Gujarat High Court Approves Ex-Gratia Payment for Official Liquidator’s Company Paid Staff

Acknowledging long-term service, the Gujarat High Court sanctions a one-time payment for 12 employees amidst office closure uncertainties.

In a pivotal decision, the Gujarat High Court has sanctioned a one-time ex-gratia payment for 12 company-paid staff members of the Official Liquidator's office. This move comes as a significant relief to employees facing uncertainties due to the potential closure of the office following the jurisdictional transfer to the National Company Law Tribunal, as stipulated by the Insolvency and Bankruptcy Code, 2016.

Presided over by Justice Mauna M. Bhatt, the court acknowledged the dedicated service of these employees, who have been an integral part of the office for over two decades. Despite their long-standing service, these employees, not being government servants, do not qualify for statutory pensionary benefits, apart from gratuity and leave encashment.

The judgment highlights that the proposed ex-gratia payments are to be funded from the Common Pool Fund, ensuring no impact on the creditors or stakeholders involved in liquidation proceedings. The fund currently holds over Rs. 200 crores, with a recurring annual surplus, making this welfare measure financially viable without prejudicing existing obligations.

The court laid down specific conditions for the disbursement of these funds, ensuring the payments are made only upon the superannuation of the employee, their death (to legal heirs), or the closure of the Official Liquidator’s office. Employees under suspension or facing disciplinary proceedings are excluded from this benefit unless otherwise directed by the court.

This decision aligns with similar measures adopted by the High Courts of Calcutta, Delhi, and Punjab & Haryana, emphasizing the judiciary's recognition of non-government employees' contributions in public offices.

The ex-gratia payment aims to provide some financial security to these employees, recognizing their service as comparable to regular government staff, despite the lack of formal recognition or pension provisions.

Bottom Line:

One-time ex-gratia payment approved for Company Paid Staff employed by the Official Liquidator as a welfare measure, to recognize their long and dedicated service, with specific conditions for release and utilization of funds.

Statutory provision(s): Companies (Court) Rules, 1959, Insolvency and Bankruptcy Code, 2016, Companies Act, 2013.

Official Liquidator Various Companies (In Liquidation) v. NA, (Gujarat) : Law Finder Doc Id # 2801477