2025 (8) TMI 1231 - AT - IBC

Review petitions dismissed: approved resolution plan treats applicants as entitled to nil gratuity since not on payroll as of 06.02.2018

RAVINDRA N. ATHAVALE, DNYANABA NAMDEO KARANDE Versus CALYX CHEMICALS AND PHARMACEUTICALS PVT. LTD., CHARU S. DESAI

NCLAT (PB, New Delhi) dismissed review applications seeking gratuity payments, holding the approved resolution plan expressly treated the applicants as ... Seeking review of order - claim of the Applicants with respect to gratuity dues formed part of the approved resolution plan or not - denial of gratuity payment shows non-implementation of the terms of the Resolution Plan - Tribunal failed to appreciate that payment of admitted gratuity dues was reflected in “Approved Resolution Plan” but was not implemented by the SRA - HELD THAT:- On perusal of terms of the resolution plan alongwith the Annexure 7, it clearly shows at Category No. 3 that 39 employees who were not on the payrolls of the Company as on 06.02.2018 had submitted their claims individually. Annexure 7 clearly depicts that “Nil” payments were to be made to them against the claim amount admitted in their case. It is found that the name of one of the present Applicants, Shri Ravindra Athavale at Sl. No. 26 at Annexure 7 at Category No.3. It is unambiguously clear from a reading of Annexure 7 that ‘Nil Payment’ was due to the Applicants in terms of the plan. The existence of this list has not been denied or controverted by the Applicant. It cannot be subscribed to the manner in which the Applicants have tried to read the Resolution Plan in a fragmented manner segregating Annexure 7 therefrom. This skewed approach also followed by the Adjudicating Authority of severing the Annexure 7 from the plan has led to misrepresentation and misinterpretation of the terms of the resolution plan. Annexure 7 clearly shows that Nil Payment treatment was accorded to the Applicant in the resolution framework of the SRA with respect to their gratuity dues. There are no doubt that the resolution plan did not provide for payment of gratuity dues to certain employees including the Applicants who were not on payroll of the Company as on 06.02.2018. It is also a fact that it has not been disputed by the Applicants that they were not on the payroll of the employer as on 06.02.2018. When the plan of the SRA did not provide for any payment to the Applicants for their gratuity dues and this plan had been approved by CoC in the exercise of its commercial wisdom, it would be fallacious on our part to accede to the contention of the Applicants that their gratuity payment claims formed part of the Resolution Plan. Further in terms of the approved plan, the SRA has already paid Rs 4.83 Cr. including Rs 2.56 Cr. towards gratuity against the admitted claim of Rs 6.29 Cr. of the workmen/employees which has not been controverted by the Applicants. It is well-settled, as held by the Hon’ble Supreme Court in Ghanshyam Mishra and Sons Pvt. Ltd. Vs Edelweiss ARC [2021 (4) TMI 613 - SUPREME COURT] and Ebix Singapore Pvt. Ltd. Vs Committee of Creditors of Educomp Solutions Ltd. [2021 (9) TMI 672 - SUPREME COURT], that once a Resolution Plan is approved, all claims not forming part of it stands extinguished and cannot be reopened. After the plan of the SRA was approved by the Adjudicating Authority on 16.04.2019, the issue of differential treatment to employee and workmen not on the payroll of the Corporate Debtor as on 06.02.2018 and employees and workmen who were on the payroll as on 06.02.2018 in respect of gratuity claim was never put to challenge by the Applicants. Thereafter the order of the Hon’ble Supreme Court affirming the resolution plan was passed on 20.02.2020. The Applicant filed their application challenging the resolution plan for non-inclusion of their claim as late as in April 2022 by which time the plan had acquired finality. Thus, in terms of the Ghanshyam Mishra and Ebix judgments, the Applicant stood precluded from disputing the plan and that too when the SRA has already discharged the payment obligations in terms of the approved resolution plan of 16.04.2019 which plan carried the stamp of approval from the CoC upwards to the Hon’ble Supreme Court. There are no merit in the Review Applications warranting any modification of findings dated 18.12.2024 - Accordingly, the Review Applications are rejected. ISSUES PRESENTED AND CONSIDERED 1. Whether the gratuity claims of certain former employees formed part of the approved resolution plan such that non-payment by the Successful Resolution Applicant (SRA) would amount to non-implementation or modification of the resolution plan. 2. Whether this Tribunal has power to review its earlier order in light of the Supreme Court directing reconsideration where alleged discrepancies between the Tribunal's findings and the record were pointed out. 3. Whether precedent permitting payment of admitted gratuity claims to employees can be applied where a resolution plan has attained finality up to the Supreme Court and contains explicit annexures treating particular categories of employees (including 'not on payroll' employees) as receiving nil payment. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Whether the gratuity claims formed part of the approved resolution plan Legal framework: The Insolvency Code and CIRP Regulations require a resolution plan to state treatment of creditors; once approved by Committee of Creditors (CoC) and sanctioned by the Adjudicating Authority, the plan governs discharge of pre-CIRP claims. Annexures integral to the plan must be read with main clauses (clauses 3.3 and 3.5 in the plan) governing employee/workmen payments. Precedent Treatment: The Tribunal relied on established principles that claims not forming part of an approved resolution plan are extinguished and cannot be reopened after plan finality (as established by higher court authority on finality and binding effect of approved plans). Earlier decisions permitting payment of admitted gratuity claims were considered but distinguished on facts. Interpretation and reasoning: Record examination showed (i) employees' claims were listed in the Resolution Professional's list of creditors, (ii) the resolution plan expressly allocated amounts