Resolution Professional not personally liable for salary payments made with creditor approval during insolvency process

NCLAT Principal Bench dismissed appeal challenging application regarding salary arrears payment to 103 employees. Tribunal held Resolution Professional (RP) not personally liable for payments made with Committee of Creditors approval during Corporate Insolvency Resolution Process. Court clarified no double payment would occur to employees under resolution plan for unpaid salaries, though employees remain entitled to gratuity and provident fund benefits. Adjudicating Authority's order upheld with no grounds found for interference.

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Issues Involved:
1. Validity of the lumpsum payment to 103 employees.
2. Entitlement of employees to pre-CIRP dues.
3. Personal liability of the Resolution Professional (RP) for payments made.
4. Allegations of double payment to 103 employees.

Detailed Analysis:

1. Validity of the lumpsum payment to 103 employees:
The Corporate Insolvency Resolution Process (CIRP) against Jet Airways commenced on 20.06.2019. An Asset Preservation Team (APT) was formed, consisting of 103 employees who insisted on some lumpsum payment due to uncertainties. The RP, with the approval of the Committee of Creditors (CoC), made these payments. The Appellant challenged these payments, claiming they were arbitrary and unreasonable. The Tribunal noted that the payments were made to ensure the preservation of the Corporate Debtor's assets and were approved by the CoC. The affidavit filed by the RP clarified that the 103 employees had waived their pre-CIRP dues in exchange for the lumpsum payment.

2. Entitlement of employees to pre-CIRP dues:
The Appellant argued that the 103 employees should not receive any further payments from the approved Resolution Plan, as they had already received lumpsum payments. The Tribunal referred to its previous judgment dated 21.10.2022, which held that workmen and employees are entitled to their provident fund and gratuity minus the amount already earmarked in the Resolution Plan. The RP's affidavit confirmed that the 103 employees would not receive any further payments from the Resolution Plan for their unpaid salaries but would be entitled to provident fund and gratuity.

3. Personal liability of the Resolution Professional (RP) for payments made:
The Appellant sought to hold the RP personally liable for the payments made to the 103 employees. The Tribunal found no basis for this claim, as the payments were made with the approval of the CoC. The RP acted in accordance with the Code and the directions of the CoC, and thus, no personal liability could be fastened on the RP.

4. Allegations of double payment to 103 employees:
The Appellant alleged that the 103 employees would receive double payment. The RP's affidavit dispelled this concern, stating that the employees had waived their pre-CIRP claims and would not receive any further payments from the Resolution Plan for unpaid salaries. The Tribunal accepted this clarification and found no merit in the allegation of double payment.

Conclusion:
The Tribunal dismissed the Appeal, finding no grounds to interfere with the Adjudicating Authority's order rejecting MA No.3387 of 2019. The Tribunal clarified that the 103 employees would not receive double payment and would only be entitled to provident fund and gratuity as per the previous judgment. The RP was not personally liable for the payments made, as they were approved by the CoC. The Appeal was dismissed with no order as to costs.

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