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

NCLAT (PB, New Delhi) dismissed review applications seeking gratuity payments, holding the approved resolution plan expressly treated the applicants as entitled to "Nil" payment for gratuity because they were not on the corporate debtor's payroll as of 06.02.2018. The tribunal found Annexure 7 formed part of the plan, the applicants' claims were therefore excluded and extinguished once the plan was approved and later affirmed by the SC, and the SRA had already discharged payments under the plan. The review petitions lacked merit and were rejected.

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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.

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