Autokast Retired Employees welfare (AREWU) & Ors. vs M/s. Autokast Limited

The petitioner has filed this application under Section 9 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as IB Code) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as Adjudicating Authority Rules, 2016) for initiation of Corporate Insolvency process against the Corporate Debtor, Autokast Limited.

The petitioners/operational creditors herein are an association of retired employees who were workmen/employees of the corporate debtor. The retired Employees welfare unit (AREWU) having Registration NO.ALP/TC/360/2011 filed this petition. The petitioners stated that AREWU is a registered entity of workmen. The corporate debtor is majorly involved into manufacturing of Metals, chemicals and other products. The operational creditors were employed with corporate debtor and corporate debtor allegedly defaulted in paying their retirement dues. The total amount due is Rs.1,88,44,013/- In spite of repeated requests the respondent did not clear the dues. The petitioners collectively sent demand notice demanding payment but the respondent sent reply notice with false allegations hence the petitioners filed this petition.

The present petition filed under section 9 of IBC 2016 is not maintainable. The petition is signed and verified by Mr. P. Umesh who claims to be the Secretary of a Body called as ' Autokast Employees Welfare Union’. At the outset it is submitted that the body named AREWU is not a corporate entity and it is not a registered society. It is not authorized to represent the interest of the other persons shown in the present application. Autokast Limited does not owe any debt to AREWU nor is any debt assigned or transferred to them. Under Section 9 of IBC 2016 petition has to be filed by the Operational Creditor individually. Therefore, even on that count, the present petition is not maintainable. The amounts claimed by the Operational Creditors individually is far less than Rs.1.00 crore. Therefore, the present petition is not maintainable as it falls in short of the minimum threshold of default fixed by the Central Government vide S.O. 1205 E dated 24.3.2020. The demand notice issued in the present case is not in the proper form and does not contain the relevant particulars. The application under Section 9 is also not in a proper form. Therefore, the application under Section 9 is not complete and it is liable to be rejected. The claim made for payment of gratuity is not maintainable. There is a specific provision in the Payment of Gratuity Act for determination and realization of amounts due under the Act. The computation of interest is also, not in accordance with the provisions of law. The present claim is also time barred and the same cannot be classified as Operational Debt. It is also submitted that the amounts claimed to be due would not fall within the definition of Operational Debt. The claimants, in the present case, tend to make use of the provisions of Section 9 of the IBC as a money recovery mechanism and as such the present petition is not maintainable.

Whether the 1^st petitioner AREWU is a juristic “person” as defined under IBC 2016?

Whether the petition is filed in a representative capacity?

Whether the alleged default amount is an operational debt?

Whether the petition filed as such is maintainable?

The petition is filed by Autokast Retired Employees Welfare Unit (AREWU) by its secretary P. Umesan, ranked as 1^st petitioner and 21 others ranked as petitioners 2 to 22. Even though 21 petitioners are arrayed as petitioners 2 to 22 they have not signed the petition and verified the petition. The 1^st petitioner alone signed the petition and verified the petition; hence it is construed that this petition is filed by the 1^st petitioner alone.

On the petitioner side the legal status of the petitioner AREWU is not explained anywhere in the petition, only in part II of the application Registration Number is furnished as ALP/TC/360/2021. On the respondent side in para 4 of reply it is stated that the petitioner is an unregistered society. This statement is not refuted by the petitioner, further on the petitioner side no document such as registration certificate is produced to prove that the 1^st petitioner is a juristic person.

In section 3(23)(g) of IBC 2016 the “Person” is defined as “any other entity established under statue and includes a person resident outside India”. In this case on the petitioner side not produced a registration certificate to establish that 1^st petitioner is a creation of any statue. On the petitioner side relies upon the Apex court Judgment JK Jute Mill Morcha vs Juggilal Kamlapat Jute Mills, no doubt there the Apex court held that Trade union registered under the Trade union Act 1926 is a person as defined under Section 3(23) of IBC 2016 and held that the trade union represents its members who are workers, for them the Trade union can file the petition as an operational creditor in respect of dues owed by the employer to the workers for the services rendered. There is no pale of controversy that any juristic person created under the statue can file the petition under section 9 of IBC 2016 on behalf of its members. In this case on the petitioner side failed to establish that the 1^st petitioner is a person established under the statue as such the 1^st petitioner is not a person as defined under code. Thus, this point is answered.

The petitioners 2 to 22 are simply arrayed as petitioners but they have not signed and verified the petition. They also not authorised any one of the persons to sue on their behalf. Rule 6 read with form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 Note, runs as follows:

From the above Rule it is made clear that one workman can file the petition for himself and also on behalf of other workmen after obtaining authorisation from other workmen. In this case as stated earlier workmen/employees’ names are only arrayed as petitioner 2 to 22 but they have not signed the petition and there is no authorisation in favour of any of the petitioner to represent others, in these circumstances it is answered that this petition is not filed in a representative capacity.

This petition is filed in respect of retirement benefits due of the petitioners payable by the respondent. In the petition it is captioned as retirement benefit/outstanding arrears of pay etc. The claims of workmen are classified as “service claim” and “welfare claims”. The service is considered as operational debt but the welfare claim does not consider as operational debt. This position is explained by Hon ‘ble NCLAT in Kishore K Lonkar Hindustan Antibiotics Ltd. company Appeal (AT)(Insolvency)No.934 of 2021 on 10.05.2022 as follows:

In this petition it is not separately mentioned what is the quantum of “service claim” and “welfare claim” in the absence of any material in this regard the due amount of petitioner cannot be considered as an operational debt. Thus, this point is answered.

Further the date of retirement of petitioners are described as default date in this regard in respect of petitioners 3 to 5 8, 9,16 and 17 their retirement dates/default dates are furnished as follows:

The default period for these petitioners falls between 25.03.2020 and 24.03.2021 hence in view of specific bar provided in first proviso to section 10A of IBC 2016 no petition under section 7,9 & 10 IBC are maintainable. In this petition section 8 statutory notices were sent individually by the petitioners in their individual capacity. As discussed supra the petition is not filed by the juristic person on behalf of its constituent members and also not filed in a representative capacity as workmen, in such a situation the individual’s due amount cannot be joint together to reach the threshold amount for filing petition as such the petition is not maintainable.

In these circumstances and in view of answers arrived to the points it is concluded that the petition is liable to be dismissed.

In the result petition is DISMISSED. No cost.

The Registry is directed to send e-mail copies of the order forthwith to all the parties and their Ld. Counsel for information and for taking necessary steps.

Certified Copy of this order may be issued, if applied for, upon compliance of all requisite formalities.