Insolvency cannot be initiated on the basis of unpaid LTC & Leave encashment dues: NCLAT
NCLAT judgement in Company Appeal (AT)(Insolvency) no. 934 / 2021 has made some important observations as to the scope of insolvency proceedings. It has held that the welfare claims such as Leave Encashment, superannuation dues are not operational debt for the purpose of initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor under Section 9 of the IB, 2016.
In this case, Appellant who was an ex-employee of the Corporate Debtor filed the appeal under Section 61 of the Code before NCLAT against the order dated 06.09.2021 passed by NCLT Mumbai wherein the Petition filed by the Appellant under Section 9 of the Code against the Corporate Debtor was dismissed.
The copy of the order is as under: