Tribunal Admits Application for Unpaid Wages Under Insolvency Code

The Tribunal admitted the application under Section 9 of the Insolvency and Bankruptcy Code for default in payment of wages by the Corporate Debtor to Operational Creditors. The Corporate Debtor failed to pay wages for 6 months, resulting in a claim of Rs. 23,77,978. Despite objections raised by the Corporate Debtor regarding the maintainability of the petition, the Tribunal rejected the argument and admitted the application. An Interim Resolution Professional was appointed to manage the Corporate Debtor and oversee the Corporate Insolvency Resolution Process, which must be completed within 180 days.

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Issues Involved:
Adjudication of CP/607/(IB)/CB/2017 under Section 9 of the Insolvency and Bankruptcy Code 2016 for default in payment of wages by the Corporate Debtor to Operational Creditors.

Detailed Analysis:

Issue 1: Default in Payment of Wages
The Operational Creditors filed CP/607/(IB)/CB/2017 against the Corporate Debtor under Section 9 of the I&B Code, seeking initiation of Corporate Insolvency Resolution Process due to non-payment of wages. The Corporate Debtor failed to pay wages for 6 months, leading to a claim of Rs. 23,77,978. Despite a direction from the Authority Appointed under the Payment of Wages Act, 1936, the Corporate Debtor did not settle the outstanding amount.

Issue 2: Maintainability of the Petition
The Corporate Debtor contended that the Operational Creditors, collectively filing the petition, did not qualify as 'Operational Creditors' under Section 5(20) of the I&B Code. However, the Tribunal rejected this argument, citing provisions allowing workmen to file jointly. The claim amount by individual workmen exceeded the prescribed threshold, making the application maintainable.

Issue 3: Admission of Application
After reviewing documents and arguments, the Tribunal found the Corporate Debtor in default of payment to the Operational Creditors. The Tribunal admitted the application, initiating the Corporate Insolvency Resolution Process, subject to completion within 180 days. A moratorium was declared to protect the Corporate Debtor's assets during the resolution process.

Issue 4: Appointment of Interim Resolution Professional (IRP)
As the Operational Creditors did not propose an IRP, the Tribunal appointed Mr. Shankar from the Panel of IRPs for Tamilnadu. The IRP was directed to manage the Corporate Debtor immediately, make public announcements, and solicit claims as per the I&B Code. Directors and associated persons were instructed to cooperate with the IRP.

Conclusion:
The Tribunal upheld the application, admitted it for Corporate Insolvency Resolution, declared a moratorium, and appointed an IRP to oversee the process. The Corporate Debtor's non-payment of wages led to the initiation of insolvency proceedings, emphasizing compliance with the I&B Code provisions throughout the resolution process.

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