Env Coord (.) 22 July 2015

Money recovery suit against a sick company

Dear Experts,

Kindly resolve my query.

I was working in a manufacturing company as a mid-level executive.I resigned from the company in June,2014. When I left the company(resigned by giving 3-months advance notice),as it was under serious financial debt due which it was defaulting on payment of salaries.The company paid me Gratuity in Decemeber,2014 but didn't pay my six months outstanding salary & 9 months Travel Reimbursement.
The company is having Registered office in Mumbai. I am planning to file a summary suit under Order 37 of C.P.C. for recovery of my outstanding amount of Rs.10 Lacs(approx.).

Furthermore,a month ago (i.e.) in June,2015 the Company filed a reference with the Board for Industrial & Financial Restructuring (BIFR) under provisions of the Sick Industrial Companies Act (SICA).
The Companyhas filed a reference stating that the Net Worth of the compnay as on March 31, 2015 as per Audited Accounts has been eroded fully, hence as per definition under section 3(1)(0) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) the Company has become a Sick industrial Company.
The Company's reference has been permitted and registered by BIFR under sections of SICA.

My Query :
1. Can I institute a summary suit under Order 37 of C.P.C. for recovery of my dues even after a reference has been filed by the company under SICA with Board for Industrial & Financial Restructuring (BIFR)?

2. Is it true that if a refernece has been filed by a Company with BIFR,then no lawsuit can be filled against the company by any of its Creditors ?

Awaiting your advice.

Aggreived Ex-Employee of a Sick Company.
Ajay Anil Dey.

Reply Follow

3 Replies

Kumar Doab (FIN) 22 July 2015

"28............................that a proceeding for recovery shall lie against a sick company but an order made in it could not be executed against any of the properties of the industrial company, the effect being that the proceedings may continue without any

consequence. Thus there cannot be any execution or

distraint against the properties of the company but

creditors may continue to apply for recovery "

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 5225

OF 2008

KSL & INDUSTRIES LTD.

.... APPELLANT

VERSUS

M/S ARIHANT THREADS LTD. & ORS.

.... RESPONDENTS

https://judis.nic.in/supremecourt/imgs1.aspx?filename=42040

Provide full facts of all communications and actions that you have taken to an able counsel handling Company Law cases/Labor-Service matters and your counsel may opine that there is a strategy or a way out for you.

The counsel that has examined all docs and inputs can advice you the best.

Env Coord (.) 23 July 2015

@Kumar Doab : Many thanks for your reply.

Going through your reply above to my query,does it mean that the ex-Employee can still institute a Lawsuit against his ex-Employer but its not sure when he will get his money ? Is it so ?

What are the alternative remedies available to an ex-Employee ?

Kindly advice.

Kumar Doab (FIN) 23 July 2015

Your previous query has been replied.

It has already been suggested that you may provide full facts of all communications and actions that you have taken to an able counsel handling Company Law cases/Labor-Service matters and your counsel may opine that there is a strategy or a way out for you. The counsel that has examined all docs and inputs can advice you the best.

It is felt that you should join the list of creditors, on record.

You may also go thru:

https://www.lawyersclubindia.com/forum/Company-in-liquidation-77247.asp#.VbCxFrV-jMo

and understand: “stacking order of priorities in secured lending”………………and go thru the attached judgments.

You can pick up the relevant points.

If the employer does not make the promised payouts on promised/due dates e.g; salary/reimbursements then it has breached the T&C of contract of employment drafted by it and signed with employee………………….and in such cases the notice period should lose its sanctity.

Before the company did not manage the audit of its accounts to declare that it has NO net worth, you could have:

Filed civil suit for recovery

Winding up petition as unpaid promised dues are debt on employer

Filed complaint u/s 406,420…………

If as per your hunch the audit is stage mentioned and company and its promoters have net worth you can object.

Some employees by their position and proximity attain access and handle on employer.

If you have such handle apply it and let the owners pay thru their own resources.

In Maharashtra the Dept. of Labor has option of PAMS for employees that are not workman. Try if it can help you.

It is reiterated that the response in this thread is first hand feel from limited information that is available and limited understanding and ‘you may provide full facts of all communications and actions that you have taken to an able counsel handling Company Law cases/Labor-Service matters and your counsel may opine that there is a strategy or a way out for you.

The counsel that has examined all docs and inputs can advice you the best.’