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TMI Blog2024 (9) TMI 1323X X X X Extracts X X X X X X X X Extracts X X X X ..... ldsys Limited had a factory in Pant Nagar in the State of Uttarakhand. Production of factory at Pant Nagar was closed from February 2017. The Corporate Debtor issued a transfer letter dated 20.06.2017 to the workmen, members of Appellant transferring their services to Nagpur Plant w.e.f. 01.07.2017. The Corporate Debtor declared a lockout on 31.07.2017 under the Uttar Pradesh Industrial Disputes Act, 1947 at the Pant Nagar unit of the Corporate Debtor. Notice dated 31.07.2017 was also sent to the Secretary, State of Uttarakhand, Labour Department, Dehradun informing about the permanent closure of the establishment under Section 2(ee) and Section 6V of the Uttar Pradesh Industrial Disputes Act, 1947. The Appellant aggrieved by lockout and closure filed a W.P. (M/S) No. 2020 of 2017 in the High Court of Uttarakhand at Nainital which Writ Petition was disposed of on 05.10.2017 by the High Court observing that let a decision be taken by Secretary, Labour Department. The said direction was issued in wake of the claim of the Appellant that there are more than 300 workers in the preceding 12 months of the closure, hence, no closure could have been down by the Corporate Debtor without obta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant on 04.06.2021 has filed IA No. 2545 of 2021 praying for setting aside of the purported closure dated 31.07.2017 and consequent admission of claim for wages and bonus. In auction held on 23.05.2022, M/s. Jasamrit Designers Pvt. Ltd. was held as successful bidder and has procured the corporate debtor as a going concern. The application IA No.2545 of 2021 was heard by the Adjudicating Authority and by impugned order dated 02.04.2024 dismissed the IA which order is under challenge in this Appeal. 3. We have heard Ms. Bhargavi Kannan, Learned Counsel for the Appellant and Shri Abhishek Anand, Learned Counsel for the Liquidator. 4. Counsel for the Appellant challenging the order submits that the Appellant has promptly challenged the closure of factory dated 31.07.2017 before the High Court of Uttarakhand and High Court of Uttarakhand has disposed of the Writ Petition observing that the Appellant to approach the NCLT and raised all its contentions. The Ho'ble Supreme Court in its order dated 13.11.2019 has also observed that the petitioner can raise all contentions before the NCLT or in Appellate proceedings. It is submitted that the NCLT thus was obliged to consider the validi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant in support of her submissions has relied on various precedents which we shall notice hereinafter. 5. Counsel for the liquidator refuting the submissions of the Counsel for the Appellant submits that the closure/lockout dated 31.07.2017 happened much before the commencement of the CIRP dated 20.09.2018. The closure/lockout which is unrelated to the insolvency process cannot be adjudicated by the Adjudicating Authority. The Appellant having filed its claim before the liquidator, the same was admitted partly by the liquidator. Claim of an amount of Rs.1,09,70,698.27/- has been admitted. The Adjudicating Authority has rightly held that it shall no jurisdiction to deal with the application filed by the Appellant questioning the closure/lockout dated 31.07.2017. It is submitted that the dispute with respect to closure of the Pant Nagar Plant of the Corporate Debtor could only be raised before appropriate Court/Tribunal in terms of the Uttar Pradesh Industrial Disputes Act, 1947 and not under the purview of the IBC. Counsel for the Respondent has also placed reliance on various precedents which shall be noticed while considering the submissions in detail. 6. Before we enter into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the production of our factory is closed from February 2017 the company and the factory are continuously going in loss. Hence continuing your service the company is transferring you from pant nagar factory to Nagpur factory, which is under Para No.12 of the employment letter issued to you by the company. Hence you are directed that you report in the Nagpur factory by 10 AM morning on 01.07.2017, if you fall to report in the Nagpur factory by 01.07.2017 then it will be deemed that you yourself is not interested in working with the company. Your sincerely SD/- (Ravi Saxena) (Assistant Manager- Human Resource) Address of the Nagpur factory: Shri Bhushan Chauhan (Senior Manager- Human resource) Apex Buildsys Limited D-3 MIDC Industrial