Tribunal upholds Liquidator's decisions in Excel Glasses ex-employees' appeals, citing lack of statutory forum decisions

The Tribunal dismissed all appeals filed by ex-employees of Excel Glasses Limited concerning the rejection of their claims by the Liquidator. The Tribunal found that the claims for various amounts, including salary arrears, bonus, lay-off compensation, closure/retrenchment compensation, notice pay, and gratuity, could not be sanctioned without decisions from relevant statutory forums. The Liquidator's decisions were based on audited financial records and an Actuarial Valuer's report. The Tribunal concluded that the appeals lacked merit and upheld the Liquidator's decisions, ultimately dismissing all appeals.

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Issues Involved:
1. Delay in filing the appeals.
2. Rejection of claims by the Liquidator.
3. Validity of claims for salary arrears, bonus, lay-off compensation, closure/retrenchment compensation, notice pay, and gratuity.
4. Compliance with the Insolvency and Bankruptcy Code (IBC), 2016 and related regulations.
5. Validity of lock-out and its impact on claims.
6. Admissibility of claims based on financial records and actuarial valuation.

Detailed Analysis:

1. Delay in Filing the Appeals:
The Tribunal acknowledged the delay in filing the appeals but decided to consider them along with other connected matters under Section 42 of the Insolvency and Bankruptcy Code, 2016 (IBC).

2. Rejection of Claims by the Liquidator:
The appeals were filed by ex-employees of Excel Glasses Limited, aggrieved by the Liquidator's decision to reject their claims. The Liquidator had issued a public announcement on 21.10.2019, calling stakeholders to submit proof of their claims by 20.11.2019. The appellants submitted their claims, which were partially admitted by the Liquidator, leading to the appeals.

3. Validity of Claims for Salary Arrears, Bonus, Lay-Off Compensation, Closure/Retrenchment Compensation, Notice Pay, and Gratuity:
The appellants claimed various amounts, including salary arrears, bonus, lay-off compensation, closure/retrenchment compensation, notice pay, and gratuity. However, the Liquidator admitted only a fraction of these claims based on the audited books of accounts of the Corporate Debtor. The Tribunal found that the Liquidator could not decide on disputed liabilities without orders from appropriate authorities like the Labour Court.

4. Compliance with the Insolvency and Bankruptcy Code (IBC), 2016 and Related Regulations:
The Liquidator processed the claims as per Regulation 25 read with Regulation 19(4) of Liquidation Process Regulations, 2016, verifying the claims against the audited books of accounts. The Tribunal noted that the Liquidator had sought opinions from leading advocates and appointed an Actuarial Valuer to ascertain the exact amount of gratuity payable.

5. Validity of Lock-Out and Its Impact on Claims:
The Tribunal referred to a Settlement Agreement dated 02.12.2015 between the Management of Excel Glasses and the Trade Unions, which stated that the lock-out was valid and legally done by the company. This agreement impacted the claims, particularly regarding the legality of the lock-out and the resultant liabilities.

6. Admissibility of Claims Based on Financial Records and Actuarial Valuation:
The Tribunal found that the Liquidator admitted claims based on financial records and the Actuarial Valuer's report for gratuity liability as of 21.10.2019. The Tribunal emphasized that the provident fund, pension fund, and gratuity fund do not form part of the liquidation estate and cannot be used to satisfy claims. The Tribunal cited Section 36(4)(a)(iii) of the IBC, which excludes these funds from the liquidation estate.

Conclusion:
The Tribunal concluded that the claims for wages could not be sanctioned without decisions from statutorily constituted forums under relevant acts like the Industrial Dispute Act, Payment of Wages Act, and Bonus Act. The Tribunal found no merit in the appeals, as the claims were admitted based on the Corporate Debtor's financial records and the Actuarial Valuer's report. Consequently, all the appeals were dismissed.

Dated this the 18th day of November, 2021.

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