TMI Blog2016 (1) TMI 1309X X X X Extracts X X X X X X X X Extracts X X X X ..... d creditors or workmen approach the Company Court in its winding up jurisdiction for recovery of their dues, only those claims which are consistent with the provisions of the Companies Act and Companies (Court) Rules can be granted by the Company Court. There is, thus, no merit in the challenge to the adjudication of the Official Liquidator. The Company Application is, accordingly, dismissed. - COMPANY APPLICATION NO.239 OF 2014 IN COMPANY PETITION NO. 518 OF 2005 - - - Dated:- 6-1-2016 - S.C.Gupte J. SURESH KUMAR, SANJAY SINGHVI, ROHIT GUPTA, Gawrangi Patil, J.P.SEN, K.MOHAN KUMAR, Pratibha Ramaswamy Advocates JUDGEMENT S. C. Gupte, ( 1. ) The Company Application taken out by the Applicant - Regional Provident Fund Commissioner - challenges an adjudication order of the Official Liquidator, by which a claim filed by the Applicant in respect of PF dues was rejected. The controversy in the matter mainly pertains to damages and interest payable by the employer Zadona Electronics Ltd. (in liquidation) respectively under Sections 14B and 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ( PF Act ) on delayed payments of PF dues. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve Bank Ltd. Vs. Asst. P.F. Commissioner, Supreme Court judgment in Civil Appeal No.6893 of 2009 dt.8.10.2009 .) The question is whether any of these other amounts claimed are actually due as of the date of the winding up order or at the time of payment of the PF dues. ( 5. ) Since the salaries payable to the employees for the relevant period have been paid in full, i.e. without deducting any employees' contributions to the Fund, there is no question of paying the Applicant the component of employees' contribution on behalf of the employees. These amounts have been directly received by the employees in winding up, and are not claimable separately by the Applicant. ( 6. ) Section 14B of the PF Act provides as follows: Section 14B. Power to recover damages:- Where an employer makes default in the payment of any contribution to the Fund, the Pension fund or the Insurance Fund or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of insolvency (see Section 46(1) of the Presidency Towns Insolvency Act) that demands in the nature of unliquidated damages arising otherwise than by reason of breach of contract or breach of trust shall not be provable in insolvency. The liability here is said to arise under a provision of law and is subject to the conditions provided in law. But even if we were to proceed on the footing that the scheme framed by the Company for provident fund forms a contract between itself and its employees and there is a breach of contract on the part of the Company by defaulting in payment of its contributions, there is no debt until the liability on account of such breach is adjudicated and damages are assessed by the adjudicating authority. There is no question of the Official Liquidator himself adjudicating these damages. That jurisdiction rests exclusively with the authorities under the PF Act. Till such adjudication is made, there is no debt provable before the Official Liquidator. The following observations of the Supreme Court in relation to the nature of a claim for unliquidated damages for breach of contract, in the case of Union of India Vs. Raman Iron Foundry, 1974 AIR(SC) 1265 are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Court of law gives to a party for the injury which he has sustained. But, and this is most important to note, he does not get damages or compensation by reason of any existing obligation on the part of the person who has committed the breach. He gets compensation as a result of the fiat of the Court. Therefore, no pecuniary liability arises till the Court has determined that the party complaining of the breach is entitled to damages. Therefore, when damages are assessed, it would not be true to say that what the Court is doing is ascertaining a pecuniary liability which already existed. The Court in the first place must decide that the defendant is liable and then it proceeds to assess what that liability is. But till that determination there is no liability at all upon the defendant. This statement in our view represents the correct legal position and has our full concurrence. 7. In sum, there is no case for the Official Liquidator awarding any sum towards damages under Section 14B. 8. For claiming interest on PF dues between the date of the winding up order and the date of actual payment, the Applicant relies on Section 7Q of the PF Act. Section 7Q provides as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X
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