Lanco Infratech Employees Welfare Association Vs Anuradha Bisani (NCLAT Chennai)
National Company Law Appellate Tribunal (NCLAT) in Chennai recently dismissed the appeal of Lanco Infratech Employees Welfare Association, which sought the payment of retention allowance to its members. The Association, representing 212 employees, claimed that they were entitled to the retention allowance as part of their salary for June 2017, in addition to the salary already paid. The dispute centers on whether the retention allowance, promised by the previous management, should be treated as part of the employees’ salary during the Corporate Insolvency Resolution Process (CIRP).
The appellants’ claim was based on an internal note dated May 18, 2017, in which the then Managing Director of Lanco Infratech approved a retention allowance for employees who continued in their roles until March 2018. However, the NCLAT emphasized that this endorsement was merely a proposal and not a legally binding decision. It was pointed out that the retention allowance was not part of the employees’ regular salary, as no legal document or policy supported its inclusion as a financial liability payable each month.
The NCLAT upheld the decision of the National Company Law Tribunal (NCLT), which had previously rejected the claim for retention allowance. The Tribunal noted that while salary typically refers to monthly emoluments, the retention allowance was not a guaranteed monthly payment but rather an incentive linked to employment continuation. The Appellants failed to provide sufficient evidence or legal basis to prove that the retention allowance constituted part of the salary under the applicable rules or service contracts.
