# In the matter of Kishore K. Lonkar Vs. Hindustan Antibiotics Ltd. Company Appeal (AT) (Insolvency) No. 934 of 2021

> NCLAT judgment dated 2022-05-10. Citation: TCN-2022-NCLAT-00491. The appeal was filed by Kishore K. Lonkar against the order dated 06.09.2021 passed by the…

- **Court:** NCLAT
- **Order date:** 10 May 2022
- **Citation:** TCN-2022-NCLAT-00491
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/kishore-k-lonkar-vs-hindustan-antibiotics-ltd-company-appeal-9b352f70

## Summary

### Background

The appeal was filed by Kishore K. Lonkar against the order dated 06.09.2021 passed by the National Company Law Tribunal, Mumbai Bench, in C.P. (IB) No.- 1060/MB/2019. The appellant's application under Section 9 of the Insolvency and Bankruptcy Code, 2016, was dismissed by the Adjudicating Authority. The appellant claimed that the respondent company failed to clear the 'Operational Debt' despite serving a demand notice dated 11/02/2019, under Section 8 of the Code. The appellant sought initiation of Corporate Insolvency Resolution Process (CIRP) against the respondent company based on unpaid gratuity, LTC, and EL Encashment.

## Facts

Kishore K. Lonkar, the appellant, filed an appeal against Hindustan Antibiotics Ltd., the respondent, challenging the dismissal of his application under Section 9 of the Insolvency and Bankruptcy Code, 2016. The appellant claimed that the respondent failed to clear an 'Operational Debt' despite a demand notice dated 11/02/2019. The debt allegedly comprised unpaid gratuity (Rs. 10,00,000/-), EL Encashment (Rs. 6,74,273/-), and LTC (Rs. 6,604/-), totaling Rs. 16,80,877/-. The appellant contended that these dues constitute 'salary' and fall under the definition of 'Operational Debt' under Section 5(21) of the Code. The respondent argued that gratuity disputes should be decided by the Regional Labour Commissioner under Section 14 of the Payment of Gratuity Act, 1972. The

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## Issues and analysis

### Issue 1: Whether the unpaid gratuity, LTC, and EL Encashment constitute an 'Operational Debt' under Section …

**Ratio:** The ratio is based on the interpretation of Section 5(21) of the Insolvency and

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**Reasoning:** The court reasoned that while 'service benefits' like LTC accrue on account of service

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**Interpretation:** The interpretation of 'Operational Debt' under Section 5(21) is crucial. The

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**Application:** The court applied the ratio by concluding that although the appellant claimed

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## Parties

- **Judges:** Ashok Bh…; Shreesha…; +1 more
- **Appellants:** Kishore K.…
- **Respondents:** Hindustan…

## Timeline

- **2016-01-01 — Enactment of Insolvency…**: The Insolvency and…
- **2019-02-11 — Demand N…**: The Appellant served a Demand Notice to the Respondent Company under Section 8 of the…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 8 — Insolvency resolution by operational creditor](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-8)

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