NCLT Mumbai Dismisses Workmen's Belated Wage Claims Against IL&FS, Cites Moratorium

The National Company Law Tribunal (NCLT) at Mumbai has dismissed an application filed by S.A. Azad, the authorised representative of 31 workmen, seeking admission of wage claims against Infrastructure Leasing and Financial Services Ltd. (IL&FS).

The tribunal dismissed the application on the grounds that the claims were barred by the 2018 moratorium and filed beyond the extended timelines, while also noting that the workmen were not directly employees of IL&FS.

Rejecting the plea, the tribunal also observed, "Nevertheless, the Applicants were not employed by IL&FS and were in fact employed by one of the independent sub-contractors engaged by Respondent's Subsidiary Company, which is also covered under the Resolution frame work. Further, the Applicant had filed its claim well beyond two years after the extended timelines for submissions of those claims. Hence, we do not find any infirmity in the decision rejecting the claim"

A coram of Judicial Member Sushil Mahadeorao Kochey and Technical Member Prabhat Kumar dismissed the application, which had sought condonation of delay and directions to admit claims of Rs. 17.94 lakh towards unpaid wages and compensation.

Proceedings against IL&FS under Sections 241 and 242 of the Companies Act were initiated before the tribunal on October 1, 2018, on a petition filed by the Union of India. Although the proceedings arose under these provisions, the moratorium was imposed pursuant to orders passed by the National Company Law Appellate Tribunal on October 15, 2018, staying all proceedings against IL&FS and its group entities.

Pursuant to those orders, a comprehensive moratorium came into force against IL&FS and its 348 group companies. The tribunal held that proceedings initiated by the workmen under the Payment of Wages Act, 1936, and the orders passed in 2023 were unenforceable due to the moratorium.

It also noted that the workmen were engaged through an independent contractor appointed by IL&FS Engineering and Construction Company Ltd., a subsidiary of IL&FS, and not employed directly by IL&FS, and therefore could not pursue claims against the company.