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TMI Blog2025 (5) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... habad Bench, Prayagraj), admitting a Section 9 application C.P. (IB) No.280(ALD)/2018 filed by Devi Prasad Respondent No. 1, herein. 2. There is a chequered history of litigation with respect to corporate debtor (hereinafter referred to as JK Jute Mills Company Ltd.). 3. We need to notice certain background facts leading to filing of Section 9 application by Respondent No. 1 against the corporate debtor: i. JK Jute Mills Company Limited having its registered office at Kanpur, Uttar Pradesh filed Reference No. 149/1994 before the Board of Industrial and Financial Reconstruction (BIFR) under the provisions of Sick Industrial Companies (Special Provisions Act) 1985. Though a scheme was initially sanctioned for reconstruction, BIFR, however, subsequently held the scheme to have failed and directed the company to be wound up. ii. Appeal was filed before the appellate authority for Industrial and Financial Reconstruction, which stayed the wind-up order, however, proceeding before the BIFR continued. During pendency of the proceeding, Sarda group took over the company and took over the management. iii. The Draft Representation Scheme before BIFR abated due to repeal of SICA with e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at document submitted in the Draft Rehabilitation Scheme (DRS) by any parties is null and void. xii. The R-1 Devi Prasad sent a demand notice under Form-III dated 29.05.2018, claiming an outstanding amount of Rs.5,24,132/-. xiii. Section 9 application was filed by respondent on which C.P. IB No.280/ALD/2018 was registered, notices were issued, reply was filed by corporate debtor to which rejoinder was filed. xiv. The Civil Appeal filed by JK Jute Mazdoor Morcha, was against the order of this Tribunal dated 12.09.2017, which was passed in appeal against the order dated 28.04.2017, rejecting Section 9 application by JK Jute Mazdoor Morcha. Hon'ble Supreme Court vide its order judgment dated 30.04.2019 has held that application under Section 9 by a Trade Union is maintainable. It was held that Trade Union can be an operational creditor. The order of this Tribunal dismissing the appeal was set aside and matter was remanded to the NCLAT who was to hear the appeal filed by JK Jute Mazdoor Morcha. xv. In the appeal which was filed by JK Jute Mazdoor Morcha and pending in this Tribunal being Comp. App. (AT) (Ins.) No. 82/2017, this Tribunal on 08.08.2019 directed to file an affidav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the appellant have been filed in the intervention application. Resolution Professional (RP) has also filed a reply in the appeal. Affidavit in the rejoinder has been filed by the appellant. 4. We have heard learned sr. counsel, Mr. Abhijeet Sinha appearing for the appellant. Learned Senior counsel, Ms. Malvika Trivedi appearing for R-1. Learned counsel Govind Bhardwaj has appeared for IRP. We have also heard learned counsel appearing for the intervenors. 5. Learned sr. counsel Mr. Abhijit Sinha appearing for the appellant challenging the impugned order dated 19.01.2024, admitting Section 9 application submits that claim made by R-1 is not an operational debt. Counsel for the appellant has relied on the judgment of this Tribunal in the matter of 'Kishore Kamlakar Lonkar' Vs. 'Hindustan Antibiotics Ltd.' in Comp. App. (AT) (Ins.) No.934/2021. It is further submitted that petition filed by R-1 is hit by res judicata. R-1 having already pressed his claim as part of JK Jute Mazdoor Morcha in Comp. App. (AT) (Ins.) No. 82/2019, which has been dismissed by this Tribunal on 17.03.2023, application filed by R-1 was barred by res judicata and adjudicating Authority committed an error ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to compromise worker due and not an admission of debt. The said suit in no manner disputes the claim of gratuity which has been established by award dated 26.02.2024. It was admitted by the corporate debtor before the adjudicating authority that order dated 26.02.2024 was never challenged. Adjudicating authority has rightly held that suit only concern with DRS and operate on different field. Award by Labour Commissioner dated 26.02.2024 has become final and there are no pre-existing disputes between the parties regarding claim of gratuity amount. It is submitted that operational debt has been acknowledged and admitted by the corporate debtor. Learned counsel for the appellant has referred to the order of Delhi High Court dated 06.12.2017 where Writ Petition was disposed of with the consent of the corporate debtor, granting liberty to the workmen to invoke jurisdiction of NCLAT. The Civil Suit seeking to injunct workers was filed on 12.12.2017 and 15.12.2017, after the order of the Delhi High Court. Learned counsel for R-1 further submits that there is no question of applicability of res judicata since the proceeding which was initiated by the JK Jute Mazdoor Ekta Union came to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p, but the fact remains that corporate debtor continue to be the Sick Company till the provisions were repealed. The JK Jute Mazdoor Morcha had filed an application under Section 9 by giving a Section 8 notice on 14.03.2017 on behalf of roughly 3000 workers under Section 8 of the IBC for outstanding dues of the workers. The JK Jute Mazdoor Morcha filed Section 9 application which was dismissed by adjudicating authority on 28.04.2017, against which appeal was also dismissed by this Tribunal, and the matter was taken to the Hon'ble Supreme Court, where judgment dated 30.04.2019 was delivered by the Hon'ble Supreme Court in the matter of 'JK Jute Mills Mazdoor Morcha' Vs. 