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TMI Blog2022 (1) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Code that provides for the role of a secured creditor in liquidation proceedings. In view of the liquidation order passed by the NCLT on 23.3.2018, the order of moratorium passed under Section 14 ceased to have effect. Accordingly, further proceedings in the pending adjudicating case before the Industrial Tribunal was not barred after the order of liquidation passed by the NCLT - Under Section 238 of the Code, the provisions of the Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. Therefore, the distribution of the proceeds from the sale of liquidation assets are to be distributed in the order of priority as provided under Section 53 of the Code after determination of the claims by the Liquidator. In view of the manner of distribution of the assets of the company in liquidation as provided under Section 53 of the Code, the workmen's dues of the company in liquidation shall be made strictly in accordance with the priority, to the extent, and, in the manner provided in Section 53 of the Code - no negative evidence could have been l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company was engaged in the business of manufacturing of geared scooters and had an employee strength of more than 6,000 employees including staff and workers. Around the late 1990s in view of the significant change in the consumer behavior towards motorcycles as opposed to scooters, the Company suffered substantial losses. On inability to arrange fresh working capital, the Company was only able to achieved partial restructuring in the year 2005. However, in view of the rapid erosion of the Company's net worth, a reference was filed before the Board for Industrial and Financial Restructuring BIFR under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 SICA . In the proceeding of BIFR held on 8.5.2007, an operating agency was appointed to prepare a revival scheme if feasible. The workmen of the petitioner-Company resorted to strikes and demonstrations with effect from 27.2.2006, which paralyzed its functioning and a lockout was declared with effect from 7.3.2006. In order to salvage the Company's business, the management of the Company and its workmen represented by the registered union of the Company namely Lohia Machines (LML) Karmcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s granted dehors the statute. The Special Appeals, bearing numbers 834 of 2008 and 833 of 2008, filed by the respondent-Union came to be dismissed by this Court by a judgement dated 1.2.2013. However, Special Leave Petitions filed against the aforesaid judgement passed in the Special Appeals are pending before the Supreme court in which the effect and operation of the order dated 1.2.2013 has been stayed until further orders. The order of reference dated 21.5.2008 made under Section 4K of the Act was also challenged by the petitioner-Company in Writ Petition No. 33896 of 2007 which was dismissed by a judgement delivered on 17.09.2010. The Special Appeal No. 1699 of 2010 filed challenging the judgement of the writ Court was also dismissed by means of a judgement dated 31.1.2014. A corporate insolvency resolution process of the petitioner-company, which is a corporate debtor, was initiated pursuant to an order dated 18.5.2017 passed by the NCLT admitting the company petition bearing CP No. (IB)-55/ALD./2017 filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 Code . The NCLT issued consequential directions while passing an order of moratorium under Section 14 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07 which was given effect to. The lockout was lifted with effect from 15.4.2007 and the settlement was implemented. It is contended that since the registration of the respondent-Union, was canceled by the order of the Court, therefore, under the provisions of Section 6(I) of the U.P. Act, none of its officers were entitled to represent the workmen before the Industrial Tribunal. It is contended that the validity of the settlement was upheld in Special Appeal before this Court, which order has become final and the lay off compensation contemplated in the settlement is strictly in accordance with the provisions of the U.P. Act. The contention is that after the repeal of the SICA, steps were taken by the Company before the NCLT under the provisions of the Code in which an order of moratorium was passed under the provisions of Section 14 of the Code. Given the order of the NCLT, the Labour Court ought not to have proceeded with the matter. It is further contended that once the order of liquidation was passed on 23.3.2018 and the Liquidator was appointed by NCLT by the order dated 9.4.2018, no award could have been made by the Industrial Tribunal for grant of full back wages and other d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e majority of the workmen. The circumstances led to the workmen forming the respondent-Union, the registration of which was challenged in a writ petition. It is contended that in view of the interim order passed by the Supreme Court in a Special Leave Petition staying the operation of the order of the Division Bench of this Court passed in a Special Appeal, the registration of the respondent-Union stood revived. It is contended that even an unregistered Union is not debarred from representing the interest of a workman. In this regard, the learned counsel has referred to the aforesaid judgment of the Division Bench of this Court in Special Appeal No.1699 of 2010 in which, while observing that