Area, Mohapa Road, Umred, District Nagpur Maharashtra-441203 Mobile No.942205608" 9. From the facts brought on the record, it is clear that none of the workmen had reported at Nagpur factory where they were transferred. Notice was given for permanent closure on 31.07.2017 by the corporate debtor which notice has been brought on record as Annexure A-5. Annexure A-5 is as follows:- "ANNEXURE A-5 APEX BUILDSYS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions:- "9. After having heard the learned counsel for the parties, the fact pertaining of the inception of the proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 and its pendency before the National Company Law Tribunal is not disputed by the parties to the writ petition. In such an eventuality, when the question of liquidation and the settlement of liabilities due to be paid by the respondent company under any head of liability, they are to be settled as a consequence of the proceedings, which are pending before the National Company Law Tribunal, thus District magistrate opined that it would be inappropriate for the writ Courts to pass any order so far an action, which has been put to challenge by the petitioner in the present writ petition, as a consequence of the Notice issued on 31.07.2017 expressing thereof their management's and those intention of the closure of the Company and the transfer of the services of the employees/workmen to other places. 10. The proceedings under Section 7 of the Act before the National Company Law Tribunal has got a precedence over the proceedings likely to be held or going on before any other Forum and that is w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the view that it has no jurisdiction to adjudicate on notice dated 31.07.2017. The order dated 08.08.2019 has already been extracted above from which it is clear that the Adjudicating Authority has not taken any decision and has not expressed any view that the Adjudicating Authority has jurisdiction to adjudicate the notice dated 31.07.2017. What is recorded in the order is the statement made by the Resolution Professional. Hence, the order dated 08.08.2019 cannot be read to be determination by the Adjudicating Authority of its jurisdiction to pronounce on the closure notice. 13. Counsel for the Appellant has also placed reliance on the judgment of the High Court of Uttarakhand and the Hon'ble Supreme Court which we shall notice hereinafter to support her submissions that in view of the above orders, it was obligatory for the Adjudicating Authority to consider the challenge raised by the Appellant to the closure notice dated 31.07.2017. We have already extracted the relevant paragraphs of the order dated 27.04.2019 of the High Court of Uttarakhand where High Court noticing the initiation of the CIRP by admitting Section 7 application and noticing the fact that moratorium has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot issue any notice in the Writ Petition but left it open to the petitioner to raise all contentions and issues before the NCLT or an Appellate proceedings. From liberty to raise all contentions and issues are not akin to any direction or adjudication that issue pertaining to challenge to the closure notice has to be undertaken by the NCLT. The above order of the Hon'ble Supreme Court does not in any manner support the submission of the Appellant that NCLT has to adjudicate on the closure notice dated 31.07.2017. We, thus, are of the view that neither of the judgment of the High Court of Uttarakhand or the Judgment of the Hon'ble Supreme Court can be read to mean that after an adjudication, the High Court or the Supreme Court has held hat question of closure of notice dated 31.07.2017 has to be examined and adjudicated by the NCLT. 16. The Hon'ble Supreme Court had occasion to examine the jurisdiction of the NCLAT under Section 60(5) (c) of the IBC in "Gujarat Urja Vikas Nigam Limited vs. Mr. Amkit Gupta & Ors.