'Juggilal Kamlapat Jute Mills Company Ltd.' reported in (2019) 11 SCC 332. Hon'ble Supreme Court held that Trade Union is also included within the definition of persons under Section 3(23) and union could also be an operational creditor. Hon'ble Supreme Court set aside the order of this Tribunal and remanded the matter to this Appellate Tribunal for hearing the appeal. In paragraph 17 of the judgment following was held: "17. The Nclat, by the impugned judgment [Mazdoor Morcha v. Juggilal Kamlapat Jute Mills Co. Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntainable and has rightly been dismissed by the Adjudicating Authority." 12. Appellate Tribunal, thus dismissed the appeal filed by JK Jute Mazdoor Morcha as premature. No other issue was decided by this Tribunal against which order of Civil Appeal 3163/2023, was also dismissed by the Hon'ble Supreme Court on 17.05.2023. 13. It is also relevant to notice that in the said appeal being Comp. App. (AT) (Ins.) No. 82 of 2017, an affidavit was filed by Devi Prasad on which much reliance has also been placed by the appellant which shall be considered hereinafter. It was after the dismissal of the said appeal and judgment of the Hon'ble Supreme Court that Section 9 application filed by the R-1 came to be admitted on 19.01.2024. Adjudicating authority in the impugned order has framed three issues for consideration in paragraph 13, which are as follows: "13. We have perused the materials submitted on record and heard the Ld. Counsels for both the parties. The operational Creditor has sought initiation of CIRP against the Corporate Debtor based on the dues mentioned in Part-IV of the this Application which are :- Gratuity, 10% Wages Deduction as per MoU of 1995 and 1999 from 1996 to 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e final and was never questioned by the corporate debtor, which fact has been recorded by the adjudicating authority in the impugned order. In paragraph 22 of the order, following has been observed: "22. It may be noted that the minimum amount of default as has been prescribed under Section 4 of the Code has a purpose and object. The object is that unless there is a minimum amount of default, no person should be permitted to initiate CIRP. The threshold limit for initiating CIRP in this case is in terms of the order dated 26.02.2014 passed by the Asst. Labour Commissioner which is decretal amount of Rs. 70,700 along with interest @8% p.a. till date of filing application before the Asst. Labour Commissioner i.e. 24.01.2013. The total decretal amount is 1,23,725. This decretal amount is adjudicated by the Labour Court as a legally payable claim crystallized and payable in law, the same would constitute a 'debt' which remained unpaid by the Corporate Debtor. The decretal amount awarded by the Civil Court, Kanpur Nagar in respect of gratuity along with 8% till the date of filing of Petition which constitutes a sum of Rs. 1,23,725 is above the threshold limit of Rs. 1.0 Lakh as specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the gratuity fund or any other fund for the welfare of the workmen is maintained by the company is specifically included in workman dues. 20. Learned counsel for the appellant has relied on the judgment of this Tribunal in 'Kishore K. Lonkar' Vs. 'Hindustan Antibiotics Ltd.' reported in 2022 SCC OnLine SC NCLAT 287 to submit that this Tribunal held that welfare dues do not constitute and cannot be treated to be service benefits due and payable. When we look into the above judgment of this Tribunal in the above case, the principal amount of gratuity was already paid to the employee which has been noticed in paragraph 5 of the judgment, which is as follows: "5. Learned Sr. Counsel Mr. D. Ray Choudhuri argued that as per Section 14 of the Payment of Gratuity Act, 1972, the Gratuity disputes would be decided by the Regional Labour Commissioner. It is submitted that the Appellant had approached the Commissioner and obtained an Order for payment of Gratuity. On 17/02/2022, the principal amount of the Gratuity was already paid to the Appellant and the question of whether interest is to be paid or not, is to be decided by the Regional Labour Commissioner and that this Tribunal doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claims' which