whether the circumstances existing after seven years of the settlement still justify its terms to be binding on more than 2500 workmen, which is about 80% of the total number of workmen, which were employed on the date of lock-out requires to be examined by the Industrial Tribunal, the Court held that it is not disputed that even the workmen of unregistered Union may make a reference by raising an industrial dispute. Learned counsel, in this regard, has referred to paragraph no. 4 of the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alyzed. Representation of the workmen before the Industrial Tribunal: Annexure No.7 to the writ petition is an order issued on 21.05.2008 passed by the ex-officio Secretary to the Labour Department of the Government of Uttar Pradesh communicating the opinion of the Governor regarding the industrial dispute between the employer and its workmen and referring the same under Section 4-K of the U.P. Act suo moto . The aforesaid order of reference was challenged by the petitioner-company in a writ petition which came to be dismissed on 17.09.2010. In the Special Appeal filed by the petitioner-company, M/s L.M.L. Limited M/s L.M.L. Limited v. State of U.P. And others Special Appeal No.1699 of 2010 , against the aforesaid order, the Appellate Court upheld the settlement to be binding despite it being unregistered, however, held that the settlement is not binding on all the workmen of the petitioner-company. It was held as follows:- 26. We find that though learned Single Judge has committed an error in law in holding that the settlement or agreement to be binding must be registered under Section 6-B of the Industrial Disputes Act and has ignored the ratio of the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compensation, is not found to be legal and valid, its binding effect on all the workmen would not make the settlement valid for all the workmen for denying a reference. 29. The legal position, that even the workmen of unregistered union may make a reference, is not disputed and thus even if the LML Mazadoor Ekta Sangathan, Kanpur is not a registered union, it could have raised an industrial dispute. In the present case, the industrial dispute has been referred suo moto by the State Government, which makes the case of the petitioner still weaker inasmuch as the satisfaction of the State Government cannot be lightly interfered with by the High Court under Article 226 of Constitution of India, nor the settlement could be said to binding on the State Government for all times to come, if it is satisfied that there exists an industrial dispute which needs to be adjudicated and resolved. The settlement in any case on the face of its terms was inconclusive and was entered into to bring temporary industrial peace on 13.4.2007. It did not end the relationship of employer and employee. 30. We further find that even if the settlement dated 13.4.2007 for arguments sake was valid and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur Court, or Tribunal in the manner prescribed. (2) No party to any proceeding before a Board shall be represented by a legal practitioner, and no party to any proceeding before a Labour Court or Tribunal shall be represented by a legal practitioner, unless the consent of the other party or parties to the proceeding and the leave of the Presiding Officer of the Labour Court or Tribunal, as the case may be, has been obtained. (3) No officer of a Union shall be entitled to represent any party unless a period of two years has elapsed since its registration under the Indian Trade Unions Act, 1926, and the Union has been registered for one trade only: Provided that an officer of a federation of unions may subject to such conditions as may be prescribed represent any party. It has been observed by this court in the Special Appeal of L.M.L. Limited (supra) that the reference was made suo moto by the State Government and that it was always open to the workmen of the petitioner-company who are members of the respondent-Union, which is stated to be unregistered, to raise an industrial dispute. Rule 40 of the U.P. Industrial Disputes Rules, 1957 U.P. Rules reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing non-entitlement of the respondent-Union to represent the interest of the workmen before the Industrial Tribunal would not be acceptable. While placing the judgment in the case of B. Srinivasa Reddy , the learned counsel for the petitioner-company has specifically referred to paragraph no.38 thereof in which it is held as follows:- 38. In the writ petition filed by Respondents 1 and 2 their locus standi to challenge the appointment of the appellant was asserted in the following words: The petitioner Association is a trade union registered under the Trade Unions Act, 1926. The petitioner is the only registered trade union existing in the 2nd respondent Board. The Board has held several negotiations with the petitioner Union with regard to the service conditions of the employees of the 2nd respondent Board since its formation in the year 1986. The Board has entered into several settlements with the petitioner Union with regard to their service conditions. The petitioner which is a recognised trade union is entitled to agitate the matter with regard to the appointment of the 3rd respondent to the Board. The petitioner is concerned about the functioning of the 2nd res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Once it is shown that a body of workmen, either acting through their union or otherwise had sponsored a workman's case it becomes an industrial