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

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

Introduction

The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, has held that employees of a corporate debtor cannot claim gratuity dues in addition to the payouts already allocated to them under an approved Resolution Plan. Once a Resolution Plan clearly provides for employee claims, no further separate allocation for gratuity can be made.

Factual Background

The appellants, representing employees of the corporate debtor, challenged the approval of the Resolution Plan on the ground that gratuity dues were being adjusted within the allocated payout of ₹6,30,10,916, instead of being paid separately. They argued that gratuity payments were over and above the payout provided in the Resolution Plan.

Procedural Background

The NCLAT considered the approved Resolution Plan, the Resolution Professional’s (RP) email dated 24.04.2025, and the appellants’ objections regarding employee dues.

Contentions of the Parties

• Appellants’ Contention: The appellants argued that gratuity dues should be paid in addition to the allocated employee payouts. The RP’s email, according to them, contradicted the Plan.
• Respondents’ Contention: The respondents contended that no separate amount was earmarked for gratuity. The RP’s communication was consistent with the Resolution Plan, which included gratuity dues within the employee allocation.

Issues

1. Whether employees can claim gratuity dues in addition to the payouts provided in the Resolution Plan?

2. Whether the Resolution Plan envisages gratuity dues as a separate liability beyond the admitted employee claims?

Reasoning and Analysis

The Bench of Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member) held:

• The Resolution Plan proposed payment of only 10% of admitted employee claims. Gratuity dues were already included within this amount.
• Clause 13 of the Resolution Plan clarifies that if additional statutory dues (like gratuity, pension, provident fund) become payable pursuant to a Court’s order, they must be satisfied out of the SFC payment—not as an additional liability.
• Thus, gratuity cannot be claimed as a separate entitlement outside the approved payout.

Outcome

The NCLAT:

• Dismissed the appeal, finding no inconsistency in the RP’s communication or the approved Resolution Plan.
• Confirmed that gratuity dues must be adjusted from the allocated payouts, not paid additionally.

Implications

This ruling underscores that Resolution Plans are binding in their entirety and that employees cannot demand separate payment of gratuity once their claims are subsumed within the Plan. It also highlights the importance of clarity in drafting Resolution Plans regarding treatment of statutory dues.

In this case the appellant was represented by Ms. Anju Jain and Mr. Hitesh Sachar, Advocates.