arise after cessation of employment, like 'Gratuity', 'Leave Encashment', Superannuation Dues, Workmen Compensation for closure of the entity which all depend on the tenure of the employment. Subsequent to the Company going into the Insolvency, all such claims may be submitted in Form D under Regulation 9 of the (Insolvency and Bankruptcy) CIRP Regulations, 2016. But seeking to initiate CIRP on the ground that 'LTC' and 'EL Encashment' has not been paid, which fall within the ambit of service benefits/welfare benefits cannot be said to be the intent and objective of the Code. 10. We are also conscious of the fact that the Principal Gratuity amount was paid to the Appellant on 17/02/2022 and deciding the question of interest is not within the domain of IBC. Hence, this Tribunal is of the considered view that there is no illegality or infirmity in the well-considered Order of the Adjudicating Authority. Therefore, this Appeal fails and is accordingly dismissed. No Order as to costs." 22. The above judgment is clearly distinguishable from the facts of the present case. We, thus are of the view that claim of gratuity with interest was fully included in operational de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed that should not be treated any admission of the claim against the company or management. The said suit cannot constitute any pre-existing dispute with regard to claim of the workmen. The next suit which has been relied by the appellant is Suit No. 2506/2017. The date of filing of the said suit is relevant which is 15.12.2017, why the said date is relevant is noticed hereinafter. 25. We have noticed above that the JK Jute Mazdoor Morcha has filed the Writ Petition in the Delhi High Court being Writ Petition 440/2017, which Writ Petition was filed by JK Jute Mazdoor Morcha after their application under Section 9, was rejected on 28.03.2017. In the said Writ Petition, Delhi High Court directed by interim order 26.05.2017 to preserve an amount of Rs.2.5 crore by the company to take over the dues of the workmen. The Writ Petition came to be finally decided on 06.12.2017, where learned counsel for the company (corporate debtor) has submitted and both the counsels have agreed that workmen of JK Jute Mill could be operational creditor and they are entitled to invoke jurisdiction of NCLT under Sections 6, 8 & 9. It is useful to notice paragraphs 3 & 7 of the judgment which is as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dues is mala fide on part of the company/corporate debtor and cannot be termed to be raising a dispute regarding the claim. There is one more reason due to which the plea of pre-existing dispute raised by the appellant has to be rejected. 28. We have noticed that JK Jute Mazdoor Ekta Union has filed Section 9 application after giving a notice under Section 8, which application was for claiming outstanding dues of 3000 workers. Notice under Section 8 before filing the Section 9 application by JK Jute Mazdoor Ekta Union was given on 14.03.2017, which has been noticed by the Hon'ble Supreme Court in its judgment of JK Jute Mazdoor Morcha. It is useful to notice paragraph 2 of the judgment, which is as follows: "2. On 14-3-2017, the appellant issued a demand notice on behalf of roughly 3000 workers under Section 8 of the Code for outstanding dues of workers. This was replied to by Respondent 1 on 31-3-2017. The National Company Law Tribunal ("NCLT"), on 28-4- 2017 [Mazdoor Morcha v. Juggilal Kamlapat Jute Mills Co. Ltd., 2017 SCC OnLine NCLT 1317], after describing all the antecedent facts including suits that have been filed by Respondent 1 and referring to pending writ petitions i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and he authorises JK Jute Mazdoor Morcha to represent his case. We have noticed the judgment of this Tribunal in JK Jute Mazdoor Morcha. Judgment of this Tribunal dated 17.03.2023, where this Tribunal dismissed the appeal filed by JK Jute Mazdoor Morcha holding that application filed under Section 9 by JK Jute Mazdoor Morcha was premature since it was filed within 10 days from delivery of demand notice. Date of delivery was held on 21.03.2017 and petition was filed on 28.03.2017, hence it was held as premature. The order passed by the adjudicating authority rejecting Section 9 application by JK Jute Mazdoor Morcha shall be merged with order dated 17.03.2023 of this Tribunal, where the only finding returned was that the application was premature. The said order was also affirmed by the Hon'ble Supreme Court on 17.05.2023. In the appeal, no such issue was decided on basis of which the appellant can contend that claim of R-1 is barred by res judicata. We, thus reject the submission of the appellant that claim of the R- 1 was barred by res judicata. 32. The facts have been noticed above that JK Jute Mills is closed from March 2014. The company was under the SICA from 1994 to 25.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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