dispute. Under the circumstances, the challenge to the representation by the respondent-Union in seeking the reference or in appearing before the Industrial Tribunal cannot be sustained. Consideration of the settlement by the Industrial Tribunal: As regards the settlement dated 13.4.2007, its scope and extent has already been discussed by the judgement dated 31.1.2014 in the aforesaid Special Appeal of M/s L.M.L. Limited (supra). Lay-off by the petitioner-Company formed part of the settlement. The issue regarding lay-off was the subject matter of the reference made suo moto by the State Government to the Industrial Tribunal which, in turn, has answered the reference aforesaid in favour of the workmen. It, however, needs to be mentioned that the reference by the State Government does not refer to the workmen who are the members of any particular Union, but, refers to the workmen who were laid off. Given the unrest among the workers with regard to their disengagement as a result of lay off, the State Government s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n). It is pertinent to mention here that the Industrial Tribunal has observed that from 15.04.2007, for a continuous period of 10 years, the workmen are without any work and despite the respondent-Union opposing the lay off, the lay-off was not brought to an end and no work was allotted to them. The Industrial Tribunal has further held that in the settlement no additional benefit has been given to the workmen and they were entitled to lay-off compensation, but lay off compensation has not been paid in its entirety which is improper and illegal. The Industrial Tribunal further noticed that the partial payments of the compensation for the lay-off that was being made from the year 2017 was stopped from March, 2017 and accordingly, it held that it cannot be assumed that by means of the settlement, approval had been given to the petitioner-company to keep the workmen laid off for an indefinite period of time and not make payment of the entire compensation. Section 2(n) of the U.P. Act reads as follows:- ( n) 'Lay-off' (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of shortage of coal, power or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the workman shall, unless there is any agreement to the contrary between him and the employer, be paid, for all the days comprised in every such subsequent period of lay-off for one week or more, compensation at the rate specified in sub-section (1): Provided that it shall be lawful for the employer in any case falling within this sub-section to retrench the workman in accordance with the provisions contained in Section 6-N at any time after the expiry of the first forty-five days of lay-off and when he does so, any compensation paid to the workman for having been laid-off during the preceding twelve months may be set-off against the compensation payable for retrenchment. Explanation- Substitute workman means a workman who is employed in an industrial establishment in the place of another workman whose name is borne on the muster rolls of the establishment, but shall cease to be regarded as such for the purposes of this section, if he has completed one year of continuous service in the establishment. As observed by the Industrial Tribunal, no documentary or oral evidence was filed on behalf of the petitioner-company which could have demonstrated that the settlement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he lay-off done by the employers was not in accordance with law. The witness, while referring to document no.26, stated that it was an order made by the Labour Commissioner of Uttar Pradesh to make payment of lay off compensation in accordance with law, but the employer did not obey that order. The witness testified that after lifting of the lockout, around 400 workmen were employed and those 400 workmen are not included in the case before the Tribunal. On behalf of the petitioner/liquidator, Shri Suraj Narain Shukla appeared as witness E.D.-1. He testified in his examination-in- chief that the industrial dispute came to an end after the settlement dated 13.04.2007. That 50% of the lay-off compensation was paid to the workmen. In his cross-examination, the witness stated that no document had been filed before the Industrial Tribunal with regard to the lay-off. The witness stated that no document with regard to payment of 50% of the lay-off compensation to the workmen had been filed before the Industrial Tribunal. The witness had no knowledge whether the settlement dated 13.04.2007 was registered or not. He stated that as per his knowledge, due amount of the lay-off compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employed. It was noticed that this notice of the Labour Department was not opposed by the employers nor was any oral evidence led to contradict this fact. Thereafter, after detailed analysis of the evidence, the Industrial Tribunal held that the lay-off done on 15.04.2007, under cover of settlement dated 13.04.2007, was completely unjustified and illegal. It was further held that from the date of the lay-off, that is, from 15.04.2007, the workmen are entitled to full wages, allowances and other consequential benefits. The memorandum of settlement dated 13.04.2007, that is the bone of contention between the contesting parties, has been enclosed as Annexure No.4 to the writ petition. It is made in Form- 1 and under Section 4-F of the U.P. Act read with Rule 5(1) of the U.P. Rules. The names of the parties and their addresses are mentioned as M/s. LML Limited, Scooter Unit, Site-II, C-10, Panki