NCLT cannot decide on non-computation of salary after layoff period under Industrial Disputes Act: NCLAT [Read Order]
The bench held that the Adjudicating Authority correctly noted that it is not within its purview to determine whether the workers are entitled to receive their dues for the layoff period under the Industrial Dispute Act
NCLAT – NCLAT New Delhi – Industrial Disputes Act – NCLT cannot decide layoff salary issues – taxscan
NCLAT – NCLAT New Delhi – Industrial Disputes Act – NCLT cannot decide layoff salary issues – taxscan
The New Delhi bench of the National Company Law Appellate Tribunal ( NCLAT ) has held that National Company Law Tribunal ( NCLT ) should not decide on non-computation of salary after layoff period under Industrial Disputes Act as the provisions of Industrial Dispute Act is not in the domain of the adjudicating authority.
On May 12, 2022, the Corporate Debtor's CIRP got underway. On July 31, 2021, notice of a 45-day layoff was given to the Corporate Debtor industry. Following the warning, the industry remained closed and work could not be restarted. Following the corporate debtor's admission into insolvency, the workers' union submitted claims totaling Rs. 314,31,360, of which the RP ultimately admitted Rs. 185,62,360. In an order issued by the adjudicating authority, the RP was instructed to reexamine the claim within three weeks.
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Following the aforementioned directive, the Resolution Professional reexamined and confirmed the previous figure of Rs. 1,85,62,360. The Appellant filed IA NO.406/2024 in protest of the aforementioned decision, but the impugned order denied it. The appellant, Drish Shoes Workers Union, argued that the Adjudicating Authority erred in failing to appreciate the provisions of the Industrial Dispute Act, citing sections 25(m) and (o) of the Act. The appellant argued that because the layoff was unlawful, the RP should have ignored it entirely when determining the workers' salaries; as a result, their earnings up until the start of the insolvency should be accepted.
The respondent contended that the appellant had the right to contest the layoff as the CIRP had started on May 12, 2022. Since the Appellant had not contested the layoff, the Resolution Professional was required to compile the claim and determine the wage payout up to the layoff date.
Additionally, it was contended that the Tribunal's ruling in Era Labourer Union of Sidcul, Pant Nagar, through its Secretary vs. Apex Buildsys Ltd. (2024) clearly addresses the issues brought in the current appeal. Both the layoff and the pay calculation were contested in the aforementioned ruling by the Adjudicating Authority through an IA, which was rejected, and the salary was not calculated following the layoff time until the start of insolvency.
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While agreeing with the respondent's arguments, the bench of Justice Ashok Bhushan ( Judicial Member ), Mr. Barun Mitra ( Technical Member ), and Mr. Arun Baroka ( Technical Member ) noted that the Resolution Professional's failure to calculate the salary after layoff cannot be attributed to the Resolution Professional's lack of adjudicatory jurisdiction.
The bench held that the Adjudicating Authority correctly noted that it is not within its purview to determine whether the workers are entitled to receive their dues for the layoff period under the Industrial Dispute Act. The NCLAT evaluated the same question after relying on the Era Labourer Union of Sidcul.
To Read the full text of the Order CLICK HERE
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