Case Note & Summary
The appeal arose from an order dated 07.07.2020, where the Adjudicating Authority allowed an application by certain ex-employees of Maharashtra Seamless Limited for payment of salaries post the completion of the Corporate Insolvency Resolution Process (CIRP). The appellant, Maharashtra Seamless Limited, challenged this order, arguing that the Adjudicating Authority had become functus officio after the approval of the resolution plan on 21.01.2019, and that the respondents lacked the authority to represent other employees without proper authorization. The Tribunal noted that the respondents had not appeared despite being served notice. The Adjudicating Authority's reasoning was based on the premise that the successful resolution applicant could not evade responsibility for employee-related disputes. However, the Tribunal disagreed with this reasoning, emphasizing that once the CIRP was resolved, the Adjudicating Authority could not entertain matters outside the approved resolution plan. The Tribunal allowed the appeal, set aside the Adjudicating Authority's order, and directed the respondents to seek their claims in an appropriate forum. No costs were awarded.
Headnote
A) Insolvency Law - Jurisdiction Post-Resolution - Functus Officio Principle - Insolvency and Bankruptcy Code, 2016, Section 31 - The Tribunal held that once a Corporate Insolvency Resolution Process (CIRP) is successfully resolved, the Adjudicating Authority becomes functus officio regarding matters not covered by the approved resolution plan. The appeal was allowed as the respondents were directed to seek remedy in an appropriate forum for their salary claims (Paras 5-6).
Issue of Consideration
Whether the Adjudicating Authority had jurisdiction to allow salary claims after the resolution plan was approved.
Final Decision
The appeal was allowed, and the order of the Adjudicating Authority dated 07.07.2020 in IA No. 325 of 2020 was set aside. The respondents were directed to seek remedy in an appropriate forum for their salary claims. No costs were awarded.
Law Points
- CIRP completion
- functus officio
- authority to represent
- approved resolution plan
