9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (5) TMI 444 - AT - Insolvency and BankruptcyApproval of Resolution Plan - provision for the payment of Provident Fund dues not made - failure to consider and appreciate the legislative intent behind the exclusion of Provident Fund dues from the Liquidation Estate of the Corporate Debtor - HELD THAT - Before coming into force of the Insolvency and Bankruptcy Code 2016 while sanctioning a scheme for rehabilitation of a sick company under Section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 Central Board constituted under the EPF Act was authorised under Section 14B of the Act to reduce or waive off the damages levied about an establishment which is a sick industrial company. In the instant case, the Appellant, despite filing a claim of ₹ 1,95,01,301/- has raised a claim of ₹ 2,84,69,797/-,i.e. much higher than the amount claimed by the Appellant in its claim before the Resolution Professional. The Appellant's claim admitted by Respondent No. 1/RP had been considered while formulating the Resolution Plan of the Corporate Debtor. The said Resolution Plan was further approved by the Adjudicating Authority/NCLT vide its Order dated July 20 2020, in conformity with Section 30 (2) of the I B Code,2016 and the Rules and Regulations framed thereunder. The Appellant has not provided any reason or justification for raising the enhanced claim of ₹ 2,84,69,797/-, which is much higher than the amount claimed. After approval of the Resolution Plan under Section 31, the claims as provided in the Resolution Plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors including the Central Government, any State Government or any Local Authority, Guarantors and other Stakeholders. On the approval of the Resolution Plan by the Adjudicating Authority, all such claims that are not a part of the Resolution Plan shall stand extinguished. No person will be entitled to initiate continuing any proceedings regarding a claim that is not part of the Resolution Plan. The Appellants claim about Provident Fund dues amounting to ₹ 1,95,01,301/-, which was earlier raised at the time of initiation of CIRP and was later admitted, stood frozen and will be binding on all the Stakeholders, including the Central Government. After approval of the Resolution Plan by the Adjudicating Authority, all such claims that are not part of the Resolution Plan shall stand extinguished. No person is entitled to initiate or continue any proceeding regarding a claim that is not part of the Resolution Plan. Appeal dismissed.
Issues Involved:
1. Waiver of Provident Fund dues in the Resolution Plan. 2. Adherence to Section 11 of the Employees Provident Fund Act (EPF Act). 3. Compliance with Section 36 (4) (a) (iii) and Section 30 (2) (e) of the Insolvency and Bankruptcy Code (IBC) 2016. 4. Validity of the enhanced claim amount by the appellant. 5. Applicability of Section 36 (4) (a) (iii) of IBC during the Corporate Insolvency Resolution Process (CIRP) as opposed to liquidation. 6. Binding nature of an approved Resolution Plan under Section 31 of IBC. Detailed Analysis: 1. Waiver of Provident Fund Dues in the Resolution Plan: The appellant contested the waiver of Provident Fund dues in the Resolution Plan, arguing it violated Section 11 of the EPF Act, which prioritizes Provident Fund dues over other debts. The appellant claimed total dues of ?2,84,69,797/- whereas the Resolution Plan admitted ?1,95,01,301/-. 2. Adherence to Section 11 of the EPF Act: The appellant argued that Section 11 of the EPF Act contains a non-obstante clause, ensuring Provident Fund dues have a first charge on the assets of the establishment. The appellant contended that the Resolution Plan contravened this provision by not giving priority to the Provident Fund dues. 3. Compliance with Section 36 (4) (a) (iii) and Section 30 (2) (e) of IBC 2016: The appellant claimed the Resolution Plan failed to comply with Section 36 (4) (a) (iii) and Section 30 (2) (e) of IBC, which exclude Provident Fund dues from the liquidation estate. The appellant argued that the Resolution Plan should have considered these dues outside the liquidation estate. 4. Validity of the Enhanced Claim Amount by the Appellant: The appellant initially submitted a claim of ?1,95,01,301/- but later raised it to ?2,84,69,797/-. The respondent argued there was no basis for the enhanced claim and that the appellant, having full knowledge of the CIRP, could not now seek more than initially admitted. 5. Applicability of Section 36 (4) (a) (iii) of IBC During CIRP: The respondent contended that Section 36 (4) (a) (iii) of IBC applies only during the formation of the liquidation estate by the liquidator and not during CIRP. Since the Corporate Debtor was under a Resolution Plan and not in liquidation, these provisions were deemed inapplicable. 6. Binding Nature of an Approved Resolution Plan under Section 31 of IBC: The tribunal referenced the Supreme Court's ruling in "Ghanashyam Mishra and Sons Private Limited v Edelweiss Asset Reconstruction Company Limited," which held that once a Resolution Plan is approved under Section 31, all claims stand frozen and are binding on all stakeholders, including the Central Government. Any claims not part of the Resolution Plan are extinguished, and no new claims can be initiated or continued. Conclusion: The tribunal concluded that the appellant's claim for enhanced Provident Fund dues lacked merit. The approved Resolution Plan, which admitted ?1,95,01,301/- in Provident Fund dues, was binding on all stakeholders. The tribunal dismissed the appeal, stating that no claims outside the approved Resolution Plan could be entertained. Order: The appeal was dismissed with no order as to costs.
|
