In a recent judgment of Drish Shoes Workers Union Vs Drish Shoes Ltd.1, the NCLAT held that the RP does not have the authority and lacks jurisdiction to compute workers' salary during the layoff period, which was prior to the commencement of the CIRP.
Relying upon the judgement of Era Labourer Union of Sidcul, Pant Nagar, through its Secretary Vs. Apex Buildsys Ltd.3, the NCLAT held that non-computation of salary after lay off by the RP cannot be faulted with, since the RP has no adjudicatory jurisdiction and that whether the workers are entitled to claim their dues for the layoff period under provisions of Industrial Dispute Act, 1947, is not in the domain of the NCLT.
Interestingly, before the NCLT, the Workers' Union had argued that they could not approach any other forum for the adjudication of the lay off period amount due to the moratorium under Section 14. Relying upon a judgment of the High Court of Kerala in Deputy Commissioner (Works Contract), Kerala State Goods And Services Tax Department, Ernakulam Vs National Company Law Tribunal3, the NCLT held that (i) the Workers' Union could have approached the relevant Labour Law authority for their dues pertaining to the lay off period, (ii) embargo during the moratorium only extends to execution of a claim and not determining liability and (iii) the RP could represent the CD before another judicial forum, and since the claim is in respect of pre-CIRP period, it would be de hors the jurisdiction of NCLT under Section 60(5) of the IBC.
However, given the recent judgment of the NCLAT in the matter of Employees' Provident Fund Organization vs. Jaykumar Pesumal Arlani4, it would be interesting to see how Adjudicating Authorities would now deal with claims of workers' assessed by Labour Law authorities, assessment done post commencement of CIRP, for a period prior to CIRP commencement. In the EPFO judgment, the NCLAT held that when a moratorium is imposed under Section 35(3) of the IBC in liquidation proceedings, the bar is only against suits or legal proceedings and there is no bar against assessment proceedings to be conducted by statutory authorities, including the EPFO; however, under Section 14, the EPFO cannot proceed with assessment proceedings.
Footnotes
1 Company Appeal (AT) (Insolvency) No.2281 of 2024
2 Comp. App. (AT) (Ins) No. 1572 of 2024
3 WP(C) NO. 39185 OF 2022
4 Company Appeal (AT) (Insolvency) No.1062 of 2024
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