2018 (5) TMI 77 - Tri - Insolvency and Bankruptcy

Workers' Insolvency Application Deemed Maintainable, Tribunal Admits Case, Initiates Resolution Process

Sardar Singh Versus M/s. Anil Special Steel Industries Limited, Allahabad Bank, Divisional Manager, Allahabad Bank And M/s. Tarun International Limited

The application under section 9 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process for the ... Corporate Insolvency Resolution Process - whether unpaid applicant workmen, who have provided services to the corporate debtor come within the purview of 'Operational creditor'? - Held that:- Application in joint capacity through their duly authorised representative as per the requirement of the format prescribed under the Rules is allowed. Accordingly application under Section 9 by unpaid workmen in a joint capacity is clearly maintainable. Unpaid applicant workmen, who have provided services to the corporate debtor, including those who are in employment clearly come within the purview of 'Operational creditor'. The respondent corporate debtor has specifically admitted the default in making payment of the dues to the applicant workmen. Besides the default/debt clearly exceeds the ceiling of ₹ 1 lakh, as provided in Section 4 of the Code. The corporate debtor has also not raised any dispute in respect of the claims of the applicant workmen. The present application preferred by the workmen operational creditors is complete and there has been clear admission of default by the respondent corporate debtor. The admission by respondent goes to show that the respondent corporate debtor committed default in payment of the dues of workmen even after demand made by the workmen operational creditors. Once the application is complete and in the absence of any resistance from corporate debtor, the application is liable to be admitted. Therefore, on fulfilment of the requirements of Section 9 (5) (i) (a) to (d) of the Code, the present application is admitted. Issues:1. Application under section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.2. Maintainability of the petition in light of previous orders.3. Definition of 'Operational Creditor' and 'Operational debt.'4. Satisfaction of requirements for admission of the application.5. Issuance of moratorium under section 14 of the Code.6. Appointment of Interim Resolution Professional.7. Direction for payment to the Interim Resolution Professional and statutory steps to be taken.Analysis:1. The application was filed under section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process for the respondent company, claimed to be the corporate debtor. The applicant, representing 207 workers of the respondent company, highlighted non-payment of employment dues, totaling to Rs. 3,83,71,283, leading to the demand for resolution process.2. A doubt was raised during the hearing regarding the maintainability of the petition in reference to previous orders. However, it was clarified that the present case was distinct as it was not filed by a Trade Union but by unpaid workmen in a joint capacity, as permitted under the regulations, making the application maintainable.3. The definitions of 'Operational Creditor' and 'Operational debt' were crucial in determining the eligibility of the applicant workmen to claim as operational creditors. The unpaid workmen, having provided services to the corporate debtor, fell under the purview of operational creditors, meeting the criteria set by the Code.4. The application satisfied all requirements outlined by the Code, including the admission of default by the respondent corporate debtor, absence of dispute, and completeness of the application, leading to the admission of the application by the Tribunal.5. A moratorium was issued under section 14 of the Code, prohibiting various actions against the corporate debtor, including legal proceedings, asset disposal, and recovery actions, ensuring a halt in such activities until the completion of the resolution process.6. An Interim Resolution Professional was appointed to oversee the process, with specific directions given for payment and performance of statutory duties, aiming to expedite the resolution process and comply with the Code's timelines.7. The order directed the Interim Resolution Professional to take necessary steps as per the Code, with a deadline set for report submission. Additionally, the applicant was instructed to pay a sum to the Interim Resolution Professional to cover expenses, ensuring smooth functioning of the resolution process.This comprehensive analysis covers the key aspects and details of the judgment delivered by the National Company Law Tribunal, New Delhi.