CIRP employment dues and asset custody: salary, leave encashment and debtor-owned vehicles were treated as insolvency process matters.

Gratuity was held not payable through the insolvency process where the corporate debtor had not created a gratuity fund, but salary and leave encashment for services rendered during CIRP were treated as insolvency resolution process costs because they arose from running the debtor as a going concern and had to be provided for in priority. The resolution professional was entitled to take custody and control of the corporate debtor's owned vehicles, and their handover was directed because such assets must be preserved during CIRP. The claim for car rental was not decided in the insolvency proceedings and was left to be pursued before the appropriate forum.

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Issues: (i) Whether gratuity was payable from the insolvency process where no gratuity fund had been created by the corporate debtor, and whether salary and leave encashment for the CIRP period formed part of insolvency resolution process costs. (ii) Whether the resolution professional was entitled to secure possession of vehicles belonging to the corporate debtor and whether a claim for car rental lay within the Tribunal's jurisdiction.

Issue (i): Whether gratuity was payable from the insolvency process where no gratuity fund had been created by the corporate debtor, and whether salary and leave encashment for the CIRP period formed part of insolvency resolution process costs.

Analysis: Gratuity was treated as dependent upon the existence of a gratuity fund and the statutory framework governing employee benefits. Where the corporate debtor had created no gratuity fund, the amount could not be directed to be paid by the resolution professional. By contrast, salary and leave encashment for services rendered during the CIRP were held to be expenses incurred in running the corporate debtor as a going concern and therefore fell within the definition of insolvency resolution process costs. The resolution plan had to provide for such costs in priority.

Conclusion: The claim for gratuity was rejected, while salary and leave encashment for the CIRP period were directed to be provided for as insolvency resolution process costs, in favour of the petitioner on that limited issue.

Issue (ii): Whether the resolution professional was entitled to secure possession of vehicles belonging to the corporate debtor and whether a claim for car rental lay within the Tribunal's jurisdiction.

Analysis: The corporate debtor's ownership of the vehicles was undisputed. The resolution professional was bound to take custody and control of assets of the corporate debtor and to preserve and protect them during CIRP. The Tribunal held that the vehicles ought to have been in the resolution professional's custody and directed their handover. The claim for car rental was treated as outside the Tribunal's direct insolvency jurisdiction and was left to be pursued before the appropriate forum if so advised.

Conclusion: The respondents were directed to hand over the vehicles to the resolution professional, while the claim for car rental was not adjudicated in these proceedings, in favour of the petitioner on the possession issue.

Final Conclusion: The applications were allowed, with relief granted for payment of CIRP-period employment dues as insolvency resolution process costs and for delivery of the corporate debtor's vehicles to the resolution professional, while gratuity without a fund was declined and the rental claim was left open to an appropriate forum.

Ratio Decidendi: Employment dues for services rendered during CIRP are part of insolvency resolution process costs when the corporate debtor is run as a going concern, and assets owned by the corporate debtor must be taken into custody by the resolution professional; gratuity cannot be directed absent a gratuity fund.

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