Introduction
Delay has always been the weak point of Indian insolvency law. Before 2016, creditors of a sick company often waited for years while proceedings moved between the Board for Industrial and Financial Reconstruction, the High Courts, and the Debt Recovery Tribunals, and by the time a decision came the business had often lost much of its value.1 The Insolvency and Bankruptcy Code, 2016 (the Code) was meant to end this pattern. Its central idea is that the clock starts when the process begins, and that the company, its creditors, and the resolution professional must all work within a fixed timeline.
This design is strong on paper, and the courts have generally supported it. Yet the timeline was written with large financial creditors and big corporate debtors in mind. It was not written with the people who are now among the most visible economic actors in the Indian digital economy, namely gig workers who deliver food, drive cabs, and complete tasks through online platforms. When a platform company enters insolvency, these workers may be owed money for weeks of work, but they do not ordinarily sit on the committee of creditors and their claims may not be recognised as debts at all.
This article asks a simple question. How long do gig workers wait to recover their dues under the time bound process in Section 12, and does that process protect them or harm them? The question matters for three reasons. First, the number of gig workers in India is large and growing, and many of them depend on platform income for their livelihood.2 Second, the Code was amended in 2019 and again in 2026 to tighten timelines, so the pressure on the process has increased.3 Third, the law on gig workers is still developing, and the two bodies of law rarely speak to each other.
The article proceeds in seven parts, of which this introduction is the first. Part two explains the statutory structure of the time limit. Part three looks at where gig worker claims fit within the Code. Part four estimates the waiting period and its effect on recovery. Part five weighs the protective and harmful effects of the time bound process. Part six offers reform suggestions, and the final part concludes.
The statutory architecture of the time limit
Section 12 of the Code requires that the corporate insolvency resolution process be completed within 180 days from the date on which the application is admitted.4 The committee of creditors may resolve, by a vote of at least 66 per cent, to seek an extension of up to 90 days, and the Adjudicating Authority may grant the extension where it is satisfied that the process cannot be completed in time.5 The 2019 amendment added the rule that the process, including any extension and the time taken in legal proceedings, is to be completed within 330 days.6 The purpose was to stop litigation from quietly extending the process beyond what the legislature had intended.
The Supreme Court took this rule seriously, but not literally, in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta.7 The Court struck down the word “mandatorily” in the proviso as manifestly arbitrary under Article 14 and as an excessive and unreasonable restriction under Article 19(1)(g) of the Constitution. It held that the process must ordinarily be completed within 330 days, including extensions and the time taken in legal proceedings, and that time may be extended beyond that limit only in exceptional cases, as where only a short period is left, revival would be in the interest of all stakeholders, and the delay is largely attributable to the tardy process of the Adjudicating Authority or the Appellate Tribunal rather than to the fault of the litigants. The judgment still treated time as a central value of the scheme rather than a technical detail, because the general rule remains that a corporate debtor is to be driven into liquidation beyond the outer limit. In Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., the Court addressed what follows when the process ends. It held that once a resolution plan is approved under Section 31, the claims provided in the plan stand frozen and bind the corporate debtor, its employees, its creditors, and other stakeholders, and that all claims not part of the plan stand extinguished, so that the successful applicant starts on a clean slate.8 That holding bears directly on gig workers, because a worker whose claim is not part of the plan may lose it altogether. Together these decisions mean that the timeline is firm as a general rule, though not absolute, and that what stays outside the process may not survive it.
The Court also recognised that speed is not the only goal. In Swiss Ribbons Pvt. Ltd. v. Union of India, the Court upheld the constitutional validity of the Code and explained that its primary focus is the revival and continuation of the corporate debtor, while the preamble to the Code speaks of the maximisation of the value of assets and the balancing of the interests of all stakeholders.9 This means that a time bound process is meant to achieve value and fairness together, and not speed alone. The question for gig workers is whether the process delivers fairness within the time it allows.
Where gig worker claims fit in the insolvency scheme
The first difficulty is classification. The Code on Social Security, 2020, most of which came into force on 21 November 2025, defines a gig worker as a person who performs work or participates in a work arrangement and earns from such activities outside a traditional employer employee relationship, and it separately defines platform work and platform workers, who work through online platforms.10 Several states have enacted their own laws on platform based gig workers, including Rajasthan, which passed a dedicated statute in 2023, and, more recently, Karnataka and Telangana.11 These laws show that legislatures have accepted that gig workers need protection. However, the Code on Social Security places them outside the traditional employment relationship, the Insolvency and Bankruptcy Code does not mention them at all, and many platforms describe them as independent contractors or service partners.
