A Bench of Justices MR Shah and Aniruddha Bose stated that under Sections 53 and 5 of the IBC, such pay is to be given precedence over other debts provided the employees have actually worked and the corporate debtor was being run as a going concern by the Resolution Professional.
The matter involved 273 employees of ABG Shipyard Ltd, and the instant respondent is the liquidator of the firm.
The question of law as framed by the Supreme Court in this case, at the stage of issuing notice, was whether:
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Dues payable to employees even for the period when they were working under the CIRP are to be treated as costs of running the business by the Interim Resolution Professional as payable in terms of Section 5(13) of the IBC, or
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They are to be treated as wages and any unpaid dues owed to employees are payable under Section 53 of the IBC
[More details awaited]
Source: Barandbench
