TMI Blog2021 (4) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... on of 'claim' and upon a combined reading of sub-sections (a) (b) of Section 6 of IBC, 2016, it is seen that the definition covers a diverse spectrum with the only pre-condition being that there must exist a right to payment on the part of claimant and a duty on the part of the Corporate Debtor to make a payment. At this stage, there is no categorisation of the claimants, it must be noted, and the call made by the IRP is in relation to all the claimants having a claim over the Corporate Debtor undergoing the CIRP, so that the IRP is in a position to collate the claims received. Thus, filing of claim pursuant to the notice published by the IRP on the part of a Claimant puts the IRP on notice about the claim. A careful perusal of both i.e., Section 11 of the EPF MP Act, 1952 or for that matter Section 36(4)(a)(iii) of IBC, 2016 primarily deals with the assets concerned of the establishment, and the Corporate Debtor respectively and nowhere specifies that the EPF Authorities are not required to even lodge a claim before the IRP/RP/Liquidator in relation to a Corporate Debtor undergoing a Insolvency or Liquidation Proceedings even though liability accrued only prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67(IB)/CB/2018 - - - Dated:- 8-4-2021 - R. Varadharajan, Member (J) And Anil Kumar B., Member (T) For the Appellant : A.G. Sathiyanarayana, Advocate For the Respondents : R. Thirunavukarasu, Advocate ORDER R. Varadharajan, Member (J) Facts In Brief: The facts in brief, which are required to be considered with a view to enable to dispose of this Application by this Tribunal are as follows:- 1. As against the Corporate Debtor, namely, M/s. SAS Autocom Engineers India Pvt. Ltd., the Corporate insolvency Resolution Process (CIRP) was initiated by this Tribunal vide Order dated 05.10.2018, based on an Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (I B Code 2016) by an Operational Creditor, namely, M/s. APL Apollo Tubes Limited. 2. At the time of initiation of the CIRP, this Tribunal had appointed the Applicant herein as the Interim Resolution Professional (IRP). After the constitution of the Committee of Creditors (CoC), it is seen that the IRP continued as Resolution Professional (RP) of the Corporate Debtor, in view of the decision of CoC of the Corporate Debtor choosing him to act as such. Based on the recommendation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the CIRP was initiated by this Tribunal only on 05.10.2018 and in the circumstances, Section 14 of the Insolvency Bankruptcy Code, 2016 ( IBC, 2016 ) in relation to moratorium as per the provisions of EPF Act overrides the provisions of IBC, 2016 and in the circumstances, an attachment order which has been issued by the Respondent (EPFO) can be sustained. By virtue of the said submission, it is contended that the Respondent is at liberty to bring the property for sale as sought in the application by the Liquidator. The detail of the attachment order issued is also pointed out by the Counsel for the Respondent which is annexed as 4 page to the typed set filed on 19.02.2020. Pursuant to the said warrant of attachment of movable property dated 23.10.2018, the notice shows the following amounts have been claimed as due from the Corporate Debtor: S No RRC No Nature of due Period amount 1 CBSLM2574 Dt 06/04/2017 7A 06/2004 to 10/2012 2905380 2 CBSLM5814 Dt 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon the same being done, the Liquidator will decide in accordance with the provisions of IBC, 2016 in relation to the claim and the option as may be exercised by the Respondent in this regard. Till such time, let the parties maintain a status quo in relation to the property . 5. While so, the Applicant herein, had sought to auction of both the land and building, plant and machinery by way of e-auction sale notice dated 05.02.2020 in relation to which the liquidation value had been arrived at ₹ 2,06,41,500/- against which value a sum which was fetched in the e-auction, is stated to be ₹ 2,16,00,000/-. In view of the status quo Order passed in MA/868/2019 as above by this Tribunal on 19.02.2020, even though a sum of ₹ 22,50,000/- had been lodged by the successful bidder in the e-auction, the sale by auction of plant and machinery could not be finalized as the successful bidder did not make further payment. 6. In the circumstances, IA/370/2020 has been filed by the Applicant seeking for the following reliefs: (a) To pass an order for re-locating the machinery of the Corporate Debtor, namely, M/s. SAS Autocom Engineers India Private Limited, which is under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties were also allowed to file their Written Submissions before this Tribunal, of which it is seen from the records of this Tribunal that the parties also seem to have availed. 