Quick Summary: In a recent decision by the High Court of Bombay at Aurangabad, Metalyst Forgings Limited's change in leadership resulted in the dismissal of several employee claims. The court decided that the new management, under the Insolvency and Bankruptcy Code (IBC), is not responsible for old employee claims.
Metalyst Forgings Limited, located in Aurangabad, faced multiple legal challenges from former employees. These challenges questioned their dismissals and sought to be rehired with back pay. The employees claimed they were unfairly fired during the company’s financial problems and ongoing bankruptcy proceedings.
The main issue was whether the new management, after a plan was approved by the National Company Law Tribunal (NCLT), had to pay attention to old employee claims. The employees argued that their dismissals were unfair and wanted to be rehired.
On January 12, 2026, Judge Arun R. Pedneker gave the decision. The court explained that once a plan is approved under Section 31 of the IBC, all previous claims not included in the plan are dismissed. This decision was influenced by the Supreme Court's decision in the case of Essar Steel India Ltd.
“Once a resolution plan is duly approved... all claims which are not part of the resolution plan shall stand extinguished,” the court noted.
The court decided in favor of Metalyst Forgings, saying that the new management is not responsible for old employee claims. The employees' requests to be rehired and receive back pay were denied, as their claims were not part of the approved plan.
The court's decision means that Metalyst Forgings' new management does not have to deal with past employee claims. This aligns with the IBC’s goal of allowing companies to start fresh without the burden of unresolved old debts.
