CIRP wages and layoff disputes: labour-law challenge barred in insolvency forum, and post-layoff dues were not recoverable.

A labour-law challenge to a layoff notice issued during CIRP was treated as outside the adjudicating authority's jurisdiction, because the Insolvency and Bankruptcy Code's overriding effect applied and the dispute did not become an industrial dispute for insolvency adjudication. The workmen's claim for post-layoff wages and dues also failed: wages during CIRP are payable only where the corporate debtor is run as a going concern and the workmen actually work during that period. On the facts found, no such post-layoff work was performed, and the approved resolution plan remained binding on stakeholders.

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Issues: (i) Whether the adjudicating authority had jurisdiction to entertain the challenge to the layoff notice issued during the corporate insolvency resolution process; (ii) Whether the workmen were entitled to wages and other dues for the period after the layoff notice, including in the context of the resolution process and approved resolution plan.

Issue (i): Whether the adjudicating authority had jurisdiction to entertain the challenge to the layoff notice issued during the corporate insolvency resolution process.

Analysis: The challenge to the layoff notice arose from the alleged non-compliance with the Industrial Disputes Act, 1947, but the notice was issued in the context of the insolvency process and the resolution professional's duty to protect and preserve the corporate debtor as a going concern. The decision below proceeded on the footing that the Insolvency and Bankruptcy Code, 2016 has overriding effect under Section 238, and that the dispute over the layoff notice was not one the adjudicating authority was competent to decide as an industrial dispute. The reasoning was reinforced by earlier authority holding that disputes concerning closure or layoff under labour law do not vest adjudicatory jurisdiction in the insolvency forum.

Conclusion: The challenge to the layoff notice was not maintainable before the adjudicating authority, and the finding is against the appellant.

Issue (ii): Whether the workmen were entitled to wages and other dues for the period after the layoff notice, including in the context of the resolution process and approved resolution plan.

Analysis: Entitlement to wages during CIRP depends on the corporate debtor being run as a going concern and on the concerned workmen actually having worked during that period. The governing principle applied was that only such wages form part of insolvency resolution process costs, while other dues are to be dealt with in the manner contemplated by the statutory priority framework. On the facts, the workmen had not worked after the layoff notice and the tribunal treated the notice as operative; accordingly, wages for the post-layoff period were not payable as CIRP costs. The approved resolution plan was also treated as binding on all stakeholders and not reopened in this appeal, which confined itself to the layoff notice.

Conclusion: The workmen were not entitled to wages or dues for the post-layoff period on the facts of the case, and the finding is against the appellant.

Final Conclusion: The appeal failed because the insolvency forum could not adjudicate the labour-law challenge to the layoff notice and the claimed post-layoff wages were not recoverable on the facts found. The impugned order was therefore sustained.

Ratio Decidendi: In CIRP, only wages of workmen who actually worked while the corporate debtor was run as a going concern can qualify as insolvency resolution process costs, and a labour-law challenge to a layoff notice issued in that context is not within the adjudicating authority's jurisdiction when the Code's overriding effect applies.

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