Safiya Malik

The High Court of Gujarat Single Bench of Justice Mauna M. Bhatt approved a proposal submitted by the Office of the Official Liquidator to grant a one-time ex gratia payment to twelve company-paid staff members employed under the supervision of the Court. The Court directed that the payment, drawn exclusively from the Common Pool Fund, be invested in separate term deposits and released upon the employee’s superannuation, death, or closure of the Liquidator’s office, whichever occurs first. The order was issued after noting that these employees, unlike government staff, are not entitled to pension or other retirement benefits. The Court clarified that the measure was purely welfare-oriented, applicable only to the identified employees, and would not serve as a precedent for future claims.

The Official Liquidator filed a report before the High Court seeking approval to provide a one-time ex gratia payment to twelve company-paid staff members working in the Office of the Official Liquidator, Gujarat. The report explained that two categories of employees serve in the establishment: those appointed against sanctioned government posts under the Ministry of Corporate Affairs and those engaged by order of the High Court under Rules 308 and 309 of the Companies (Court) Rules, 1959. The latter group, identified as company-paid staff, are paid from the Common Pool Fund maintained by the Official Liquidator.

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It was submitted that with the implementation of the Insolvency and Bankruptcy Code, 2016, and the transfer of company liquidation matters to the National Company Law Tribunal, the Office of the Official Liquidator would eventually be phased out. Consequently, the government staff may be redeployed to other departments, whereas the company-paid staff—many of whom have completed over seventeen to twenty years of continuous service—face uncertainty as they are not entitled to any pensionary or post-retirement benefits apart from gratuity and leave encashment.

The report stated that representations were received from these employees seeking a welfare measure in the form of an ex gratia payment. The Official Liquidator, after forwarding the matter to the Ministry of Corporate Affairs, received a response clarifying that the company-paid staff are not government servants and that any such welfare measure, if sanctioned by the Court, must be funded from the Common Pool Fund. Reference was made to similar orders passed by the High Courts of Calcutta, Delhi, and Punjab and Haryana approving limited welfare disbursements to company-paid staff.

The report proposed an ex gratia payment of ₹20 lakh each for Group C employees and ₹18 lakh each for Group D employees, to be released upon superannuation, death, or closure of the Liquidator’s office, provided the staff member was not under suspension or disciplinary proceedings.

The Court observed that “At this juncture, it is challenging to forecast the lifespan of the OL office, Gujarat. This Court is cognizant of the unpredictability that accompanies retirement, particularly for the Company Paid Staffs, who are in a unique predicament as their services have not been formally recognized at par with Government employees, and they lack any pension provisions.”

The Court stated that “Upon superannuation, these employees receive only a gratuity and a few minor benefits, despite their long, unbroken, and flawless service to the OL's office, which is in no way inferior to the contributions of regular staff.”

The Court recorded that “Upon consideration of the tenure of service, absence of statutory terminal coverage and financial position of the Common Pool Fund, this Court is satisfied that a limited welfare measure in the nature of a one-time ex-gratia payment is justified in equity, provided that it does not prejudice the entitlement of stakeholders in liquidation proceedings.”

The Court observed that “The Common Pool Fund, from which the expenditure is proposed, presently carries a balance in excess of 200₹ Crores, and the Receipts and Payments placed on record reflect a recurring annual surplus, even after meeting statutory obligations.”

The Court stated that “Hence, the proposed limited welfare measure does not prejudice the interest of creditors or stakeholders of companies in liquidation.”

The Court recorded that “It is further clarified that the present benefit is a one-time welfare measure confined only to the 12 Company Paid Staff presently on record, shall not operate as a precedent, and shall not create any right of regularization, absorption, to further financial claim in favour of any other future claimant.”

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The Court recorded: “The proposal for grant of one-time ex-gratia payment in favour of 12 Company Paid Staff, in amounts proposed as reflected in Para 13 of the Report, is approved, strictly as a welfare measure, to be met exclusively from the Common Pool Fund.” It directed: “The Official Liquidator shall set apart the sanctioned amount from the Common Pool Fund and Invest the amount in separate term deposits in the joint name of the Official Liquidator and each individual employee, to retain supervisory control.” It stipulated release only upon “(i) Superannuation… or (ii) Death… or (iii) Closure of the Office of the Official Liquidator, whichever event occurs first. No payment shall be released” to any individual under suspension or with pending/adverse disciplinary findings, “unless otherwise directed by this Court.”

“It is a one-time welfare measure confined only to the 12 Company Paid Staff presently on record, shall not operate as a precedent, and shall not create any right of regularization, absorption, to further financial claim in favour of any other future claimant.” It granted liberty: “In case any difficulty arises in implementation of this order, it shall be open to the Official Liquidator to approach this Court for appropriate directions.” The report then “stands disposed of accordingly.”

Advocates Representing the Parties

For the Petitioners: Bhoomi M. Thakore, Ld. Panel Advocate

Case Title: Official Liquidator Various Companies (In Liquidation) v. NA
Case Number: R/Official Liquidator Report No. 62 of 2025
Bench: Justice Mauna M. Bhatt