Under the Insolvency and Bankruptcy Code, every creditor is either a financial creditor, an operational creditor, or a creditor of another kind. An operational creditor is a person to whom an operational debt is owed, and the definition of operational debt includes a claim in respect of the provision of goods or services, including employment.12 This wording is helpful for gig workers. Because the definition covers services as well as employment, a strong argument exists that unpaid earnings owed to a gig worker for services rendered to a platform fall within operational debt, whether or not the worker is an employee. The worker would then be an operational creditor entitled to a share in the distribution.
The second difficulty is the waterfall. Section 53 sets out the order in which the proceeds of liquidation are distributed. Insolvency resolution process costs and liquidation costs come first, followed by workmen’s dues for twenty four months, ranking equally with debts owed to secured creditors who have relinquished their security, then wages and unpaid dues of other employees for twelve months, then unsecured financial debts, then certain Government dues and the unpaid balance of secured creditors who enforced their security, and then any remaining debts and dues.13 The phrase workmen’s dues is important. The Explanation to Section 53 gives it the meaning assigned in Section 326 of the Companies Act, 2013, which refers to a workman under the Industrial Disputes Act, 1947.14 Under that Act a workman is a person employed to do manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward.15 The 1947 Act was repealed with effect from 21 November 2025, and the Industrial Relations Code, 2020 now contains a parallel definition of worker.16 Many gig workers do not satisfy this definition because they are not employed under a contract of service. As a result their claims may not qualify for the higher priority reserved for workmen. Section 53 has no separate rank for operational debt, so these claims would fall among the remaining debts and dues, which rank much lower.
This creates an uncomfortable gap. A driver who worked for a platform for eighteen months may have a claim that is real in ordinary language but unclear in insolvency language. The Code is not built to answer whether the platform owes such a driver as an employee or as a service provider, and the answer will often decide how much the driver recovers.
How long the wait is and what it does to recovery
To see the practical effect, consider the timeline. The corporate insolvency resolution process starts when the Adjudicating Authority admits the application.17 The moratorium under Section 14 begins at the same time and prohibits the institution or continuation of suits and proceedings against the corporate debtor, including the execution of any judgment, decree, or order.18 A gig worker who wants to recover unpaid fees must therefore stop pursuing the platform through the ordinary courts or labour forums during the moratorium. At this stage the worker’s claim is not extinguished, but it is frozen.
If the process runs to its statutory limit, the wait may be close to 330 days, and longer in an exceptional case. Even if the resolution plan is approved, a worker’s share depends on the terms of the plan. Under Section 30 a resolution plan must provide for the payment of operational creditors in an amount not less than the higher of what they would receive in a liquidation and what they would receive if the amount to be distributed under the plan were distributed in the order of priority in Section 53.19 The regulations add that the amount payable to them must be paid in priority over financial creditors.20 This is an important protection, because it sets a floor. But both limbs of the floor follow the Section 53 order, in which unsecured operational debts rank near the bottom, and the liquidation limb in many platform cases may be low, since the main assets of a technology company are often intangible and lose value quickly once operations stop.
The Insolvency and Bankruptcy Board of India has issued regulations that govern how operational creditors are paid under a plan and how their claims are verified.21 Verification requires documents, and gig workers often hold their records only in the platform’s app. Access to earnings statements, payment histories, and dispute logs may be limited. This means that even when a worker’s claim is legally valid, the time needed to prove it can eat into the very window the Code tries to keep short.
In short, the worker waits through the moratorium, waits through the resolution period, and then waits through verification and payment. The Code does not say that the waiting is unfair, because it was designed to protect the company as a going concern. Yet for a worker who may need to be paid within weeks to cover rent and food, the same timeline can feel very long.
Protection or harm: weighing the effects
There is a strong case that the time bound process protects gig workers. A platform in distress may try to keep operating while it holds back payments to workers, delays settlements, and uses its cash flow to pay other creditors. A firm timeline limits this behaviour. The moratorium also stops individual workers from pursuing separate claims that could drain the company’s remaining assets and leave little for everyone else. In this sense the Code treats workers as part of a collective, and it channels their claims through the resolution process rather than leaving them to race each other to the courthouse.
The resolution process can also preserve the business itself. A platform that survives insolvency may continue to offer work, which is often what gig workers want most. If the process ends in liquidation rather than revival, the workers lose their platform income immediately. The quick decision required by the Code can therefore help keep the platform alive, and with it the opportunity for future work.