10. It is also seen that in the meanwhile IA/31/2021 has been filed by the Applicant based on the averments contained in the said Application for the reliefs as sought as follows: (a) That this Hon'ble Adjudicating Authority pass an order allowing the Applicant to register the property in favour of the successful bidder to complete the liquidation process within the mandated timeline; and (b) To pass such other orders or further orders, which may deem to be fit and proper in the interest of justice . 11. Perusal of the Counter statement of the Respondent discloses the following, namely: i. The Corporate Debtor had defaulted in the remittance of PF dues from April 2013, consequent to which, the Respondent had initiated an enquiry under Section 7A of the Employees Provident Fund (EPF) and Miscellaneous Provisions (MP) Act, 1952. ii. In 2017, upon an enquiry conducted for the determination of dues and as a consequence of which it has been arrived at that the PF dues aggregates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in relation to Provident Fund, Pension Fund and Gratuity cannot form part of the liquidation estate. As such payment of dues should be construed as the asset of the workmen or the employees concerned and that in relation to the same far over reaching interest and title has been created in favour of the workmen to whom amounts are due. vi. The Respondent also brings to the notice of this Tribunal that the Applicant had been given prior/advance intimation that the Respondent proposes to proceed with the recovery of dues as per the mechanism given under EPF and MP Act, 1952 read with Second Schedule of IT Act, 1961 and that the notice of sale of proclamation was also served upon the Resolution Professional as well as Corporate Debtor for information. Instead of replying to the said notice or communication, the Applicant seems to have preferred this Application before this Tribunal that too at the eleventh hour without giving due opportunity to the Respondent to file a suitable reply in this connection. vii. The rationale for staying/restraining the Respondent from selling the property vide the proclamation of sale notice by this Tribunal vide Order dated 20.08.2019 is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by JPC to Clause 155(2)(c). The decision rendered by the NCLT, New Delhi in Alchemist Asset Reconstruction Co. Ltd., vs. Moser Baer (India) Ltd., concurring with the Order of the Mumbai Bench rendered in the decision of M/s. Precision Fasteners Ltd. vs. Employees Provident Fund Organisation case and the said decision being upheld by the Hon'ble NCLAT in appeal, are relied on, to canvass for the proposition that dues arising out of the EPF and MP Act, 1952 are not amenable to the provisions of IBC 2016, and taking into consideration the factual and legal position, to vacate the Stay Order as passed by this Tribunal on 20.08.2019. 12. Before venturing into the exercise as to whether this Tribunal is at all competent to dwell on the aspect when a situation comes up in the process of CIRP of a Corporate Debtor or during the Liquidation process of such a Corporate Debtor vis- -vis. the claims made by the EPFO Authorities, it is required to be noted that in relation to insolvency of a Corporate Debtor, this Tribunal is vested with exclusive jurisdiction under Section 238 of IBC, 2016 whereby the provisions of the Code are to override other laws. Further, under Section 60 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... insolvency law in India under a single unified umbrella with the object of speeding up of the insolvency process . The principle was reiterated in Arcelor Mittal (supra) where this court held that the non-obstante Clause in Section 60(5) is designed for a different purpose to ensure that the NCLT alone has jurisdiction when it comes to applications and proceedings by or against a corporate debtor covered by the Code, making it clear that no other forum has jurisdiction to entertain or dispose of such applications or proceedings . Therefore, considering the text of Section 60(5)(c) and the interpretation of similar provisions in other insolvency related statutes, NCLT has jurisdiction to adjudicate disputes, which arise solely from or which relate to the insolvency of the Corporate Debtor. However, in doing so, we issue a notice of caution to the NCLT and NCLAT to ensure that they do not usurp the legitimate jurisdiction of other courts, tribunals and fora when the dispute is one which does not arise solely from or relate to the insolvency of the Corporate Debtor. The nexus with the insolvency of the Corporate Debtor must exist . 