Supreme Court: The Division Bench of J.B. Pardiwala and K.V. Viswanathan, JJ., issued notice to the respondents, returnable in four weeks, in a civil appeal raising following two significant questions of law:
-
whether the Insolvency and Bankruptcy Code, 2016 (‘IBC’) overrides the provisions of the Industrial Disputes Act, 1947 (‘ID Act’).
-
whether a Resolution Professional (‘RP’) could lawfully retrench employees under the guise of a lay-off during the corporate insolvency resolution process.
The present appeal was preferred by United Machines Karamchari Sangh (‘Appellant’) challenging the order passed by National Company Law Appellate Tribunal (‘NCLAT’). By the said order, the NCLAT dismissed the appellant’s appeal and upheld the purported lay-off of workmen/employees affected by the Resolution Professional (Respondent 1) during the corporate insolvency resolution process. The appellant contended that the so-called lay-off was, in effect, an illegal retrenchment disguised as a lay-off, and stood vitiated for being in violation of the mandatory safeguards and procedures laid down under the ID Act.
It was further submitted that the impugned judgment failed to consider several critical contentions raised by the appellant, including the procedural irregularities committed by the Resolution Professional and the non-compliance with statutory provisions governing retrenchment and lay-off under the ID Act.
[Unitech Machines Karamchari Sangh v. Vivek Raheja, Civil Appeal No. 12557/2025, decided on 16-10-2025]
Advocates who appeared in this case:
For Appellants: Mr. Swarnendu Chatterjee, AOR, Ms. Harshita Rawat, Adv., Mr. Ali Abbas Masoodi, Adv.
This is a critical case that could set an important precedent for how employee rights are treated during insolvency proceedings. The questions raised about whether the IBC overrides the ID Act and the legality of retrenchments disguised as lay-offs are especially significant for both employers and employees. It will be interesting to see how the Supreme Court balances corporate restructuring needs with statutory protections for workers. The outcome could have far-reaching implications for labor law compliance during insolvency resolution.