TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 961
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....nion was dismissed. 2. Necessary facts required for disposal of the instant appeal are that the appellant in its appeal has stated its case as that the appellant were the workmen of the United Machines Ltd. (CD) who had undergone insolvency vide order dated 01.03.2019 of Ld. Tribunal passed with regard to the application moved by the financial creditor under Section 7 of the IBC, 2016. 3. It is further stated that the appellant union had moved an application on 21.07.2019 before the Ld. NCLT under Section 60(5) of the IBC, 2016 for issuing directions to the Resolution Professional for releasing salaries/wages/ statutory dues of the workmen of the CD and the resolution professional of the CD has released salaries and dues up to March, 2020 but neither the provident fund for four months prior to CIRP nor gratuity was cleared. 4. It is further stated that the Resolution Professional of the CD has issued an order/notice of lay off on 01.02.2020 without clearing the legitimate dues of the employees and without following the due procedure as prescribed under relevant provisions of the Industrial Disputes Act and the said layoff notice is completely illegal and is violative of Se....
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....AT) (Ins) No. 265 of 2020 the impugned order therein was set aside and Respondent No. 2/PRA was permitted to submit a revised plan before CoC of the CD and the revised plan submitted by the Respondent No. 2 was ultimately approved by by the CoC on 17.09.2021 with a voting share of 89.71%. It is also contended that there is no infirmity in the impugned order as there was no work left at the factory of the CD and there was absolutely no need of any worker to go there and since the workers of the appellant has not done any work thereafter, they are not entitled for any salary or dues of the period whereon they have not attended the factory in pursuance of the layoff notice and also that Ld. NCLT was not having any jurisdiction to entertain any challenge to the layoff notice/circular. 11. Respondent No. 2/SRA in his reply apart from other facts have stated that in pursuance of the order of this appellate tribunal he had submitted a revised resolution plan which was approved by the CoC as well as by the adjudicating authority and thereafter the appellant had preferred an IA No. 408/2022 seeking rejection of this resolution plan submitted by the Respondent No. 2 and the said IA was la....
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....also no question of res judicata in consequence of withdrawal of IA No. 408/2022. Reliance in support of his submission was placed on Jet Aircraft Maintenance Engineers Welfare Association vs. Ashish Chhawchharia, 2022 SCC Online NCLAT 418, Sunil Kumar Jain vs. Sundaresh Bhat (2022) 7 SCC 540, Era Labourer Union vs. Apex Buildsys Ltd.; Drish Shoes Workers Union vs. Drish Shoes Ltd.; Tourism Finance Corporation of India Ltd. vs. Rainbow Papers Ltd. 2019 SCC Online NCLAT 910. 20. Ld. Counsel for Respondent No. 1 i.e. Resolution Professional submits that the entitlement of any workmen to wages as part of the CIRP costs arises only where the CD is being run as a going concern and the services of such workmen having in fact has been utilised during the CIRP period and while rejecting the IA filed by the appellant, adjudicating authority has categorically recorded that no work has been carried out in the factory of the CD and there was no necessity for the workers to continue reporting to duty. It is also submitted that in fact while considering IA No. 2748 of 2019 an oral direction was given by the adjudicating authority to issue a layoff notice as no work was being carried out in th....
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....t SRA after approval of its resolution plan may not be asked to face a situation which may cause monetary hardship and was not in contemplation when the resolution plan was submitted and approved. 27. It is also submitted that the appellant workmen, having not worked after the layoff notice are not entitled for any wages or dues of that period. 28. Having heard Ld. Counsel for the parties and having considered the record including the written submissions filed by them it appears that the appellant union is aggrieved by the passing of the impugned order on the score that the layoff of notice of date 01.02.2020 was issued by the resolution professional illegally and in violation of the relevant provisions of the ID Act. 29. The appellant also appears to have been aggrieved by the fact that the layoff notice of date 01.02.2020 stated to have been issued in pursuance of the oral directions of the adjudicating authority while in none of the orders passed by the adjudicating authority any such direction has been given. 30. The perusal of record would further reveal that IA No. 3780/2021 in IB-937/PB/2018 was moved by the appellant before Ld. Tribunal for grant of following re....
