High Court cannot bypass pending IBC adjudication by directing payment of employee dues.

The petitioners, claiming to represent workers and employees of Cachar Paper Mill, a unit of Hindustan Paper Corporation Ltd. (“HPCL”), sought directions to the Union of India to ensure payment of provident fund, gratuity, wages and other employee dues, invoking the humanitarian crisis and Article 21 of the Constitution.

HPCL was under liquidation, and the Official Liquidator disclosed that the same issues were pending in WP(C) No. 1062/2020 before the Delhi High Court and were also being adjudicated by the NCLT, New Delhi under the Insolvency and Bankruptcy Code, 2016 (“IBC”).

By the date of the affidavit, ₹213,18,14,728 had been disbursed to the EPFO, ₹79,51,60,919 towards wage arrears, and ₹359,13,97,613 to employees through the State of Assam/AIDC—totalling ₹651,83,73,260; this was not disputed by the petitioners.

Whether the High Court should direct the Union of India to make immediate payment of provident fund and other employee dues pending adjudication before the authorities under the IBC.

Whether such a direction would impermissibly interfere with the liquidation and claim-adjudication proceedings pending before the NCLT, New Delhi under the IBC.

Whether dismissal of the writ petition would prejudice the petitioners’ right to pursue their outstanding claims before the competent insolvency forum.

The Court applied Article 21 of the Constitution as the constitutional basis invoked by the petitioners in seeking protection against the alleged humanitarian consequences of non-payment of employee dues.

It held that the Insolvency and Bankruptcy Code, 2016 is a self-contained statutory framework governing liquidation, claims and distribution of the assets of a corporate debtor, including employee claims.

The Court also took note of Section 53 of the IBC, which regulates the statutory priority and distribution of liquidation proceeds, as reflected in the payments made towards wage arrears.

Where the relevant claims are already pending before the NCLT, the High Court should not issue directions that interfere with or circumvent the insolvency process.

The Court declined to order fresh payment by the Union of India because the employees had already received substantial disbursements and the petitioners did not dispute the aggregate payment of ₹651,83,73,260.

The Court observed that it might have considered interim intervention if no payment had been made, but that was not the factual position.

Since the EPFO’s additional claims and the employees’ dues were already under consideration by the NCLT pursuant to orders of the NCLT and NCLAT, directing the Union of India to pay the claimed amount—with liberty to recover it later—would interfere with the pending insolvency proceedings and conflict with the IBC’s self-contained mechanism.

The Court also noted that the petitioners had not produced material establishing that petitioner organisations Nos. 1 and 3 were registered trade unions.

The dismissal was expressly confined to the Court’s refusal to entertain the writ petition on those grounds and did not affect the petitioners’ substantive right to pursue their dues before the NCLT, New Delhi.