2011 (2) TMI 1524 - HC - Companies Law

Summary

Issues involved:
The judgment involves the admissibility of employer's contribution and damages under section 530 of the Companies Act, 1956 and section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

Admissibility of Employer's Contribution:
The company was ordered to be wound up, and the official liquidator took possession of the assets. The appellant filed a claim for employer's contribution towards employees provident fund, which was admitted as a preferential claim under section 530 of the Companies Act. The employer's contribution was determined by the competent authority under the EPF Act, and the claim was submitted after the delay was condoned. The claim for employer's contribution prior to the winding up order was admitted as a preferential claim under section 530 of the Companies Act. The claim for damages, however, was held inadmissible as it was claimed after the passing of the winding up order.

Admissibility of Damages:
The appellant contended that the damages should be recovered as a preferential claim on a priority basis under section 11(2) of the EPF Act. The counsel argued that the rejection of the claim for damages by the official liquidator was contrary to the provisions of the EPF Act. The official liquidator, on the other hand, argued that damages claimed after the issuance of the recovery certificate were not preferential claims under section 530 of the Companies Act. The official liquidator stated that due to the available funds and the claims of secured creditors and workmen, the damages claimed were not admissible.

Legal Analysis:
The court considered the facts that the employer's contribution and damages were determined under the EPF Act. The employer's contribution was admitted as a preferential claim under section 530 of the Companies Act. However, the damages claimed were held inadmissible as they were determined after the winding up order. The court noted that no recovery could be made for damages without a recovery certificate issued under the EPF Act. Therefore, the rejection of the claim for damages by the official liquidator was upheld as no error was found in the decision.

Conclusion:
The court dismissed the company application as it lacked merit, and no costs were awarded. The judgment reaffirmed the admissibility of the employer's contribution as a preferential claim under section 530 of the Companies Act but upheld the rejection of the damages claim as it was made after the passing of the winding up order.