- Civil Appeal No.9241 of 2019". In paragraph 87 of the judgment, the Hon'ble Supreme Court laid down following : - "87. The residuary jurisdiction of the NCLT under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which order the Resolution Professional and the CoC has filed the Appeals before the Hon'ble Supreme Court. In the above context, the issue of jurisdiction of the NCLT came for consideration. The Hon'ble Supreme Court held that the NCLT would have no jurisdiction to question the decision taken by the Government under MMDR Act 1957. In paragraphs 36 and 45, following has been laid down:- " 36. From a combined reading of Sub-section (4) and Subsection (2) of Section 60 with Section 179, it is clear that none of them hold the key to the question as to whether NCLT would have jurisdiction over a decision taken by the government under the provisions of MMDR Act, 1957 and the Rules issued there-under. The only provision which can probably throw light on this question would be Sub-section (5) of Section 60, as it speaks about the jurisdiction of the NCLT. Clause (c) of Sub-section (5) of Section 60 is very broad in its sweep, in that it speaks about any question of law or fact, arising out of or in relation to insolvency resolution. But a decision taken by the government or a statutory authority in relation to a matter which is in the realm of public law. cannot, by any stretch of ima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... btor. In paragraphs 25 and 26, the Hon'ble Supreme Court has laid down following:- "25. Before the initiation of the CIRP, the appellant had on multiple instances communicated to the Corporate Debtor that there were deficiencies in its services. The Corporate Debtor was put on notice that the penalty and termination clauses of the Facilities Agreement may be invoked. This is evident from the appellant's communications dated 1 August 2018, 17 September 2018, 1 October 2018 and 11 October 2018. In its email dated 13 October 2018 the appellant specifically noted that the housekeeping staff being provided by the Corporate Debtor was inadequate. The appellant was apparently constrained to deploy its own staff for housekeeping, evinced from its email dated 19 November 2018. The Corporate Debtor has admitted that the appellant was using its own housekeeping staff and deducting the costs from the invoice. The appellant again intimated the Corporate Debtor to change faulty batteries of the UPS and provide cleaning products in its email dated 3 February 2019. The termination notice dated 10 June 2019 also clearly lays down the deficiencies in the services of the Corporate Debtor. The t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmission is that the Adjudicating Authority in the impugned order has observed that the claim for period post closure notice dated 31.07.2017 could not be verified by the liquidator as the business operations were suspended which reason was not communicated by the Liquidator and the earlier Resolution Professional informed that the claims post closure are admitted on contingent basis subject to a decision by a Competent Authority. Appellant relying on the judgment of the Hon'ble Supreme Court in "Mohinder Singh Gill and Anr. V. The Chief Election Commissioner, New Delhi and Anr.- (1978) 1 SCC 405" submits that no new reasons can be given by the Statutory Authority to support his decision. There can be no quarrel to the proposition of law laid down by the Hon'ble Supreme Court in "Mohinder Singh Gill". In the present case, the above judgment of the Hon'ble Supreme Court does not render any help to the Appellant. The non-acceptance of the claim by the liquidator was challenged before the Adjudicating Authority and the Adjudicating Authority while deciding the application of the Appellant was fully entitled to give its reason to not accept the claim of the Appellant. There is no dispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .12.2005 fill his joining his post at Bhopal, the appellant is treated to be on leave and the respondents are directed to pass an appropriate order invoking the leave rules applicable in this behalf. It is ordered accordingly." 23. The above case has no application in the present case since transfer order dated 20.06.2017 has never been held to the illegal by any Competent Authority. The case of "Somesh Tiwari" (supra) has no application. 24. Counsel for the Appellant in support of her submission that Section 60(5)(c) of the IBC need to be broadly construed, has also relied on various judgments including judgments of this Tribunal and High Court of Gujarat to support that this Tribunal in several case had decided the issue under Section 60(5)(c). Reliance has been placed on "Mr. Hemant Mehta vs. Asst. Commissioner of State Tax & Ors.- Company Appeal (AT) (Ins.) No.328 of 2022" where the bank accounts of the corporate debtor were frozen and application was filed by the liquidator on which application Adjudicating Authority refused to exercise its residuary jurisdiction. This Tribunal took the view that the Adjudicating Authority ought to have exercised its residuary jurisdiction. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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