Termination of employee during cirp

This query is : Resolved 
 


Querist : Anonymous (Querist)
22 May 2020

Dear sir,
Facts : The company is under Insolvency proceedings (CIRP) as per the order of insolvency.
At Present the affairs of Company is being run by Resolution Professional.
Current Status : Settlement between Promoters and Financial Creditors is undergoing and there is likelihood for settlement.
Employees has filed IA before NCLT for the payment of outstanding salary for both Pre CIRP and Post CIRP process.
The matter is pending before NCLT and on the last date of hearing NCLT has directed to pay salaries of employees on priority from available funds.
Now RP has communicated during COVID-19 that he intends to terminate employee by paying half of the pending salary of POST CIRP period and the remaining will be paid post settlement with the promoters or upon liquidation as the case may be

Question: Can RP terminate the employment during this period when the matter for payment of salary is pending before NCLT.
What is legal defence the employee have against this intended termination ie without the payment of complete dues.
What stand we need to take for filing appropriate application before NCLT against this intended termination b
while the settlement process is on


N.J.S.Rajkumar alias narasimha (Expert)
23 May 2020

When the Company is already under Insolvency Proceedings it is better accept what is being Legally paid by them . The Case at NCLT filed by employees could be easily defended by them by mentioning the Court Orders in the relevant matter. Still you could clarify your doubt with Local Good Senior Advocate please.

Dr J C Vashista (Expert)
23 May 2020

NCLT has already disposed the IA moved by employees, directing the RP to make full payment of employees, irrespective of the fact that IP has been deferred due to lockdown on account of COVID-19.
Gorvernment has made it amply clear through various circulars that services of employees shall not be terminated due to COVID-19 circumstances.
Seek guidance of your counsel for further proceeding.

N.J.S.Rajkumar alias narasimha (Expert)
23 May 2020

Refer the Case of Binny Ltd. Which was one of the Best Textiles Company in India till 1980. Then the Company was shut down due to similar reasons . The Employees who had accepted the settlement were safe and few Employees who filed a Suit are still running after though it is more than 30 years of the dispute and sorry to say many of both the sides had even passed away. Make an wise, Safe and positive decision. Discuss with your Local Good Advocate

N.J.S.Rajkumar alias narasimha (Expert)
23 May 2020

Mr.J.C.Vashista you should read the full sentence of the Querist. " NCLT had directed to pay the salary to the Employees On Priority from available Funds ". This is not an specific Order and the Order is Subject to. Subject to available Funds but what is the available Funds not mentioned or not clear.. And in what basis the Priority of Employees to be made out even that is not Clear. Other Side Good Advocate would easily defend. Is it Clear Mr.J.C./Vashista. Mr J.C.Vashista still you have not made any reply to the query of completing a Law Degree while in Army Service as stated by you in your Profile Please.

Rajendra K Goyal (Expert)
23 May 2020

You said:
Can RP terminate the employment during this period when the matter for payment of salary is pending before NCLT.

Reply:
Yes, subject to appointment terms / orders from competent authority.

You said:
What is legal defence the employee have against this intended termination ie without the payment of complete dues.

Reply:
Can approach NCLT.

Rajendra K Goyal (Expert)
23 May 2020

You said:
What stand we need to take for filing appropriate application before NCLT against this intended termination b while the settlement process is on

Reply:

Show all related document to your lawyer approaching NCLT.


Raj Kumar Makkad (Expert)
23 May 2020

1. Can terminate as the issue of the payment is not related with the issue of termination. The complainace of the order is to be made by PR.

2. They can only claim for their dues and further entitlemet arising out of the action of termination but the pendancy of the ordered amount cannot become a defence for the proposed action of company to terminate the services of its employees.

3. It shall be better to have definite opinion of your lawyer already defending your case before NCLT as defence depends upon various facts which are documentary in yur case and those documents are with your lawyer so no comment on this point.

P. Venu (Expert)
24 May 2020

In my understanding, it would be in the best interests of the employees if they accept the payments, as offered and bring the matter to the notice of the NCLT, as suggested by learned expert Mr. Raj Kumar.



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