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2022 (6) TMI 496 - Tri - Insolvency and BankruptcyCIRP - resolution plan - claim of priority over other creditors - PF and allied dues, including interest of the employees - Rejection of revised claim - seeking direction to Respondents to pay off the revised claim of the Applicant on first priority from and out of the liquidation assets/estate of the Respondents - HELD THAT - Any penal damages and interest levied by the PF Authorities under Section 14B 7Q of the EPF Miscellaneous Act, 1952 would form part of any amount due under Section 11(2) of EPF Miscellaneous Act, 1952. Under the said circumstances, the contention of the Learned Counsel for the Respondent that the Penal damages and Interest under Section 14B and 7Q of the EPF Miscellaneous Act 1952 levied by the Applicant, should be covered under the waterfall mechanism, goes against the well-established position of law. The PF authorities are entitled to the satisfaction of the full claim in relation to the PF dues including interest. Further, it is to be taken note that the entire amount of Rs. 28,43,387/- do not form part of the Liquidation estate - Application disposed off.
Issues:
1. Application to set aside rejection of revised claim amount under Insolvency and Bankruptcy Code. 2. Rejection of claim by Liquidator based on jurisdictional grounds. 3. Entitlement of Provident Fund authorities to claim interest and damages. 4. Interpretation of statutory priority of dues from employer under EPF Act. 5. Disposal of the application under Section 42 of IBC. Issue 1: Application to Set Aside Rejection of Revised Claim: The Tribunal addressed an Application filed under the Insolvency and Bankruptcy Code seeking to set aside the rejection of a revised claim amount by the Liquidator. The Applicant sought direction for payment from the liquidation assets, emphasizing the importance of the claim's validity and priority. Issue 2: Rejection of Claim by Liquidator: The Liquidator rejected the revised claim citing violations and jurisdictional issues. The rejection was based on discrepancies in the claim and non-compliance with EPF Act provisions. The Liquidator asserted that certain amounts were premature claims and not acceptable, prompting the Applicant to challenge this decision. Issue 3: Entitlement of Provident Fund Authorities: The Tribunal deliberated on the entitlement of Provident Fund authorities to claim interest and damages. It referenced legal precedents indicating that such claims should be honored, emphasizing that penal damages and interest under the EPF Act should not be excluded from the amount due from the employer. Issue 4: Interpretation of Statutory Priority of Dues under EPF Act: The judgment highlighted the statutory priority of dues from the employer under the EPF Act, emphasizing the significance of full payment of PF dues, including interest. Legal interpretations clarified that penal damages and interest levied by PF authorities should be considered part of the amount due from the employer, contrary to arguments suggesting coverage under the waterfall mechanism. Issue 5: Disposal of the Application under Section 42 of IBC: Ultimately, the Tribunal concluded that the PF authorities were entitled to the full satisfaction of the claim, including interest, emphasizing that the claim amount did not form part of the Liquidation estate. The application was disposed of with directions to honor the PF dues and settle the claim accordingly. This detailed analysis of the judgment provides insights into the legal intricacies surrounding the rejection of a revised claim amount under the Insolvency and Bankruptcy framework, emphasizing the entitlement of Provident Fund authorities to claim interest and damages as part of the statutory priority of dues from the employer under the EPF Act.
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