2021 (8) TMI 1202 - Tri - Insolvency and Bankruptcy

Tribunal Orders Reconsideration of Workmen's Claims, Emphasizes Procedural Fairness

The Tribunal set aside the Liquidator's order rejecting the workmen's claims, directing a reconsideration within 30 days, emphasizing procedural fairness ... Admission of claims of the workers - Rule 11 of the National Company Law Tribunal Rules, 2016 read with Section 42 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- The claims of workmen who have toiled to serve the company and helped in production and running of the same through hard labour, must be given due importance. The Companies Act as well as the IBC 2016, contain specific provisions for workmen for this reason. Hence the Legislative intent also is to protect the interest of the workmen - In the instant case when CIRP was ordered, then also their claims were made before the RP, and all the records and documents available with the RP would have been handed over to the Liquidator at the time of his appointment as Liquidator. Further as per Regulation 19(4) of the IBBI (Liquidation Process) Regulations 2016, the Liquidator may admit the claims of the workmen on the basis of the books of accounts of the Corporate Debtor if a claim has not been made by the Workmen. Once the workmen have made a claim, through their Union, the same has to be made in the prescribed manner and within the prescribed time. As per Regulation 16, a stakeholder has to prove his claim for the debt or dues to him as on the liquidation commencement date. As per Reg. 19, in the case of workmen, the proof of claim has to be submitted to the liquidator in person, or by post or electronic means in prescribed forms. The proof has to be provided in the manner laid down in Reg. 19(3) - the claim can also be accepted as per the books of accounts of the corporate Debtor. The claim of the workmen needs to be considered by the Liquidator. This denial of claims would be against all norms of justice and equity. Hence, without any comment on or interfering with the disputes that are sub-judice before various courts, thus, the legitimate and verifiable dues of the workmen must be considered by the Liquidator. The order rejecting the claims of the Applicants is set aside - petition disposed off. Issues Involved:1. Legality of the Liquidator's rejection of the workmen's claims.2. Compliance with statutory requirements for admitting workmen's claims.3. Unfair treatment and prejudice against workmen by the Liquidator.4. Procedural fairness in the Liquidation Process.Detailed Analysis:1. Legality of the Liquidator's rejection of the workmen's claims:The Applicant, representing the workmen of GCL Pvt. Ltd., sought to set aside the Liquidator's decision on the admission of their claims, arguing it was illegal and unfair. The Tribunal noted that the workmen's claims were initially made before the Resolution Professional (RP) during the Corporate Insolvency Resolution Process (CIRP) and that all records should have been handed over to the Liquidator. The Tribunal emphasized the importance of considering the claims of workmen who have contributed significantly to the company.2. Compliance with statutory requirements for admitting workmen's claims:The Tribunal referenced Regulation 19(4) of the IBBI (Liquidation Process) Regulations 2016, which allows the Liquidator to admit claims based on the corporate debtor's books of accounts if no claim is made by the workmen. The Tribunal noted that the workmen's claims, submitted through their Union, should be made in the prescribed manner and within the prescribed time. Despite the Liquidator's assertion that the claims were not received in time, the Tribunal found that the Liquidator had no objection to considering the claims if directed by the Tribunal, provided the claims were submitted in accordance with the Code and Regulations.3. Unfair treatment and prejudice against workmen by the Liquidator:The Applicant alleged that the Liquidator had a prejudiced view against the workmen and had not followed fair procedures, such as making inadequate publications about the claims process. The Tribunal acknowledged the workmen's hardships due to non-payment of wages and noted the Liquidator's failure to invite workmen's representatives to the Stakeholders Consultative Committee meeting, violating Regulation 31A of the Liquidation process.4. Procedural fairness in the Liquidation Process:The Tribunal highlighted the legislative intent to protect workmen's interests and emphasized that denying their claims would be against norms of justice and equity. The Tribunal directed the Liquidator to reconsider the workmen's claims and issue a speaking order within 30 days, in compliance with the Code, the IBBI (Liquidation Process) Regulations, and other relevant provisions.Conclusion:The Tribunal set aside the Liquidator's order rejecting the workmen's claims and directed the Liquidator to reconsider the claims afresh, ensuring procedural fairness and adherence to statutory requirements. The Tribunal underscored the importance of protecting workmen's rights and ensuring their legitimate and verifiable dues are considered.