RP Was Correct in Not Including Workmen’s Salaries for the Lay-Off Period, as RP Cannot Decide on the Lay-Off’s Legality | NCLAT
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- Last Updated on 27 April, 2025
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Case Details: Drish Shoes Workers Union v. Drish Shoes Ltd. - [2025] 173 taxmann.com 832 (NCLAT-New Delhi)
Judiciary and Counsel Details
- Ashok Bhushan, Chairperson, Barun Mitra & Arun Baroka, Technical Member
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M.L. Dhingra, Sr. Adv., Gaurav Dhingra & Govind Bhardwaj, Advs. for the Appellant.
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Abhishek Anand, Karan Kohli, Ms Ridhima Mehrotra & Akshit Awasthi, Advs. for the Respondent.
Facts of the Case
In the instant case, the corporate debtor was in an industry where notice for a 45-day layoff was issued. Subsequently, after the notice, work could not be resumed, and the industry remained closed.
After the initiation of the CIRP, claims were filed by the appellant, the Workers’ Union. The Resolution Professional (RP) admitted the claim to the tune of Rs. 1.85 crore. Aggrieved by the said decision, the workers’ union filed an application before the NCLT contending that the layoff was illegal and was required to be ignored by the RP while computing the salary of the workmen and the workmen were entitled to the salary till the insolvency commencement date.
The NCLT, by the impugned order, rejected the said application. Thereafter, an appeal was filed before the National Company Law Appellate Tribunal (NCLAT).
It was noted that the Resolution Professional calculated the salary until the layoff period and, accordingly, admitted the claim to the tune of Rs. 1.85 crores, which the Resolution Professional has reaffirmed.
NCLAT Held
The NCLAT held that RP’s non-computation of salary after layoff could not be faulted, as RP had no adjudicatory jurisdiction. The issue of whether workers were entitled to claim their dues for the layoff period under the provisions of the Industrial Dispute Act was not in the domain of the NCLT. Therefore, there was no error in the order passed by the NCLT, warranting any interference.
List of Cases Reviewed
- Order of NCLT (Chandigarh) in IA No.406/2024, dated 01.07.2024 (PARA 9) affirmed.
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