The National Company Law Tribunal (NCLT), Principal Bench, passed an impugned order on 30/07/2020, seeking reply within ten days from the Monitoring Committee of Bhushan Power & Steel Limited (BPSL) concerning retirement policy under Section 7 of Insolvency and Bankruptcy Code, 2016, which was issued to hundreds of employees last month. The Corporate insolvency resolution process of BPSL commenced in 2017, before NCLT, New Delhi.
Brief Facts of the Case
In July 2020, the Monitoring Committee wanted to put in place a Retirement Policy according to which all BPSL employees who are older than 60 years must retire with effect from 31, 2020. The validity of Retirement Policy, challenged before the National Company Law Tribunal (NCLT), by Madan Kumar Goel, currently working as the Deputy General Manager, Indirect Taxation. He argued before NCLT, challenging that BPSL had no power or authority to plan the policy once the Resolution got approved.
Arguments before the Court
The Petitioner argued that the Monitoring Committee has no right to take policy decisions until before new management takes the decision. The Petitioner asked for invalidation of policy, asking for the stay of the operation.
The Respondent submitted that policy is valid, as the new board had already been in place since February 2020.Furthermore, The Respondent submitted that no action took against the Petitioner until further order or until a decision by a Board, whichever is earlier.
Analysis
Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) provides for a statutory right in favour of a financial credit to initiate the corporate insolvency resolution process of a corporate debtor on the occurrence of a default.
The implementation of the Resolution Plan is being monitored by the Monitoring Committee, which includes the erstwhile Resolution Professional and a Steering Committee comprising three largest financial creditors.
The corporate insolvency resolution process concerning BPSL was commenced in 2017 before NCLT, New Delhi. In September last year, the Tribunal approved the Resolution Plan in favour of JSW Steel Limited, in Punjab National Bank v Bhushan Power and Steel Limited 223(IBC) 16/2018.
Court’s Decision
Based on the aforesaid facts, The National Company Law Tribunal (NCLT), Principal Bench, dismissed the submission by the Respondent. However, the NCLT agreed with the arguments given by the Petitioner about invalidation of policy, accordingly directed the Monitoring Committee to file a reply within ten days hereof and rejoinder, if any, within 15 days hereof.
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