Industrial Estate, Kanpur (Company) and the workmen through their Union - Lohia Machines (LML) Karmchari Sangh, 117/533, Pandu Nagar, Kanpur. The representatives of the employer were (1) Shri R.K. Srivastava, Whole time Director, and (2) Shri K.P. Tripathi, Divisional Manager (P IR). The re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any and workmen that the company resumes its operations as contemplated for manufacture and export of scooters and also time would be needed by the company thereafter for formulation, consideration and approval of the revival package by the BIFR. It was finally mentioned in the recital that after meeting between the management and the office bearers of the registered and recognised Union working in the company, a tripartite meeting had taken place on 13.04.2007 before the Additional Labour Commissioner, Kanpur Region, Kanpur and the Additional Labour Commissioner, U.P. (I.R) head office at Kanpur wherein the following settlement had been arrived at between the parties with their consent. The 11 clauses of the terms of the settlement are as follows:- Terms of Settlement 1. That it has been discussed and decided that the workman shall withdraw the strike with immediate effect and accordingly the Company shall lift the Lockout with effect from 15th April 2007. The Company, shall first start cleaning and carry out maintenance work of the plant machinery which will take 7 to 10 days time and only thereafter normal production activity can be gradually restarted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tendance accordingly. d) That those Laid Off workmen who refuse to accept any alternative employment/job, offered by the Company shall not be entitled for any LOC whatsoever. e) That any Laid Off workmen remaining absent for more than 15 consecutive days shall lose his lien on employment and shall be treated as having left the employment of the Company on his own accord as per the provisions of Certified Standing Orders of the Company and accordingly his name shall be struck off from the muster rolls of the Company. 3. That the workmen and their union agree that looking to the precarious financial condition of the company and for its revival, there will be moratorium on revision of salary/wages as on February 2006 of the employees for a period of three years from the date of lifting of the Lockout. 4. That the workmen and their union agree that the Canteen will be run on No Profit No Loss basis by a Contractor as per Factories Act. Management shall not give any subsidy what so ever. 5. That in terms of the agreement dated 24.07.2006 with regard to pending ACO lying in the name of workmen till December 2005, it is agreed that the ACO amount shall be adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner, Kanpur Region, Kanpur as well as the Additional Labour Commissioner, U.P. (I.R) Kanpur. Before considering the aforesaid settlement with regard to lay-off and the award of the Industrial Tribunal on this aspect, it may be mentioned that in the counter affidavit filed by the respondent-Union, a copy of the certified Standing Orders dated 27.08.1984 has been enclosed as Annexure-CA-1 framed under the Industrial Employment (Standing Orders) Act, 1946. This document has not been specifically denied in the rejoinder affidavit filed by the petitioner-company. The provisions of lay-off of workmen, payment of compensation, and maintenance of muster rolls are mentioned in clauses 19, 20 and 21 respectively of the aforesaid Standing Orders. They are quoted below:- 19. LAY OFF OF WORKMEN : Lay off will have the same meaning as given in Section 2 of U.P. Industrial Disputes Act, 1947. The employer may at any time or times in the event of fire, catastrophy, breakdown of machinery or stoppage of the power supply, epidemic, civil commotion or any other causes whether of a like nature or not, beyond the control of employer, stop any machine or machines or department or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. The narration of the testimony as appearing in the award aforesaid, has already been referred to above and, therefore, is not being repeated here for the sake of brevity. Suffice to say that the witness for the petitioner-Company apparently had superficial knowledge of the settlement dated 13.04.2008 and did not prove from any record whether the terms of the settlement pertaining to lay-off were complied with. Under clause 19 of the Standing Orders, the employer has powers to lay-off workmen in the eventualities mentioned therein for any period or periods and the employer is not liable to pay compensation to the laid off workmen, if the layoff is for reasons beyond the control of the employer. It is provided therein that it would be lawful for the employer to retrench the workmen in accordance with the provisions contained in Section 6-N of the U.P. Act at any time after the expiry of the first 45 days of lay-off, and when he does so, any compensation, if paid to the workmen, for having been laid off during the preceding 12 months, may be set off against the compensation for retrenchment. A perusal of the terms of the settlement dated 13.04.2007, reveals that contrary to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. A perusal of the testimony of the witness on behalf of the petitioner-company reveals that no questions were put to him in the examination-inchief with regard to the aforesaid counter affidavit. At this stage it may be mentioned that in the judgement dated 21.4.2008 passed in Civil Misc. Writ Petition No. 5903 of 2008 (LMLKS Vs. Registrar, Trade