The National Company Law Appellate Tribunal ( NCLAT ) upheld the Resolution Plan approved for Adico Forge Pvt Ltd which fully secured workers claim. The Corporate Insolvency Resolution Process ( CIRP ) against the Corporate Debtor/Respondent No. 4 commenced on 23.06.2023. Audico Forge Kamgar Sangathana (Appellant) filed a claim for dues of the workers. The Resolution Professional admitted the same.
The Committee of Creditors ( CoC ) approved the Resolution Plan submitted by Trinity India Forgetech Pvt. Ltd., the Respondent No. 3 with a 92.87% majority. The NCLT approved the Resolution Plan on 02.05.2024. Aggrieved by the same, the Appellant filed the appeal.
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Counsel for Appellant submitted that the Resolution Plan does not secure the rights of the workmen, which include continued employment after the Successful Resolution Applicant ( SRA ) took over the Corporate Debtor or retiral/ termination benefits. Further, the Resolution Plan also needs to take care of the provident fund and gratuity to which the workers are entitled and the same have to be paid in full.
Counsel for the SRA submitted that the entire claim of the workmen, which was filed in the CIRP of the Corporate Debtor, had been admitted. The Resolution Plan provided for payment of provident fund and gratuity dues of the Corporate Debtor at actuals. The Resolution Plan fully took care of the claim and dues of the workmen, which were accepted and paid in full in the Resolution Plan.
The bench comprising Justice Ashok Bhushan ( Chairperson ), Mr. Barun Mitra ( Technical Member ) and Arun Baroka ( Technical Member ) found that the Resolution Plan fully covered the workers’ claims for provident fund and gratuity. The SRA’s affidavit confirmed that the dues had been admitted and provided for at actuals in the Resolution Plan, which took precedence over payments to secured creditors.
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The Tribunal observed the jurisdiction of the NCLT and NCLAT while considering the Plan approved by the CoC is limited. The remit of the jurisdiction is to examine whether the Plan is in compliance of Section 30(2) of the Insolvency and Bankruptcy Code, 2016. In this regard, the Tribunal referred to K. Sashidhar vs. Indian Overseas Bank and Ors., it was observed that the legislature has not endowed the adjudicating authority ( NCLT ) with the jurisdiction or authority to analyse or evaluate the commercial decision of CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors.
While dismissing the appeal, the Tribunal observed that the gratuity and provident fund having been admitted in full and paid in full in the Resolution Plan, compliance of provisions of IBC were fully met.
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