# In the matter of Fort Gloster Industries Ltd. CP (IB) No. 61-KB-2018

> NCLT judgment dated 2018-08-09. Citation: TCN-2018-NCLT-00969. Jayanta Kumar Panja, an ex-employee of Fort Gloster Industries Limited, filed an application…

- **Court:** NCLT
- **Order date:** 9 Aug 2018
- **Citation:** TCN-2018-NCLT-00969
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/fort-gloster-industries-ltd-cp-ib-no-61-kb-2018-31320cab

## Summary

### Background

Jayanta Kumar Panja, an ex-employee of Fort Gloster Industries Limited, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the Corporate Insolvency Resolution Process (CIRP) against Fort Gloster Industries Limited due to default in payment of gratuity amounting to Rs. 1,13,946. The corporate debtor allegedly failed to pay the gratuity despite repeated demands. The operational creditor claimed that the corporate debtor acknowledged the debt but failed to pay, citing inability due to the non-sanctioning of a BIFR Revival Scheme.

## Facts

Jayanta Kumar Panja, an ex-employee of Fort Gloster Industries Limited, filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against the company. The basis for the application was the non-payment of gratuity amounting to Rs. 1,13,946. The applicant claimed to be an operational creditor due to this unpaid gratuity. Fort Gloster Industries Limited acknowledged the debt in a letter dated 03/04/2016 but failed to pay, citing financial difficulties related to the non-sanctioning of a BIFR Revival Scheme. The applicant issued a demand notice dated 06/11/2017, which was received by the corporate debtor. The corporate debtor argued that the application was not maintainable as the applicant

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## Issues and analysis

### Issue 1: Whether unpaid gratuity dues to an ex-employee constitute an 'operational debt' under the …

**Ratio:** Section 5(21) of the Insolvency and Bankruptcy Code, 2016, defines 'operational debt' as

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**Reasoning:** The court reasoned that any dues owed to an employee by an employer fall within the

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**Interpretation:** The interpretation of 'operational debt' is broad enough to encompass any debt

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**Application:** In this case, the unpaid gratuity of Rs. 1,13,946 owed to Jayanta Kumar Panja,

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## Parties

- **Judges:** Jinan…
- **Appellants:** Jayanta Kumar…
- **Respondents:** Fort Gloster…

## Timeline

- **2016-04-03 — Acknowledgment…**: Fort Gloster Industries Limited acknowledged the debt due to the operational creditor…
- **2017-11-06 — Demand N…**: Jayanta Kumar Panja issued a demand notice to Fort Gloster Industries Limited for 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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