Court Orders Payment of Salaries to Employees in Insolvency Case

The court allowed the Applicants' petition under Section 60(5) of the IBC, directing the Resolution Professional (RP) to pay the total due amount of &8377; 76,56,448 for services rendered. Despite the RP's financial constraints and challenges due to lockdown and lack of communication, the court held that the RP should pay the salaries as it falls within the CIRP costs provision. The RP's efforts to address irregularities and communicate with the Committee of Creditors were noted, ultimately resulting in the approval of salary/wage payments based on the provision for workmen's salaries in the CIRP costs.

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Issues:
- Non-payment of salaries by Resolution Professional (RP) from 15.05.2020 to November 2020.
- Dispute over the payment of salaries to the Applicants.
- RP's justification for non-payment due to financial constraints.
- Interpretation of the Resolution Plan regarding CIRP costs and payment obligations.

Analysis:
- The Applicants filed an application under Section 60(5) of the IBC seeking to declare the RP's acts of not paying their salaries as illegal and to direct the RP to pay the total due amount of &8377; 76,56,448 for services rendered during the mentioned period.
- RP faced difficulties due to the lockdown and lack of communication from the erstwhile management regarding the status of employees. The plant was closed for 2 years, requiring substantial repairs. RP made efforts to address irregularities, including discussions with employees on a no work-no pay agreement.
- RP informed the CoC about the situation, limited services availed, and the need to compute payments for employees. CoC approved salary/wage payments and discussed retrenchment costs for employees not available. RP stated inability to bear additional costs due to plant closure since December 2018.
- The Counsel for the Applicants cited a judgment regarding CIRP costs and payment obligations under the Resolution Plan. The Counsel argued that the RP should pay the due salaries as it falls within the CIRP costs provision and would not exceed the allocated amount. The Petition was allowed based on the provision made for workmen's salaries in the CIRP costs.

This detailed analysis covers the issues of non-payment of salaries, the RP's justifications, and the interpretation of the Resolution Plan regarding payment obligations, providing a comprehensive understanding of the judgment.

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