Employees Can't Be Paid Gratuity Dues In Addition To Payouts Allocated To Them In Resolution Plan: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) has held that the employees of the corporate debtor cannot be paid gratuity dues in addition to the proposed payouts allocated to them in the Resolution Plan when it is clearly provided in the Resolution Plan. The present appeal has been filed by the Appellants on behalf of employees of the corporate debtor against an order by which the Resolution Plan was approved. The Appellant submitted that email dated 24.04.2025 sent by the RP is not in conformity with the payouts as provided in the Plan. It was further argued that now the gratuity dues are sought to be paid by the RP out of the amount of Rs.6,30,10,916/-, whereas payment of gratuity dues were in addition to the aforesaid payout. The payout proposed to the employees is not in accordance with the Resolution Plan. Per contra, the Respondent submitted that there was no separate amount earmarked for payment of gratuity apart from Rs.6,30,10,916/-. It is submitted that email sent by the RP is in accordance with the Resolution Plan. The Tribunal noted that if any additional amount becomes payable to the employees such provident funds, pension funds and gratuities, such payments shall be paid out of the SFC payment amount as per the judgment of the Supreme Court. After referring to the relevant clause of the Resolution Plan, It observed that there is no dispute as to the admission and payment of provident fund dues. The unpaid gratuity dues must be paid out of the payouts allocated to the employees in the Resolution Plan. The Resolution Plan does not provide for the payment beyond this amount as argued by the Appellant. The Tribunal observed that the employees had filed the claims but the Resolution Plan had proposed only 10% of the admitted claims. Clauses of the Resolution Plan cannot be understood to mean that the gratuity dues are payable in addition to the admitted claims. The gratuity dues are included in this amount. Clause 13 further provides that in case of any additional payment to be made to the employees such as gratuity funds, pension funds etc. in pursuance of the court's orders, such payment shall be made out of the SFC payment. It held that the email of the RP also confirmed that the gratuity dues must be paid from the proposed payouts. Accordingly, the present appeal was dismissed as no inconsistency was found in the approval of the Resolution Plan. Case Title: Jadeja Ravirajsinh Juvansinh Versus Nuvoco Vistas Corporation Ltd. & Ors Case Number: Company Appeal (AT) (Insolvency) No.733 of 2025 Judgment Date: 21/08/2025 Click Here To Read/Download Order

Employees Can't Be Paid Gratuity Dues In Addition To Payouts Allocated To Them In Resolution Plan: NCLAT

Mohd Malik Chauhan

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Employees Can't Be Paid Gratuity Dues In Addition To Payouts Allocated To Them In Resolution Plan: NCLAT

Mohd Malik Chauhan

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Mohd Malik Chauhan

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