The same features, however, can harm gig workers. The first problem is representation. The committee of creditors comprises the financial creditors of the corporate debtor, and decisions are taken by votes weighted by voting share, which favours large financial lenders.22 Operational creditors have a place on the committee only where the corporate debtor has no financial debt or all its financial creditors are related parties. Otherwise they may attend its meetings, without a vote, if their aggregate dues are at least ten per cent of the debt, or if they are among the five largest unrelated operational creditors, including the three largest statutory authorities, invited as observers where creditors other than scheduled banks or public financial institutions hold more than sixty-six per cent of the voting share.23 Gig workers are usually numerous but individually small, and they have no bank or institutional lender to speak for them. The Supreme Court has held that the commercial wisdom of the committee of creditors deserves deference, and the Court explained in K. Sashidhar v. Indian Overseas Bank that the Adjudicating Authority should not second guess the commercial decisions of the creditors.24 This deference is sensible for banks, but it leaves little room for the concerns of workers who have no seat at the table.
The second problem is litigation. The Code allows the Adjudicating Authority, the Appellate Tribunal, and the Supreme Court to review certain decisions. Each challenge can add time, and the 330 day limit means that the time spent on challenges reduces the time left for negotiating and implementing the plan. Gig workers have the least capacity to fund or wait out such litigation. A delay that a large bank can absorb may be fatal to a worker who depends on the next payment.
The third problem is the structure of the plan. In Essar Steel, the Supreme Court held that the ultimate discretion of what to pay and how much to pay each class or sub-class of creditors lies with the committee of creditors, provided that its decision reflects that it has adequately balanced the interests of all stakeholders, including operational creditors, and that equitable treatment of creditors means equitable treatment only within the same class.25 Where a platform has many small claims, a plan can easily treat them as a single category and pay them a small percentage. Because the time pressure is high, the committee may accept a plan that pays operational creditors quickly but modestly, rather than seeking a better outcome that would take longer.
Finally, the time bound process assumes that claims are easy to identify. For gig workers, the amount and existence of a claim may be disputed. A platform may argue that deductions were justified, that workers were not active on the relevant dates, or that payments were made through an intermediary. Resolving these disputes within a short period is difficult, and a worker who cannot prove the claim in time may lose it entirely once the plan is approved.26
On balance, the time bound process is neither wholly protective nor wholly harmful. It protects workers from long delays and from the risk of asset stripping, but it does not protect their individual rights in a way that matches the speed of the process. The benefit flows mostly to the collective and to the business, while the cost falls mostly on the workers with the weakest bargaining position.
Suggestions for reform
Several reforms could reduce these tensions without undoing the time bound structure. The first is clarity on classification. The legislature could state expressly that unpaid earnings of platform workers, whether described as fees, incentives, or commissions, are operational debts that rank with other operational claims, and that platform workers are entitled to notice of insolvency proceedings and to file their claims through a simple process. Such a clarification would reduce litigation over whether a worker is an employee or a contractor.
The second reform is representation. The Insolvency Law Committee considered in its February 2020 report whether operational creditors should vote in the committee of creditors. It observed that, for the process to be regarded by them as fair and just, they should be permitted to participate meaningfully in its decision making, but it concluded that they lacked the requisite capacity at present and left voting rights to be assessed in future.27 A practical step would be to allow a recognised representative body for gig workers to participate in the committee of creditors as an observer, or to present a consolidated claim on behalf of a large group. This would not give workers a veto, but it would reduce the imbalance between a few large lenders and many small claimants.
The third reform is interim relief. During the moratorium, the Adjudicating Authority could permit the resolution professional to pay a limited amount of accrued worker dues where the amounts are clearly established and the payment would not harm the value of the company. This is similar in spirit to the treatment of the costs of running the corporate debtor as a going concern as insolvency resolution process costs,28 and it would give workers some relief during the wait.
The fourth reform is faster verification. Platforms could be required to provide workers with structured statements of their earnings and deductions at regular intervals, so that claims can be verified quickly if the company enters insolvency. A simple digital record would reduce the time and cost of proof.
Conclusion
The time bound resolution process under the Insolvency and Bankruptcy Code, 2016 is one of the most important reforms in Indian commercial law. Its fixed timeline has forced creditors, debtors, and courts to take insolvency seriously, and the Supreme Court has consistently treated the limits as meaningful, while allowing narrow exceptions. Yet the process was designed with financial and operational creditors in mind, and it has not fully addressed the position of gig workers whose claims arise from platform work.
This article has argued that the time bound process has mixed effects on gig workers. It protects them by limiting how long a distressed platform can delay payment and by keeping the business alive for longer, but it also harms them by ranking their claims low in the waterfall, by excluding them from effective decision making, by making litigation costly, and by requiring proof of claims within a short period. The Code does not need to abandon its timelines to address these problems. What it needs is a clearer classification of platform dues, a voice for workers in the process, limited interim relief, and simpler verification.
As the gig economy grows, these questions will become more pressing. Insolvency law and labour law have so far developed side by side. A closer connection between them would help ensure that the promise of time bound resolution does not come at the cost of the workers who depend on the platforms that enter the process.
