2021 (3) TMI 109 - Tri - Insolvency and Bankruptcy

Seeking appropriate directions for dealing with the claim of EPFO department - discharging duties of Liquidator - Section 35 (1) (n) and 60 (5) of I B Code 2016 - HELD THAT - From the reading of provisions under Section 7A 7Q and 14 B of the Employees Provident Funds and Miscellaneous Provisions Act 1952 it is clear that the contribution interest and damages payable are statutory dues and not claims which can be submitted to the Liquidator in Form G. Hence the EPFO need not file Form G before the Liquidator. It is also seen that the EPFO has got first charge over the Assets of the defaulter and its priority of payment over other debts is as per Section 11 of the EPF MP Act 1952. The Liquidator is directed to consider the Claims of EPFO made by them vide Annexure A III dated 6th May 2020 and Annexure V dated 12th June 2020 in which the amount due from M/s. Achariya Techno Solutions Private Limited for the period up to June 2018 has been indicated while determining the amount payable to the stakeholders in this matter. Application disposed off.

Summary

Issues: Liquidator seeking directions for EPFO claim under I&B Code, EPFO's contention on statutory dues, EPFO's priority over other debts, EPFO's first charge over defaulter's assets.

Analysis:
1. The Liquidator filed an application seeking directions for dealing with the EPFO claim under Sections 35(1)(n) and 60(5) of the Insolvency and Bankruptcy Code, 2016 (I&B Code). The EPFO claimed that its dues under the EPF & MP Act, 1952, are statutory dues and not claims to be submitted to the Liquidator.

2. The EPFO argued that the EPF contributions, interest, and damages are statutory dues with priority over other debts, citing Section 11 of the EPF & MP Act, 1952. They referred to a Supreme Court decision to support their stance that these dues do not form part of the Liquidation Estate under the I&B Code.

3. The EPFO emphasized its first charge over the defaulter's assets and stated that the defaulted contributions up to June 2018 must be determined first before calculating interest and penal damages. They communicated the defaulted statement to the Liquidator and requested dismissal of the Liquidator's application.

4. The Tribunal analyzed the relevant sections of the EPF & MP Act, 1952, and agreed with the EPFO's position that EPF contributions, interest, and damages are statutory dues, not claims for submission to the Liquidator. The Tribunal directed the Liquidator to consider EPFO's claims and amount due from the Corporate Debtor up to June 2018 while determining payments to stakeholders.

5. Consequently, the Tribunal disposed of the Liquidator's application, highlighting the EPFO's statutory dues, priority over other debts, and first charge over the defaulter's assets. The judgment clarified the EPFO's position and provided directions for handling EPFO claims within the insolvency proceedings.

This detailed analysis covers the issues raised in the judgment, including the Liquidator's application, EPFO's statutory dues argument, priority over other debts, and the Tribunal's decision regarding EPFO claims under the I&B Code.