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2014 (3) TMI 1146 - HC - Companies LawWhether the sale of properties of petitioner company vitiated in view of provision in Section 20(4) of SICA? HELD THAT:- Power is vested in the BIFR under Section 16 to cause enquiry to determine whether any industrial company has become a sick industrial company and incidental thereto. If in such enquiry it is established that a company has become a sick industrial company, in exercise of power vested by Sections 17 to19, the BIFR can take all possible steps to revive the sick industrial company. If the BIFR fails in its effort to revive the sick industrial company, it is empowered to recommend to wind up the sick industrial company in exercise of power under Section 20(1). However, such company cannot be wound up unless winding up orders are passed. Section 20(4) deals with the interregnum period between the date of recommendation by BIFR to wind up a sick industrial company and the date of order of winding up. As per Section 20(4), the power to sell the assets of sick industrial company vests only in BIFR. However, BIFR has to obtain orders from concerned High Court before utilizing the sale proceeds - Section 22(1) deals with a situation when enquiry under Section 16 or scheme referred to in Section 17 is under preparation and prior to orders of BIFR recommending for winding up of the sick industrial company were passed. It seeks to freeze the assets and liabilities during the interregnum period. In Employees Provident Fund Commissioner, the defaulting company was wound up. The company was in default towards EPF contributions. The EPF organization approached the official liquidator for payment of amount determined under Section 7(A) of EPF Act. Since there was no response, EPF filed company application for issuance of directions to the official liquidator to pay the amount payable by the employer under the EPF Act and the same was dismissed. The dues payable by the petitioner to the EPF acquires first charge compared to any other dues - In the instant case, EPF sold the properties of petitioner company after BIFR recommended for winding up the petitioner company. The EPF Act, 1952 is a social welfare legislation and is intended to safeguard the interest of employees. Provident fund contribution is one of the important element in an employee’s service and savings accrued through such contributions alone are the backbone for the employee after his retirement. These contributions are part of his salary and emoluments and as a reward to the service rendered by him to the company while he was working. Therefore, the employees are entitled to receive their amounts. It is the paramount duty of employer to promptly credit the PF contributions. Failure to credit the same by employer is a serious matter - As it appears, the company is not working and proposal to wind up the company was made on 21.06.2000. For the last more than 13 years, the employees of the petitioner company are denied of their due amounts. Therefore any further delay in settlement of their dues would cause great hardship and suffering. Furthermore, in the sale conducted by EPFO, a third party paid huge sum as per auction conducted and purchased the property. He is no way concerned with the controversy. He is a bonafide purchaser. If the sale is upset, his interests would also adversely affect. It can not be said that the infraction pointed out is not curable. Thus, in the facts of this case, though it is noticed that the procedure as mandated by Section 20(4) of the SICA is not followed, the sale confirmed in the year 2011 cannot be upset at this stage. While rejecting the prayer of the petitioner, the EPFO is directed to approach BIFR duly intimating the sale of petitioner company assets, seek its ratification for appropriation of the sale proceeds towards PF dues of petitioner company and on receipt of such request, BIFR shall undertake required formalities to ratify the action of EPFO. Entire exercise shall be completed within a period of six (06) weeks from the date of receipt of copy of this order. Petition disposed off.
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