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Footnotes
1. Innoventive Industries Ltd. v. ICICI Bank Ltd., (2018) 1 SCC 407 (India) (setting out the statement of objects and reasons, which describes the existing framework as “inadequate, ineffective” and as resulting in “undue delays in resolution”, and the report of the Bankruptcy Law Reforms Committee on how delay destroys value).
2. NITI Aayog, India’s Booming Gig and Platform Economy: Perspectives and Recommendations on the Future of Work xvii (June 2022), https://niti.gov.in/sites/default/files/2023-02/25th_June_Final_Report_27062022.pdf (estimating 7.7 million gig workers in 2020-21 and projecting 23.5 million by 2029-30).
3. The Insolvency and Bankruptcy Code (Amendment) Act, No. 26 of 2019, India Code (2019), § 4 (330 day limit); The Insolvency and Bankruptcy Code (Amendment) Act, No. 6 of 2026, India Code (2026), §§ 4, 19(c) (fourteen days for an order on a financial creditor’s application and thirty days for an order on a resolution plan, with reasons to be recorded for any delay; in force from May 26, 2026).
4. The Insolvency and Bankruptcy Code, No. 31 of 2016, India Code (2016), § 12(1).
5. Insolvency and Bankruptcy Code, supra note 4, § 12(2), (3).
6. Insolvency and Bankruptcy Code, supra note 4, § 12(3), second proviso.
7. Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, (2020) 8 SCC 531, [2019] 16 SCR 275, 402-03 (India).
8. Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., (2021) 9 SCC 657 (India); see also The Insolvency and Bankruptcy Code (Amendment) Act, No. 6 of 2026, supra note 3, § 19(e) (inserting Section 31(6), under which, unless the plan provides otherwise, a claim against the corporate debtor prior to the date of approval is extinguished).
9. Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17 (India); see also Insolvency and Bankruptcy Code, supra note 4, pmbl.
10. The Code on Social Security, No. 36 of 2020, India Code (2020), § 2(35), (60), (61); Ministry of Labour and Employment, Notification S.O. 5319(E) (Nov. 21, 2025) (appointing the date of commencement of various provisions).
11. The Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, No. 29 of 2023, India Code (2023); The Karnataka Platform Based Gig Workers (Social Security and Welfare) Act, No. 72 of 2025, India Code (2025); The Telangana Platform Based Gig Workers (Registration, Social Security and Welfare) Act, No. 21 of 2026, India Code (2026).
12. Insolvency and Bankruptcy Code, supra note 4, § 5(20), (21).
13. Insolvency and Bankruptcy Code, supra note 4, § 53(1).
14. Insolvency and Bankruptcy Code, supra note 4, § 53, Explanation; The Companies Act, No. 18 of 2013, India Code (2013), § 326, Explanation.
15. The Industrial Disputes Act, No. 14 of 1947, India Code (1947), § 2(s).
16. The Industrial Relations Code, No. 35 of 2020, India Code (2020), §§ 2(zr), 104(1); The Industrial Relations Code (Amendment) Act, No. 1 of 2026, India Code (2026), § 2; Ministry of Labour and Employment, Notification S.O. 5320(E) (Nov. 21, 2025).
17. Vidarbha Industries Power Ltd. v. Axis Bank Ltd., (2022) 8 SCC 352 (India) (reading the former Section 7(5)(a) as giving the Adjudicating Authority a discretion not to admit a financial creditor’s application); see The Insolvency and Bankruptcy Code (Amendment) Act, No. 6 of 2026, supra note 3, § 4 (substituting Section 7(5), under which no other ground is to be considered for rejection once its requirements are met).
18. Insolvency and Bankruptcy Code, supra note 4, § 14(1)(a).
19. Insolvency and Bankruptcy Code, supra note 4, § 30(2)(b).
20. Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, No. IBBI/2016-17/GN/REG004, Gazette of India (2016), reg. 38(1)(a).
21. Insolvency and Bankruptcy Board of India Regulations, supra note 20, regs. 7, 13, 38.
22. Insolvency and Bankruptcy Code, supra note 4, § 21(2), (8).
23. Insolvency and Bankruptcy Code, supra note 4, §§ 21(8) proviso, 24(3)(c), (4); Insolvency and Bankruptcy Board of India Regulations, supra note 20, regs. 16, 16E.
24. K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150 (India).
25. Essar Steel, supra note 7, [2019] 16 SCR at 358, 364.
26. Ghanashyam Mishra, supra note 8.
27. Insolvency Law Committee, Report of the Insolvency Law Committee ¶¶ 10.3, 10.5-10.7 (Ministry of Corporate Affairs, Government of India, Feb. 2020), https://ibbi.gov.in/uploads/resources/c6cb71c9f69f66858830630da08e45b4.pdf.
28. Insolvency and Bankruptcy Code, supra note 4, § 5(13)(c).