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TMI Blog2022 (11) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of pronouncement of this order, regarding keeping the amounts distributed to them, in an interest-bearing account (para 9.20 supra). (d) On prayer (d): This was not argued by both sides. (e) On prayer (e), (h) and (i): These are related to the main prayer (b). Since that prayer is not being granted, these prayers do not survive. (f) On prayer (f) and (g): These were not argued by both sides. (g) On locus: We hold that the Applicant has locus to file the present application, since - (i) the provisions of section 50 of the Maharashtra Public Trust Act, 1950 will apply only to suits and not to the present proceedings; (ii) section50 ibid will apply only to the administration of the trust itself and not to proceedings of this nature; (iii) the present petition is the latest in a series of applications filed by the applicant herein to compel the Liquidator to comply with the Code and the Regulations made thereunder; (iv) the objections regarding locus have not been taken in the reply filed by the Liquidator, but seems to be an afterthought (paras 9.28 and9.29 supra). (h) On conflict of interest: At least a part of the reliefs sought seems to indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) No.563/KB /2078; (e) Injunction restraining the Liquidator from convening any meeting of the SCC without giving prior reasonable notice to the applicant; (f) Injunction restraining the Liquidator from distributing margin money among the Creditors; (g) Injunction restraining the creditors/Banks from receiving margin Money from the corporate Debtor before sale of assets of the Corporate Debtor; (h) Order be passed directing the Liquidator to forthwith issue notices of meetings of the SCC of the corporate debtor to the applicant and to permit representation and participation of the applicant at all meetings of the SCC; and (i) Any SCC meetings/decision taken at the SCC meetings till date be adjudged null and void. 4. Submissions of the Learned Counsel appearing on behalf of the Appellant: Learned Counsel submitted that the Adjudicating Authority has erroneously refused the Prayer of the Appellant to include a representative of the Workmen and Employees on the SCC irrespective of Regulation 31-A(2) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. It is submitted that the Appellant is aggrieved by paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The decision of the Adjudicating Authority that there should be a Claim to be included in the SCC is against the provision of the Code. The Liquidator in the past has deducted the salaries of the Workmen and in Civil Appeal No. 1533/2022, the Hon ble Supreme Court while disposing of the Appeal preferred by the Appellant has recorded the submissions of the Liquidator that the Corporate Debtor is being conducted as a Going Concern and no action would be taken to the detriment of its status as a Going Concern . The discussion paper on Corporate Liquidation Process along with the Draft Regulations of the IBBI dated 27.04.2019 emphasize inclusion of one representative of the Employees and Workers in the SCC irrespective of whether they have a Claim or not. It is also submitted that the IBBI has passed the Interim Order dated 29.10.2020 on a complaint preferred against the Liquidator and found that he had violated Order of the Adjudicating Authority from time to time. 5. Submissions of the Learned Counsel appearing on behalf of the Respondent: It is submitted that the Liquidator, subsequent to the verification of Claims, filed a list of Stakeholders in accordan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent arises. It is submitted that there is a symbiotic relationship between the Regulations 31 31-A of the Liquidation Regulations, 2016 and inclusion of any Member under SCC is subject to existence of Claim under Regulation 31 as per provisions of law. Assessment : 6. At the outset, it is significant to mention that the Appellant/ Varrsana Employee Welfare Association challenged the decision of the Liquidator disbursing an amount of Rs.26Crs./- to five Nationalised Public Sector Banks. A coordinate Bench of this Tribunal in UP Awas Evam Vikas Parishad (UP Housing and Development Board) Vs. JNC Construction Pvt. Ltd. Ors. Comp. App. (AT) (Ins.) No. 855/2020 , 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. The same was challenged in Civil Appeal No. 1533/2022 by the Appellant/ Varrsana Employee Welfare Association and the Hon ble Supreme Court has observed as follows: 1. The National Company Law Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No Claims received from Worker or Employee - D Central GST Commissioner, Kutch-Gandhidham 11,70,34,132/- E RCC Limited 1,34,55,482/- F REI Agro Ltd. Shareholding of 47% in Corporate Debtor 8. It is the case of the Appellant that a Claim was filed representing 16 Employees claiming their Leave Encashment and one month salary for the Notice Period . After verification of the Claim, the Liquidator decided to distribute the Claim amount to the Employees with respect to the Leave Encashment as the same forms part of the CIRP Cost and should be distributed in priority as per Section 53 of the Code. The Liquidator sought additional KYC Documents to release the payments, however, during the course of verification, the Liquidator received Additional Claims relating to gratuity and the same was rejected vide email dated 30.01.2020. 9. It is pertinent to mention that as per Section 42 of the Code, the Appellant could ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate debtor; (c) displayed on the website, if any, of the corporate debtor. (d) filed on the electronic platform of the Board for dissemination on its website: Provided that this clause shall apply to every liquidation process ongoing and commencing on or after the date of commencement of the Insolvency and Bankruptcy Board of India (Liquidation Process) (Amendment) Regulations, 2021.] [31A. Stakeholders consultation committee. (1) The liquidator shall constitute a consultation committee within sixty days from the liquidation commencement date, based on the list of stakeholders prepared under regulation 31, to advise him on the matters relating to sale under regulation 32. (2) The composition of the consultation committee under sub-regulation (1) shall be as shown in the Table below: Class of Stakeholders Description Number of Representatives (1) Secured financial creditors, who have relinquished their security interests under section 52 (2) Where claims of such creditors admitted during the liquidation process is less than 50% of liquidation value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast fifty-one percent of representatives in the consultation committee. (7) The liquidator shall chair the meetings of consultation committee and record deliberations of the meeting. (8) The liquidator shall place the recommendation of committee of creditors made under sub regulation (1) of regulation 39C of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, before the consultation committee for its information. (9) The consultation committee shall advise the liquidator, by a vote of not less than sixty-six percent of the representatives of the consultation committee, present and voting. (10) The advice of the consultation committee shall not be binding on the liquidator : Provided that where the liquidator takes a decision different from the advice given by the consultation committee, he shall record the reasons for the same in writing. (Emphasis Supplied) 12. 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 mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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