68. It is appropriate to refer to the observat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 60(5) of the IBC. 15. While construing the provisions of Section 60(5)(c) at paragraph 87 and also at paragraph 163 of the judgment rendered by it in Gujarat Urja Vikas (supra), the Hon'ble Apex Court has held as follows: 87. The residuary jurisdiction of the NCLT under Section 60(5)(c) of the IBC provides it a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings. If the jurisdiction of the NCLT were to be confined to actions prohibited by Section 14 of the IBC, there would have been no requirement for the legislature to enact Section 60(5)(c) of the IBC Section 60(5)(c) would be rendered otiose if Section 14 is held to be exhaustive of the grounds of judicial intervention contemplated under the IBC in matters of preserving the value of the corporate debtor and its status as a going concern. We hasten to add that our finding of the validity of the exercise of residuary power by the NCLT is premised on the facts of this case. We are not laying down a general principle on the contours of the exercise of residuary power by the NCLT. However, it is pertinent to mention that the NCLT cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to judgment, fixed, matured, un-matured, disputed, undisputed, secured, secured or unsecured; 17. Perusing the definition of 'claim' as given above and upon a combined reading of sub-sections (a) (b) of Section 6 of IBC, 2016, it is seen that the definition covers a diverse spectrum with the only pre-condition being that there must exist a right to payment on the part of claimant and a duty on the part of the Corporate Debtor to make a payment. At this stage, there is no categorisation of the claimants, it must be noted, and the call made by the IRP is in relation to all the claimants having a claim over the Corporate Debtor undergoing the CIRP, so that the IRP is in a position to collate the claims received. Thus, filing of claim pursuant to the notice published by the IRP on the part of a Claimant puts the IRP on notice about the claim. This act of the claimant in filing the claim enables the IRP to factor the same during collation of the claims which is made available to the COC as well as during the resolution process to the Resolution Applicant who may intend to resolve the insolvency of the corporate debtor to factor it in the Resolution Plan outlay as subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be. Explanation.--In this sub-section and in section 17, insurance fund means any fund established by an employer under any scheme for providing benefits in the nature of life insurance to employees, whether linked to their deposits in provident fund or not, without payment by the employees of any separate contribution or premium in that behalf. [2] Without prejudice to the provisions of sub-section (1), if any amount is due from an employer whether in respect of the employee's contribution deducted from the wages of the employee or the employer's contribution, the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts. 19. In view of the above provision, namely, Section 11 of the EPF MP Act, 1952, it is submitted by Ld. Counsel for the Respondent, that the debts arising under the EPF MP Act, 1952 up to the date of insolvency or winding up, is deemed to be included in the list of debts also having a statutory first charge on the assets of the establishment in relation to dues as envisaged u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under liquidation avowedly for the benefit of the creditors of the said company, however, on the other hand, the Respondent, being a statutory body constituted under the provisions of EPF MP Act, 1952 is projecting its priority for the realisation of the PF dues based on the said Act. The paramount interest of the workmen/employees should take precedence over all the other stakeholders of which position we do not have any disagreement, save the contention taken by the Respondent that it is not even required to lodge a claim and exercise an option to stand outside the liquidation process in relation to the statutorily attached assets and recover the PF dues for the reasons stated in paragraph supra as the act of filing the Claim by any person, including any statutory or government body coming under the domain of public law puts the IRP/RP/Liquidator on notice about the Claim and does not vest with the IRP/RP/Liquidator to adjudicate upon the claim preferred, as that will be venturing into the jurisdiction of the other authorities and encroaching on their powers as provided under the respective statutes of which an example had been given by the Hon'ble Supreme Court in relatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on whose behalf they are representing. Similarly, the Liquidator or for that matter IRP/RP is also required to be wary in dealing with the assets of the Corporate Debtor upon coming to know the estimate of dues in relation to PF, Pension and Gratuity whether put on notice by the concerned Authority, more so, taking into consideration the regulations of IBBI relating to liquidation process and the claims concerning the workmen where an onus is placed upon the Liquidator to ascertain the liability from the books of accounts of the Corporate Debtor, where the workers have not lodged a claim formally. 