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TMI Blog2022 (9) TMI 439X X X X Extracts X X X X X X X X Extracts X X X X ..... . Bharat Sood , Advocate For the Respondent : Mr. Arjun Asthana , Mr. Krishnaraj Thaker , Mr. Sidhartha Sharma and Ms. Anushka Sarkar , Advocates JUDGMENT Justice Anant Bijay Singh ; This Appeal has been preferred by the Appellants was 42 in numbered being aggrieved and dissatisfied by the order dated 03.05.2021 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) in I.A. No. 865/KB/2020 in CP (IB) No. 182/KB/2017 whereby and whereunder the Adjudicating Authority has dismissed the I.A. No. 865/KB/2020 filed by the workers for following reliefs:- "a) The respondent/Liquidator be directed to disburse payment of dues of workers and employees of the Company working at Dharwad Plant of the company in Karnataka in a regular and timely manner; b) The respondent/Liquidator be restrained by an order of injunction from taking any coercive steps for closing the operations of the company's plant at Dharwad, Karnataka; c) The respondent/Liquidator be restrained by an order of injunction from terminating, or taking any decision to terminate, the agreement between the company and Jeju Metals Private Limited as recorded in the letter dated 27.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the letter dated 27.09.2019 f) Further case is that in terms of the aforesaid agreement, JMPL was to pay consideration for the use of the production facilities at the Dharwad plant of the Company at the rate of Rs. 200/- per metric ton of met coke produced for the purpose, subject to a minimum of Rs. 40.00 lakh per month (processing charges) plus all manufacturing expenses, such as, electricity power and fuel, repair and maintenance, travelling and conveyance, except salary, wages and contribution to security personnel expenses. The processing charges was agreed to be paid as a consideration for the Company providing JMPL with an exclusive right to use the plant at Dharwad, the land and all related facilities. g) Further case is that in order to ensure that there is no impediment faced by JMPL in the process of conversion of coal into met coke, the Company also agreed to provide it employees and workers presently in its employment for such operation at the Dharwad plant. The agreement was agreed to be terminated by either party by giving a prior notice of four months to the other party. On behalf of the Company, the Respondent had issued the letter dated 27.09.2019, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment from JMPL under the agreement. l) Prior to the nationwide lockdown declared by the Government of India, by reason of the outbreak of the Covid-19 pandemic, the Hon'ble Supreme Court by an order dated 24.02.2020, passed in an appeal preferred by Mr. Arun Kumar Jagatramka, directed that the liquidation proceeding of the Company may go on, but sales, if any, was not to be confirmed. It is pleaded that in terms of the orders passed by this Adjudicating Authority and the Hon'ble Supreme Court, the Respondent cannot remove any of the employees or workers or retrench them from employment. m) However, since payment were not being made by the Respondent in spite of funds available in the Company, some of the employees at the higher management level have been compelled to tender their resignations. The Respondent, by his act and conduct, and by withholding the payments, which the workers and employees are entitled to receive, was trying to create a compelling situation for the worker to leave the Company. n) Further case is that by an email dated 03.08.2020, the Respondent/Liquidator had informed the Deputy Commissioner of Police, Dharwad Region, Karnataka, about a possible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal along with Written/Additional Written Submissions submitted that one of the reliefs sought by the Appellants in I.A. No. 865/KB/2020 was 'the respondent/Liquidator of the Company, Gujarat NRE Coke Ltd., be directed to disburse/make payment of the dues of the workers and employees of the Company working at Dharwad Plant at Karnataka in a regular and timely manner'. The Respondent in his Affidavit in Reply has admitted that he has made payment to 20 Appellants being Appellant Nos. 8, 14, 15, 16, 17, 20, 21, 23, 24, 25, 26, 30, 32, 33, 35, 36, 37, 38, 40 and 42. Thus, till date, 22 Appellants have not been paid their legitimate dues. 4. It is further submitted that Section 53(1)(b)(i) of the IBC which provides for 'Distribution of assets' in case of Liquidation stipulates payment of 'workmen's dues for the period of twenty-four months preceding the liquidation commencement date' which admittedly have not been paid by the Respondent till date. 5. It is further submitted that Section 35(j) of the IBC obligates the Liquidator, i.e. the Respondent herein, 'to invite and settle claims of creditors and claimants and distribute proceeds in accordance with the provisions of this Code ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d non-payment of their purported dues on sale of the assets of the Corporate Debtor in course of the liquidation process. The Appellants cannot be permitted to take this ground inasmuch as the same was not the subject matter of IA 865/KB/2020 in which the impugned order was passed. 10. It is further submitted that before dealing with the merits if the allegation and contention raised in the Appeal, the background facts and events necessary for adjudicating of the present appeal as under: * Upon completion of the timelines in the CIRP, when no resolution plan was approved, the Adjudicating Authority passed the liquidation order of the Corporate Debtor on 11.01.2018. Pursuant to initiation of liquidation process of the Corporate Debtor (in liquidation), Mr. Arun Kumar Jagatramka, on 14.02.2018 instituted an application being CA (CAA) No. 198/KB/2018 before the Adjudicating Authority proposing a Composite Scheme of Compromise and Arrangement between the Corporate Debtor and its Shareholders, Foreign Currency Convertible Bond Holders, Secured Creditors and Unsecured Creditors (hereinafter referred to as the "Stakeholders") under Section 230 to 232 of the Companies Act, 2013. * The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged