Citation: Rolta India Limited v. Anil Vishwanath Nandoskar & Anr. 2026:BHC-OS:21552
The Bombay High Court has held that a company’s takeover under the insolvency process does not wipe out money already awarded to workers by a Labour Court before the insolvency began.
Three Rolta India Limited employees were transferred from Mumbai to Chennai, Chandigarh and Calcutta and were dismissed in 2004 without any inquiry. In 2011, the Labour Court held their dismissal illegal and awarded each Rs 2.5 lakh as compensation with 6% interest instead of reinstatement. The company challenged this and, as the High Court had directed, deposited the awarded amount in court. Later, the company went through insolvency proceedings, and a new management took over in December 2023. The new management argued that under the “clean slate” principle the workers’ claims were extinguished because they were never registered before the Resolution Professional, and that the deposited money was now its own asset. Justice Sandeep Marne rejected this. He distinguished the Ahmednagar Forgings case, where the workers’ claim was still pending when the resolution plan was approved. Here, the awards had been passed in 2011, long before the insolvency began, so the workers’ rights had already crystallized. The court also said that money an employer deposits in court while challenging a labour award really belongs to the workers, and it did not decide whether such money is otherwise a company asset.
It upheld the awards, allowed the three employees to withdraw the entire deposit with interest as their compensation, and said they would get no further service benefits. The company’s request to stay the order for four weeks was refused.
The “clean slate” principle under the insolvency law does not extinguish workers’ rights that were already decided by an award before insolvency began. Money deposited in court by an employer as a condition for challenging a labour award is meant to secure the workers’ entitlement, so a new management taking over the company cannot claim it merely because it stayed in court.