Can Workers Still Claim Dues in Labour Court After a Company Closure?

A mill of National Textile Corporation Ltd. had become sick later on. It was wound up under the orders of B.I.F.R. Can a workman file a case before the Labour Court to realize his dues, etc.? Can a case of termination continue before the Labour Court in view of the provisions of the Sick Industrial Undertakings Act?

It will involve a long battle with the authorities. You will have to approach BIFR and the liquidator appointed by it, if any.

Company Winding Up and Worker Rights

Firstly, if the company has been wound up, nothing more can be done unless cases were filed against an individual for fraudulent activity.

Insolvency and Bankruptcy Code

Secondly, now the SICA has been replaced with the Insolvency and Bankruptcy Code, under which worker rights are given priority over government dues and even in some cases bank dues. The BIFR no longer has a role to play.

Seeking Help from IBC Professionals

If the company has not yet been wound up, you can seek the help of an IBC professional to file a complaint with the NCLT (previously known as the Company Law Board) for your rights. However, this is also an expensive proposition as none of the professionals will work for free.

Dear Neeta Mathur, learned members have provided the latest position regarding industrial units that have become 'sick'. In your case, NTC has various mills all over India, but the status of your unit is not mentioned here. It is not stated whether the High Court (HC) has issued any orders for closure, revival, or rehabilitation. If the case is pending before your state's HC, you can file any claims with the same HC. The HC will review your claims and may give priority over other creditors when liquidation occurs (if a Liquidator is appointed to distribute assets and proceeds among creditors). If a rehabilitation scheme is being considered, the Nodal agency, if appointed, should include your dues as part of the revival cost. This all depends on the legal status of your company. I have attached a Supreme Court judgment from 2003 regarding a case involving NTC and employees' claims. I am not certain if this judgment will be helpful to you, but please consider the legal position.

Thank you.