for workmen and employees and provided that gratuity would be paid 'as and when due, in accordance with applicable law,' and (iii) Annexure 7 - an integral part of the plan and read with clauses 3.3 and 3.5 - categorised employees into (a) on-payroll (with specified admitted claims and payment amounts), (b) on-payroll individual claims, and (c) employees not on payroll as on Insolvency Commencement Date (ICD) with admitted claims but 'Nil' payment entitlement. One applicant's name appears in Category 3 with 'Nil' payment; the applicants did not dispute they were not on payroll as on ICD. The Adjudicating Authority's order approving the plan did not extract Annexure 7 but the annexure is integral and must be read together with the operative clauses. The Tribunal concluded the applicants had fragmented the plan by severing Annexure 7 and thereby misread the plan's terms. Ratio vs. Obiter: Ratio - where an approved resolution plan (including annexures) expressly provides nil payment to a defined category of employees (e.g., not on payroll as on ICD), claims of such employees cannot be treated as forming part of the plan for purposes of enforcement; non-payment in such circumstances does not constitute non-implementation. Obiter - observations distinguishing fact patterns of other gratuity-payment decisions were explanatory of applicability but not essential to the holding. Conclusion: The material on record demonstrates the gratuity claims of the applicants did not form part of the approved resolution plan; the plan treated employees not on payroll as on ICD as entitled to nil payment and it had acquired finality. Accordingly, denial of gratuity to those applicants does not constitute modification or non-implementation of the plan. Issue 2 - Power to review Tribunal's earlier order following Supreme Court direction Legal framework: Tribunals possess inherent and statutory powers to review or rectify their orders where requisite grounds exist; further, a higher court's direction permitting parties to point out factual or legal discrepancies before the Tribunal constitutes sufficient basis for reconsideration of the Tribunal's prior findings. Precedent Treatment: The Tribunal accepted the Supreme Court's liberty to remand or permit re-presentation of purported misreading of the record and proceeded to examine the record afresh in deference to that direction. Interpretation and reasoning: In obedience to the Supreme Court's order granting liberty to the applicants to point out alleged contradictions between the Tribunal's findings and the evidentiary record, the Tribunal re-examined the plan, Annexure 7 and the RP's list of creditors. The Tribunal limited its review to the narrow question referred by the Supreme Court - whether gratuity claims formed part of the approved plan - and did not reopen collateral or previously finally adjudicated issues absent any substantive ground to do so. Ratio vs. Obiter: Ratio - the Tribunal may revisit its findings when expressly directed by a higher court to consider alleged inconsistencies with the record; however, such review is confined to rectifying the specific discrepancy identified and does not permit wholesale re-litigation of finalized matters. Obiter - commentary on the proper limits of review in other factual scenarios. Conclusion: The Tribunal had the authority and rightly entertained the review application remitted by the Supreme Court; upon re-examination, no error in the earlier finding was found that would warrant modification. Issue 3 - Applicability of precedents directing payment of admitted gratuity claims when a resolution plan is final Legal framework: Principles concerning payment of statutory dues (e.g., gratuity) to employees must be harmonised with the sanctity of an approved resolution plan; where the plan has attained finality, the plan's treatment of claims governs, subject to legal limits and the finality doctrine. Precedent Treatment: Decisions favouring payment of admitted gratuity claims were considered by the applicants; the Tribunal analysed whether those authorities were factually and legally applicable given the present plan's finality and explicit annexural treatment. Interpretation and reasoning: The Tribunal distinguished precedents relied upon by applicants on key factual grounds: in the comparators the resolution plan had not attained finality or did not contain annexural provisions extinguishing claims of particular categories. Here, the plan was approved by CoC with significant majority, sanctioned by the Adjudicating Authority, affirmed up to the highest court, and contained Annexure 7 expressly providing nil payment to employees not on payroll as on ICD. The applicants delayed contesting the plan until after plan finality and implementation had occurred; they did not challenge the plan during the window when such challenge could have been made, which indicated acquiescence. The Tribunal cited controlling authority that an approved resolution plan extinguishes claims not forming part of it, thereby precluding reopening of such claims post-finality. Ratio vs. Obiter: Ratio - precedents mandating payment of admitted gratuity cannot be mechanically applied where an approved resolution plan, final at all appellate levels, expressly disposes of such claims (including by nil treatment) and the affected parties failed to challenge the plan within the appropriate timeframe. Obiter - general remarks on equitable considerations where plans are silent or ambiguous about employee claims. Conclusion: Precedents favouring gratuity payments are inapplicable to the present facts because the plan had acquired finality and explicitly treated the applicants' category as entitled to no payment; therefore, those authorities do not entitle the applicants to relief. Overall Conclusion The Tribunal, after reconsideration directed by the higher court, found no merit in the review applications: the resolution plan (including Annexure 7) treated the applicants' gratuity claims as outside the plan's payout (nil payment for employees not on payroll as on ICD); the plan had acquired finality through CoC approval and judicial affirmation; hence the applicants' claims are precluded and the review applications are rejected. No costs.