professional has calculated the salary till the layoff period and accordingly admitted the claim to the tune of Rs.185, 62, 360/- which has been reaffirmed by the Resolution Professional. Non-computation of salary after lay off by the Resolution Professional cannot be faulted with since the Resolution Professional has no adjudicatory jurisdiction and the Adjudicating Authority has rightly observed that whether the Workers are entitled to claim their dues for the layoff period under provisions of Industrial Dispute Act is not in the domain of the Adjudicating Authority. There are no error in the order passed by the Adjudicating Authority warranting any interference - appeal dismissed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Condonation of Delay in Refiling the Appeal The Appellant sought condonation of 102 days' delay in refiling the appeal, attributing the delay to the voluminous documents and 19 defects communicated during the process. The Tribunal found sufficient cause for condonation and allowed the delay. This decision aligns with the principle that procedural delays caused by genuine difficulties, such as gathering extensive documentation and authorizations, warrant leniency to ensure substantive justice. Jurisdiction of Adjudicating Authority and Scope of Claims Under IBC The CIRP commenced on 12.05.2022, while the layoff notice was issued on 31.07.2021, prior to the CIRP. The Workers' Union claimed salary dues amounting to Rs.314,31,360/-, of which the RP admitted Rs.185,62,360/- corresponding to salary till the layoff period. The Appellant challenged the non-admission of salary dues beyond the layoff period. The Adjudicating Authority observed that claims relating to the layoff period prior to CIRP commencement fall outside the jurisdiction of the Adjudicating Authority under Section 60(5) of the IBC, as they do not arise out of the insolvency proceedings. The Tribunal upheld this view, relying on the principle that the RP's powers and the Adjudicating Authority's jurisdiction are limited to claims arising during or after the CIRP commencement date. The Tribunal referenced the Kerala High Court's judgment clarifying that the moratorium under Section 14 of the IBC imposes an embargo on enforcement of demands but does not bar determination of the quantum of dues. However, the Tribunal distinguished between determination of dues and adjudication of entitlement, holding that the latter for pre-CIRP periods lies with the appropriate labour courts or forums, not the Adjudicating Authority. Interpretation of Industrial Disputes Act Provisions The Appellant relied on Sections 25(M) and 25(O) of the Industrial Disputes Act, contending that the layoff was illegal and salary must be paid till the insolvency commencement date. The Tribunal, however, emphasized that such disputes concerning legality of layoff and entitlement to salary for the layoff period are governed by labour laws and fall within the jurisdiction of labour authorities, not the insolvency forum. The Tribunal noted that the RP's role is to collate claims based on admitted facts and that the RP cannot adjudicate disputes on the legality of layoff or entitlement to salary beyond the layoff period. The RP's admission of claims up to the layoff period was held to be correct and consistent with the law. Application of Precedent The Respondent relied on a recent decision of the Tribunal in a similar matter involving layoff and salary claims before CIRP commencement. The Tribunal reiterated the principle from that precedent that closure or layoff notices issued prior to CIRP are not subject to adjudication by the Adjudicating Authority under the IBC. In that precedent, the Tribunal held: "Challenge to the closure and lockout notice cannot be raised before the Adjudicating Authority who is not competent to adjudicate the said issue which arises out of the provision of the Uttar Pradesh Industrial Disputes Act, 1947." "Non-verification of the claim subsequent to [closure date] when the factory remained closed cannot be interfered with by this Tribunal." The Tribunal applied the same reasoning in the present case, rejecting the Appellant's challenge to the non-admission of salary claims beyond the layoff period. Moratorium under Section 14 of IBC The Appellant argued that the moratorium under Section 14 prevented them from approaching other forums for adjudication of salary dues for the layoff period. The Tribunal clarified that the moratorium prohibits enforcement of claims but does not bar determination of dues or entitlement by appropriate fora. Hence, the Appellant could have approached the relevant labour authority before CIRP commencement or despite the moratorium for determination of claims arising prior to CIRP. Conclusions on Issues The Tribunal concluded that:
3. SIGNIFICANT HOLDINGS The Tribunal's crucial legal reasoning includes the following verbatim excerpts: "Whether the Workers are entitled to claim their dues for the lay off period from September 2021, is an issue which relates to the period prior to the commencement of CIRP, and which could have been decided by the court of appropriate jurisdiction under the relevant Labour laws." "There was no legal embargo before the Applicant to seek adjudication before the relevant Labour Law authority of their dues pertaining to the lay off period, which pertain to the pre-CIRP period." "The legal embargo under Section 14(1) of IBC 2016 is only about execution of a claim and not for determining the quantum of dues/claim." "Since the issue whether Applicant is entitled to salary for the lay off period is arising prior to the initiation of CIRP, the same is not arising out of the insolvency proceedings and is therefore, dehors to the jurisdiction of this Adjudicating Authority under Section 60(5) of IBC 2016." "Non-computation of salary after lay off by the Resolution Professional cannot be faulted with since the Resolution Professional has no adjudicatory jurisdiction and the Adjudicating Authority has rightly observed that whether the Workers are entitled to claim their dues for the layoff period under provisions of Industrial Dispute Act is not in the domain of the Adjudicating Authority." Core principles established by the Tribunal are:
The final determination was the dismissal of the appeal, affirming the Adjudicating Authority's order rejecting the IA filed by the Workers' Union challenging the RP's admission of claims only up to the layoff period and refusing to admit claims for salary dues beyond that period.
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