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....nsistent contained in any other law for the time being in force and thus held that there appears no illegality in discontinuing the services of the workmen by issuing the layoff notice of date 01.02.2020. 33. The circular dated 01.02.2020 by which the services of workmen were discontinued is also placed below for convenience: CA Vivek Raheja B. Com (Hons.), FCA, Insolvency Professional, CMA, DISA Certificate course on Forensic Audit (FAFP) conducted by ICAI, Certificate course on concurrent Audit Conducted by KAI February 1, 2020 CIRCULAR As all of you are aware that the company Corporate Insolvency Resolution Process (CIRP) under the IB Code, 2016, after completion of 9 months' period, now the matter is pending before Hon'ble NCLT Court for admission into liquidation. As all of you would appreciate the efforts of mine as a RP to maintain the company as a going concern by generating the possible funds from Customers and paid the wages including other essential Statutory dues of PF etc. to the extent possible and I am working further on these lines. The find crunches in the company has repeatedly been explained and brought to the know....
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....tory of the CD and whether he was bound to follow the relevant provisions of the ID Act. It is pertinent to mention here that the RP has paid salaries and dues of the workmen up to March, 2020. 36. Much emphasis has been given by Ld. Counsel for the appellant on non-adherence to Sections 25C, 25F and 25M of the ID Act. This issue appears to have been covered fully by the Judgment of this court passed in Drish Shoes Worker Union vs. Drish Shoes Ltd., CA (AT) (Ins) No. 2281 of 2024 wherein in identical facts this appellate tribunal held that the Adjudicating Authority has done nothing wrong in calculating salaries of the workmen till the layoff period. The appellate tribunal based its judgment on its earlier judgment passed in "Era Labourer Union of Sidcul, Pant Nagar, through its Secretary vs. Apex Buildsys Ltd.", CA (AT) (Ins) No. 1572 of 2024. The relevant portion of the same is reproduced as under: "8. Learned counsel for the Respondent submits that the issued raised in the present appeal is fully covered by judgment of this Tribunal in "Company Appeal (AT) (Ins.) No.1572 of 2024, Era Labourer Union of Sidcul, Pant Nagar, through its Secretary Vs. Apex Buildsys Ltd.".....
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....s Ltd. vs. Vishal Ghisulal Jain, Civil Appeal No. 3045 of 2020 decided by Hon'ble Supreme Court, it was held that lockout notice has nothing to do with the CIRP process and challenge to the closure and lock out notice cannot be raised before the Adjudicating Authority, which is not competent to adjudicate on the said issue which arises out of the provisions of the ID Act. 38. In Sunil Kumar Jain & Ors. vs. Sundaresh Bhatt & Ors. (2022) Vol 7 SCC 540, relied on by all the parties, Hon'ble Supreme Court in para no. 18, 19, 20, 23 & 25.1 opined as under: "18. It cannot be disputed that as per Section 5(13) IBC, "insolvency resolution process costs" shall include any costs incurred by the resolution professional in running the business of the corporate debtor as a going concern. It is also true that Section 20 IBC mandates that the interim resolution professional/resolution professional is to manage the operations of the corporate debtor as a going concern and in case during the CIRP the corporate debtor was a going concern, the wages/salaries of such workmen/employees who actually worked, shall be included in the CIRP costs and in case of liquidation of the corporate debto....
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.... Nigam Ltd. v. Amit Gupta, the RP is under mandate to manage the operations of the corporate debtor as a going concern and therefore it is to be believed that during CIRP, the corporate debtor was a going concern. managed and/or operated as a going concern cannot be accepted. It is true that under Section 20 IBC, it is the duty of the RP to manage and run the operations of the corporate debtor as a going concern. However, the words used in Section 20 are "the interim resolution professional shall make every endeavour to ...manage the operations of the corporate debtor as a going concern". Therefore, even if it is found that the corporate debtor was not a going concern during the CIRP despite best efforts by the resolution professional, it cannot be presumed that still the corporate debtor was a going concern during the CIRP period. It depends on the facts of each case. In a given case, the corporate debtor may be a going concern and in a given case, the corporate debtor might not be a going concern. Therefore, submission on behalf of the appellants that as the RP is under mandate to manage the operations of the corporate debtor as a going concern under Section 20 IBC and therefore ....