# In the matter of Mr. Savan Godiwala Vs. Mr. Apalla Siva Kumar CA(AT)(Ins) No. 1229 of 2019

> NCLAT judgment dated 2020-02-11. Citation: TCN-2020-NCLAT-00418. This case involves an appeal against an order passed by the Adjudicating Authority/National…

- **Court:** NCLAT
- **Order date:** 11 Feb 2020
- **Citation:** TCN-2020-NCLAT-00418
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/mr-savan-godiwala-vs-mr-apalla-siva-kumar-ca-79fa30e3

## Summary

### Background

This case involves an appeal against an order passed by the Adjudicating Authority/National Company Law Tribunal, Hyderabad Bench, directing the Liquidator to pay gratuity to the ex-employees of the Corporate Debtor, Lanco Infratech Limited. The Liquidator contended that the Corporate Debtor did not maintain a separate gratuity fund, and therefore, the payment could not be made from the running accounts. The Adjudicating Authority rejected the Liquidator's contention that gratuity payment should not be treated as part of the liquidation estate. The ex-employees filed an interim application seeking direction to treat gratuity dues on the highest priority, arguing that Section 4(1) of the Payment of Gratuity Act, 1972 mandates payment of gratuity and that Section

…

## Facts

1. Mr. Savan Godiwala, the liquidator of Lanco Infratech Limited, appealed against an order directing him to pay gratuity to the company's ex-employees.
2. The Adjudicating Authority directed the Liquidator to provide sufficient provision for gratuity payment, rejecting the contention that gratuity cannot be treated as part of the liquidation estate.
3. The ex-employees filed an interim application seeking priority for their gratuity dues, arguing that the Corporate Debtor failed to maintain a gratuity fund.
4. The Adjudicating Authority's order, dated 13th July 2018, directed the Resolution Professional to pay gratuity if payable, subject to the availability of funds.
5. The liquidation order for the Corporate Debtor was passed on August 27, 2018, under Section 33 of the

…

## Issues and analysis

### Issue 1: Whether gratuity dues of ex-employees should be treated as part of the liquidation estate of the …

**Ratio:** Gratuity, provident fund, and pension fund dues do not form part of the liquidation

…

**Reasoning:** The NCLAT relied on the interpretation of Section 36(4)(a)(iii) of the IBC, which

…

**Interpretation:** Section 36(4)(a)(iii) of the IBC is interpreted to mean that amounts earmarked

…

**Application:** In this case, since the gratuity dues are considered separate from the

…

## Parties

- **Judges:** V. P. S…; Venugop…
- **Appellants:** Mr Savan Go…
- **Respondents:** Lanco Infratech…; Apalla Siva…
- **Advocates:** Mish…; Vaijayant P…; +5 more

## Timeline

- **2019-08-20 — Impugned Ord…**: Date of the Impugned Order passed by the Hon'ble National Company Law Tribunal, Hyderabad…
- **2017-01-01 — CP (IB) F…**: C.P. (IB) No.111/7/HDB/2017 filed under Section 9 of the Insolvency and Bankruptcy Code,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 9 — Application for initiation of corporate insolvency…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-9)

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclat-new-delhi/mr-savan-godiwala-vs-mr-apalla-siva-kumar-ca-79fa30e3