Unions others), by which the registration of the respondent-Union was quashed, it has been observed that There is no denial that out of the work force of 3000, about 2500 are members of the petitioner-Union...... . However, in the present case, after considering the evidence, the Industrial Tribunal has recorded that only 743 workmen were members of LMLKS whereas at the time of the settlement, 2800 workmen were employed. A perusal of the record reveals that no perversity is attributable to this observation of the Industrial Tribunal. However, the observation of the Industrial Tribunal that the lay-off being based on the crisis of lack of working capital is against the provision of Section 2(n) of the U.P. Act, is not correct. The phrase for other reason appearing in Section 2(n) and the phrase any other causes whether of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, whereas in the present case, despite the Standing orders providing for retrenchment in circumstances where the lay off was extended, the lay-off was being indefinitely extended without resorting to retrenchment. This judgement is distinguishable in view of the facts and circumstances of the present case. The learned counsel for the petitioner-company has then referred to paragraph no.10 of the judgement of the Supreme Court in the case of Tata Engineering and Locomotive Company Ltd. , which is as follows:- 10. The conclusion reached by the Tribunal that the settlement was not just and fair is again unsustainable. As earlier pointed out, the Tribunal itself found that there was nothing wrong with the settlement in most of its aspects and all that was necessary was to marginally increase the additional daily wage. We are clearly of the opinion that the approach adopted by the Tribunal in dealing with the matter was erroneous. If the Settlement had been arrived at by a vast majority of the concerned workers with their eyes open and was also accepted by them in its totality, it must be presumed to be just and fair and not liable to be ignored while deciding the reference me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has scored in some other aspects and will save all unnecessary expenses in uncertain litigation. The settlement, therefore, cannot be judged on the touchstone of the principles which are laid down by this Court for adjudication. There may be several factors that may influence parties to come to a settlement as a phased endeavour in the course of collective bargaining. Once cordiality is established between the employer and labour in arriving at a settlement which operates well for the period that is in force, there is always a likelihood of further advances in the shape of improved emoluments by voluntary settlement avoiding friction and unhealthy litigation. This is the quintessence of settlement which courts and tribunals should endeavour to encourage. It is in that spirit the settlement has to be judged and not by the yardstick adopted in scrutinising an award in adjudication. The Tribunal fell into an error in invoking the principles that should govern in adjudicating a dispute regarding dearness allowance in judging whether the settlement was just and fair. * * * It is not possible to scan the settlement in bits and pieces and hold some parts good and acceptab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. In view of the facts and circumstances mentioned above, the finding of the Industrial Tribunal with regard to the lay-off done on 15.04.2007 by the petitioner-company being completely unjustified and illegal, is correct and deserves no interference. There is no such perversity or arbitrariness in the impugned award of the Industrial Tribunal, with regard to this aspect of the matter, that would merit interference. Award of back wages, allowances and consequential benefits: Annexure No.2 to the writ petition is a summary record of proceeding of the hearing held on 08.05.2007 before the bench of the BIFR which reflects that the BIFR was satisfied that the petitioner-company had become a sick industrial company as on 31.08.2006 and had declared it to be so. The BIFR then appointed IDBI as the operating agency with directions to prepare a revival scheme for the petitioner-company, if feasible. The recital of the memorandum of settlement dated 13.04.2007, also reflects that the petitioner-Company was in precarious financial condition. It, therefore, appears that various unsuccessful efforts were made by the petitioner-company for revival of the Unit. Though the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders. The court may deny the relief of reinstatement where reinstatement is impossible because the industry has closed down. The court may deny the relief of award of full back wages where that would place an impossible burden on the employer. In such and other exceptional cases the court may mould the relief, but, ordinarily the relief to be awarded must be reinstatement with full back wages. That relief must be awarded where no special impediment in the way of awarding the relief is clearly shown. True, occasional hardship may be caused to an employer but we must remember that, more often than not, comparatively far greater hardship is certain to be caused to the workmen if the relief is denied than to the employer if the relief is granted. In the present case, the petitioner-company is under liquidation by the order of the NCLT as the Resolution Plan was rejected by the Committee of Creditors. The assets of the petitioner-company are being liquidated. It is not that the petitioner-company is