Intended termination of employee during cirp
Querist :
Anonymous
(Querist) 26 May 2020
This query is : Resolved
Dear Sir,
Facts: Company is under CIRP ( Corporate Insolvency resolution process)
RP is appointed
Current status : Negotiations with promoters for settlement.
Salary of Post CIRP is pending
RP has expressed his view regarding termination without payment of dues in this COVID period.
Employee who have earlier filed a case for payment of salary is pending before NCLT and they have again moved a fresh application to stay the termination till the settlement process under inherent power of NCLT.
Query : Is there any specific provision in which NCLT can direct to stay the termination or may say to pay the dues before termination.
Any judgment to support the case of employee
P. Venu
(Expert) 27 May 2020
What do you mean by "RP has expressed his view............."?
Rajendra K Goyal
(Expert) 27 May 2020
Hon’ble NCLAT passed in appeal No.290/2017 in the matter of Subasri Realty, wherein Hon’ble NCLAT has held that “ the appointment of RP does not amount to a suspension of officers, employees, etc and they continue to function. If RP wishes to terminate the contract of employment of any of employees, the same ought to be done by the contract of employment.
Accordingly, RP is required to give notice as per the letter of appointment, and in case of immediate termination of employment, RP is required to pay the said notice period pay. By not doing the same, RP has violated/contravened the provisions of the Contract Act, which is illegal”.
The above ruling was relied in the case of Edelweiss Asset Reconstruction Co. Ltd Vs Birla Cotsyn (India) Ltd. (C.P. No.(IB)579(MB)/2018, MA 1098/2018)