before this Appellate Tribunal in CA (AT) Ins.) No. 985-986 of 2020 and the same was dismissed on 19.11.2020. A civil appeal challenging the order dated 19.11.2020 was also filed before the Hon'ble Supreme Court in Civil Appeal Nos. 4062-4063 of 2020 which was also dismissed by the Hon'ble Supreme Court on 28.01.2021 (at Annexure H & I of the Reply) respectively. * Further, Mr. Arun Kumar Jagatramka also filed a civil appeal being Civil Appeal No. 9664 of 2019 before the Hon'ble Supreme Court challenging the judgment dated 24.09.2019 and the Hon'ble Supreme Court dismissed the aforesaid civil appeal by holding that the aforesaid promoter being ineligible under Section 29A of the IBC cannot submit a Scheme under Section 230 for revival of the Corporate Debtor in liquidation vide its judgment dated 15.03.2021 (at Annexure- J of the Reply). * Immediately after the rejection of the aforesaid Reconsideration Application and the Scheme Application (being CA 20/2020 in CP (IB) No. 182/KB/2017) of 109 employees/shareholders by the financial creditors and equity shareholders and thereafter by the Adjudicating Authority, complete non-cooperation of the employees and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the met coke for Jeju and their salaries and wages were also being duly paid by the Liquidator. It is noteworthy to state here that the processing charges were required to be paid to the Liquidator within 21 days of the end of each month. However, the said Jeju made the payment in accordance with the processing agreement only till February 2020 and thereafter, started making delayed payments till 13th July 2020, whereafter, the said Jeju has not made any payment to the Corporate Debtor. * The Jeju, vide numerous emails requested the Liquidator to reduce the contract fee, however, it is imperative to mention here that the non-operational cost of the Dharwad Unit itself comes to around Rs. 41 Lakh and any reduction in the contract fee would have resulted in losses to the corporate debtor. The copy of the Liquidation Proceedings Presentation dated 16.09.2020 which was relied upon by the Appellants before the Adjudicating Authority (at Annexure- M of the Reply). * As the Jeju failed to adhere to the terms and conditions of the processing agreement and also failed to make payment to corporate debtor, the Liquidator, vide email dated 15.07.2020 issued a four months' notice for te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought by the Appellants the instant Appeal are infructuous in as much as 20 ex-workmen/ex-employees of Corporate Debtor have already been paid their full and final settlement dues i.e. Appellants No. 8, 14, 15, 16, 17, 20, 21, 23, 24, 25, 26, 30, 32, 33, 35, 36, 37, 38, 40 and 42, so far remaining 23 Appellants, being ex-employees of Corporate debtor their full and final settlement dues have not been paid as their discharge is pending since they have not handed over charge and refused/obstructed to make over the assets/records of the Corporate Debtor in their possession in spite of being repeatedly called upon to do so. 12. The Ld. Counsel for the Appellant relying on the Judgment of Hon'ble Supreme Court in the case of "Tata Consultancy Services Limited vs. Vishal Ghisulal Jain, Resolution Professional, SK Wheels Private Limited (Civil Appeal No. 3045 of 2020)" wherein the Hon'ble Supreme Court observed as hereunder: ".......... 26. In Gujarat Urja (supra), the contract in question was terminated by a third party based on an ipso facto clause, i.e., the fact of insolvency itself constituted an event of default. It was in that context, this Court held that the contractual di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor, the Respondent was constrained to initiate an application being I.A. No. 673/KB/2020 in C.P. (IB) No. 182/KB/2017 before the Adjudicating Authority and vide order dated 25.11.2021, the Adjudicating Authority inter alia constituted a team of Special Officers to visit the plant situated at Dharwad to inter alia ensure that the physical custody and safety of the assets of the Corporate Debtor are restored to the Respondent. In view of the above, the instant Appeal is not maintainable and deserves to be dismissed. 15. From the perusal of the Impugned Order, with regard to prayer (a), (b) and (d) in IA No. 865/KB/2020 filed in CP (IB) No. 182/KB/2017, the findings recorded by the Adjudicating Authority is as follows: "6.9. Prayer (a) is a direction sought upon the liquidator to pay the dues of the workers and employees working at the Dharwad plant of the Company in a regular and timely manner. We are satisfied with the statement in para 4.24 (supra) that the liquidator has made payments wages of all workmen have been paid in full till 23.09.2020 on the basis of wages sheet for Aug 2020, and that the salaries of all employees at Dharwad and other units of the Company have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/-, and Rs.15,000/- for those employees drawing salary up to Rs.30,000/-. This statement is uncontroverted. We find therefrom that the liquidator has taken every possible step to keep the Dharwad plant operational. We note that the outstanding expenses of the Company as on 31st August 2020 were Rs.8.32 crore besides other liabilities, 64 and that the same would continue to is mount due to monthly fixed costs of the Company. We also note that that April to Dec 2019, the revenue of the Dharwad unit was Rs.18.50 crore, whereas the expenditure was Rs.32.55 crore,65 thereby making the unit unviable. The liquidator cannot be expected to keep it afloat when the balance sheet of the company is in the red. The documents placed on record do not reveal any other source of revenue to meet the expenses of the Company. 6.14. At some point of time, hard decisions are called for in the life of a company, and these have to be taken. Unviable units will have to be closed down. The actions will have to be measured up against the objectives of the Code, one of which is to free up resources of unviable companies by permitting an easy exit. It cannot be misconstrued to keep unviable units afloat b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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