continuing with its business or production, and that in that eventuality it would place an impossible burden on the employer if it is saddled with the liability of payment of back wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period; (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 14 shall cease to have effect; and (b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency resolution process and the resolution plan to the Board to be recorded on its database. (4) The resolution applicant shall, pursuant to the resolution plan approved under sub-section (1), obtain the necessary approval required under any law for the time being in force within a period of one year from the date of approval of the resolution plan by the Adjudicating Authority under subsection (1) or within such period as provided for in such law, whichever is later: Provided that where the resolution plan contains a provision for combination, as referred to in section 5 of the Competition Act, 2002, the resolution applicant shall obtain the approval of the Competition Commission of India under that Act prior to the approval of such resolution plan by the committee of creditors. Liquidation of the corporate debtor is initiated under Section 33 and a Liquidator is appointed under Section 34 of the Code. Sections 33 of the Code are as follows: 33. Initiation of liquidation. - (1) Where the Adjudicating Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, no suit or other legal proceeding shall be instituted by or against the corporate debtor: Provided that a suit or other legal proceeding may be instituted by the liquidator, on behalf of the corporate debtor, with the prior approval of the Adjudicating Authority. (6) The provisions of sub-section (5) shall not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (7) The order for liquidation under this section shall be deemed to be a notice of discharge to the officers, employees and workmen of the corporate debtor, except when the business of the corporate debtor is continued during the liquidation process by the liquidator. Sub-section (4) of Section 36 of the Code excludes from the liquidation estate assets, those assets which shall not be used for recovery in the liquidation. Sub-section (4) of Section 36 of the Code reads as follows: (4) The following shall not be included in the liquidation estate assets and shall not be used for recovery in the liquidation:- (a) assets owned by a third party which are in possession of the corporate debtor, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commencement date; and (ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; (c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date; (d) financial debts owed to unsecured creditors; (e) the following dues shall rank equally between and among the following:- (i) any amount due to the Central Government and the State Government including the amount to be received on account of the Consolidated Fund of India and the Consolidated Fund of a State, if any, in respect of the whole or any part of the period of two years preceding the liquidation commencement date; (ii) debts owed to a secured creditor for any amount unpaid following the enforcement of security interest; (f) any remaining debts and dues; (g) preference shareholders, if any; and (h) equity shareholders or partners, as the case may be. (2) Any contractual arrangements between recipients under sub-section (1) with equal ranking, if disrupting the order of priority under that sub-section shall be disregarded by the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of an application for initiating corporate insolvency resolution process by the Adjudicating Authority under Sections 7, 9 or Section 10, as the case may be. Sub-section (4) of Section 14 of the Code provides the order of moratorium to have effect from the date of such order till the completion of the corporate insolvency resolution process provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under subsection (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be. As such, in view of the liquidation order passed by the NCLT on 23.3.2018, the order of moratorium passed under Section 14 ceased to have effect. Accordingly, further proceedings in the pending adjudicating case before the Industrial Tribunal was not barred after the order of liquidation passed by the NCLT. Under Section 238 of the Code, the provisions of the Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions. Explanation.- For the purposes of this section, and section 327- (a) workmen , in relation to a company, means the employees of the company, being workmen within the meaning of clause (s) of section 2 of the Industrial Disputes Act, 1947 (14 of 1947); (b) workmen's dues , in relation to a company, means the aggregate of the following sums due from the company to its workmen, namely:- (i) all wages or salary including wages payable for time or piece work and salary earned wholly or in part by way of commission of any workman in respect of services rendered to the company and any compensation payable to any workman under any of the provisions of the Industrial Disputes Act, 1947 (14 of 1947); (ii) all accrued holiday remuneration becoming payable to any workman or, in the case of his death, to any other person in his right on the termination of his employment before or by the effect of the winding up order or resolution; (iii) unless the company is being wound up voluntarily merely for the purposes of reconstruction or amalgamation with ..... 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