24. In this connection, it must be noted that while the EPF MP Act, 1952 seeks to exclusively protect the interest of the workmen/employees who are part of a business entity and is one amongst the stakeholders, this Tribunal is required to balance the interest of all the stakeholders as is evident from the respective Statement of Objects and Reasons, giving the purpose of the respective statutes and leading to its very enactments. 25. In relation to the EPF MP Act, 1952 the statement of objects and reasons, inter-alia given for its enactment reads as follows:- STATEMENT O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of insolvency and liquidation and more so during liquidation as contemplated IBC, 2016 to balance the interests of all the stakeholders concerned including employees. 29. In the circumstances, this Tribunal is required to take a broader view without in any way compromising the interests of the employees, taking into consideration the provisions of EPF MP Act, 1952 and Section 36 of IBC, 2016 while considering and exercising in relation to the jurisdictional issue in relation to the question on hand, of course within the textual hook of IBC, 2016 in doing so, as laid down by the Hon'ble Apex Court in Gujarat Urja Vikas Nigam Limited's case and noted above in paragraphs supra. In this connection, it is seen that it in the course of implementation of the Code in retrospect, both binding as well as persuasive precedents that have evolved which if it has a bearing, this Tribunal is bound to take note of in arriving at its decision in the instant case. (i) In the matter of Regional Provident Fund Commissioner Ahmedabad vs. Ramachandra D. Choudhry (Company Appeal (AT)(Insolvency) No. 1001 of 2019 In answering the question as to whether PF authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Professional Sholingur Textiles Limited in Company Appeal (AT)(Insolvency) No. 1521 of 2019 The issue which came up before the Appellate Tribunal concerned about the attachment of immoveable properties of the Corporate Debtor by the PF authorities in relation to PF dues and consequent attachment and thereafter issue of a Recovery Certificate to the concerned Recovery Officer in exercise of the powers conferred under Section 8(B) to 8(G) of EPF MP Act, 1952 and the validity of such attachment in view of the initiation of the CIRP and moratorium imposed under Section 14 of IBC, 2016 by this Tribunal it was held by the Appellate Tribunal that the attachment effected by the PF authorities was prior in time to the initiation of the CIRP of the corporate debtor, even though the entries in the concerned Sub Registrar's record of the said attachment was recorded in the register during the CIRP, would still be a valid attachment. (iv) In the matter of Precision Fasteners Ltd. through the Liquidator Vs. Employees Provident Fund Organisation, Thane Ord in MA 576 752/2018 in C.P.(IB) 1339(MB)/2017 (NCLT-Mumbai Bench) reported in Upon a detailed consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the one hand and the EPFO authorities-Respondent on the other. However, it is also required to be noted that because of the dispute between the parties, the Liquidation Process of the Corporate Debtor is stuck in a legal quagmire which is also required to be put on track. 30. Taking into consideration the discussions as above under the circumstances since the Corporate Debtor is undergoing liquidation process, and the application filed in effect seeks for determining priorities in relation to the claims and its satisfaction out of the assets of the Corporate Debtor, however, subject to whatever security interest created over it and the adjudication to be done by this Tribunal taking into consideration the provisions of IBC, 2016 and determine as who will have the first charge over the assets and right to invoke it towards the satisfaction of its claim, we are of the considered view that this Tribunal has the jurisdiction to entertain the application as filed before it and it is accordingly dealt with. CONCLUSION (i) In relation to the Claim of the PF Authorities in the instant case, the PF Authorities are entitled to the satisfaction of the full claim in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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