Workmen's Dues Priority Upheld, Creditor Application Dismissed for Improper Filing

The Tribunal dismissed the unsecured financial creditor's application as not maintainable due to improper filing procedures. Emphasizing the priority of workmen's dues under the Insolvency and Bankruptcy Code, the Tribunal highlighted the legitimacy of the workmen's claims and expressed concerns about collusion between the Liquidator and the creditor. The Tribunal underscored the importance of following correct procedures and ensuring fair treatment of workmen in the liquidation process. Subsequently, the application seeking to dismiss the intervention was disposed of as redundant after the dismissal of the creditor's application.

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Issues Involved:
1. The maintainability of MA/148/KOB/2020 filed by an unsecured financial creditor to be impleaded in the applications filed by workmen/employees.
2. The legitimacy of the claims made by the workmen/employees and their priority under the Insolvency and Bankruptcy Code.
3. Allegations of collusion between the Liquidator and the unsecured financial creditor.

Issue-wise Detailed Analysis:

1. Maintainability of MA/148/KOB/2020:
The applicant, an unsecured financial creditor, filed MA/148/KOB/2020 seeking to be impleaded as a party respondent in various applications filed by the workmen/employees of the Corporate Debtor. The Tribunal noted that this application was filed in IBA 258/CHENNAI BENCH, which had already been disposed of. Consequently, a prayer to implead in a non-existent case cannot be accepted. The Tribunal emphasized that the applicant should have filed separate impleading applications in each of the applications filed by the workmen, serving copies to them to allow for objections. Filing a single application without involving the ex-workmen was deemed an unfair practice. Therefore, MA/148/KOB/2020 was dismissed as not maintainable.

2. Legitimacy and Priority of Workmen/Employees’ Claims:
The workmen/employees filed applications seeking to be recognized as necessary parties in the liquidation process and requested that their dues be paid without including them in the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code. The Tribunal highlighted that the Code prioritizes workmen’s dues over other creditors, including unsecured financial creditors. The workmen argued that their claims, including gratuity dues, should be paid preferentially, as upheld in the NCLAT decision in State Bank of India v. Moser Baer Karamchari Union. The Tribunal acknowledged that the workmen’s claims are given utmost priority under the Code and that the Liquidator has a duty to disburse these dues accordingly.

3. Allegations of Collusion:
The Tribunal observed potential collusion between the Liquidator and the unsecured financial creditor, Kopran Limited, aimed at defeating the rightful claims of the workmen. The Liquidator’s counter supported the unsecured financial creditor’s application, raising suspicions of collusion. The Tribunal stated that while the Liquidator could make legitimate payments to Kopran Limited, it should not come at the expense of the workmen’s dues.

Conclusion:
The Tribunal dismissed MA/148/KOB/2020 filed by the unsecured financial creditor as not maintainable and highlighted the importance of following proper procedures. The Tribunal reiterated the priority of workmen’s dues under the Insolvency and Bankruptcy Code and expressed concerns about potential collusion between the Liquidator and the unsecured financial creditor. Consequently, IA/189/KOB/2020, which sought to dismiss the intervention application, was disposed of as it became redundant following the dismissal of MA/148/KOB/2020.

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