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2023 (3) TMI 18 - AT - Insolvency and BankruptcyApproval of the Resolution Plan - whether PF , Gratuity and Workmen/Employees dues have to be paid in full. - Section 30(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - Limited enquiry which can be made by the Adjudicating Authority/this Tribunal while examining the Plan is to see whether the Plan complies with requirements as provided for in Section 30(2) of the Code. The minimum that is required to be paid to Operational Creditors under a Resolution Plan said to be under Section 30(2)(b) of the Code as being the amount to be paid to such creditors in the event of liquidation of the Corporate Debtor under Section 53. Hon ble Apex Court in Ebix Singapore Private Limited Vs. Committee of Creditors of Educomp Solutions Ltd. 2021 (9) TMI 672 - SUPREME COURT has held that the Resolution Applicant has no jurisdiction to withdraw from the Resolution Plan or modify the Plan. The Adjudicating Authority has ample jurisdiction only to interfere with the Resolution Plan in the event that the Plan violates, or does not adhere to any of the provisions of Section 30(2) of the Code. It is categorically mentioned by the Resolution Professional that the Secured Financial Creditors and workmen were treated equally under the Plan with the allocation of 35.13 % of the admitted claim amounts and therefore the claims of workmen were fully considered. Having regard to the ratio of the Judgement in Jet Aircraft Maintenance Engineers Welfare Association 2022 (11) TMI 332 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI of this Tribunal, upheld by the Hon ble Apex Court, this Tribunal is of the earnest view that PF and Gratuity is to be paid in full as per the provisions of EPF and NP Act, 1952 and payment of Gratuity Act, 1972. Since admittedly the amounts paid are only 35.13% having treated them as Secured Creditors, it is opined that indeed there was a violation of the provisions of Section 30(2) of the Code, with respect to the payment of PF and Gratuity only. Undervaluation - scope and performance of SRA in taking over the unit are sans evidence - HELD THAT - This Tribunal, does not find any other material irregularity, in the Approval of the Resolution Plan. Appeal allowed in part.
Issues Involved:
1. Approval of the Resolution Plan under Section 30(1) of the Insolvency and Bankruptcy Code, 2016. 2. Treatment of Provident Fund (PF) and Gratuity Claims. 3. Compliance with Section 30(2)(e) of the Insolvency and Bankruptcy Code. 4. Commercial Wisdom of the Committee of Creditors (CoC). 5. Allegations of undervaluation and scope of the Successful Resolution Applicant (SRA). Issue-wise Analysis: 1. Approval of the Resolution Plan under Section 30(1) of the Insolvency and Bankruptcy Code, 2016: The National Company Law Tribunal (NCLT), Kochi Bench, approved the Resolution Plan submitted by the Resolution Applicant, M/s KINFRA, with specific directions. The approval included binding the Corporate Debtor, its employees, members, creditors, and other stakeholders to the Resolution Plan while excluding certain reliefs and concessions sought under Chapter XIII. The moratorium under Section 14 of the Code ceased, and the Resolution Professional (RP) was discharged from duties, directing the handover of records and premises to the Resolution Applicant. 2. Treatment of Provident Fund (PF) and Gratuity Claims: The appeals primarily challenged the Resolution Plan for admitting only 35.13% of the Provident Fund and Gratuity Claims. The appellants argued that the plan contravened Section 30(2)(e) of the Code by not fully considering the statutory obligations under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and the Payment of Gratuity Act, 1972. The Tribunal cited precedents, including the case of 'State Bank of India vs. Moser Baer Karamchari Union & Anr.', affirming that Provident Fund, Gratuity Fund, and Pension Fund claims are exempt from the waterfall mechanism under Section 53 of the Code and should be paid in full. 3. Compliance with Section 30(2)(e) of the Insolvency and Bankruptcy Code: The Tribunal assessed whether the Resolution Plan met the requirements of Section 30(2)(e) of the Code, which mandates that the plan should not contravene any provisions of law. The Tribunal concluded that the partial payment of Provident Fund and Gratuity Claims violated the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and the Payment of Gratuity Act, 1972. Therefore, the plan was found non-compliant with Section 30(2)(e). 4. Commercial Wisdom of the Committee of Creditors (CoC): The Tribunal acknowledged the limited scope of judicial review over the commercial wisdom of the CoC, as established in precedents like 'K. Sashidhar vs. Indian Overseas Bank'. However, it emphasized that the Resolution Plan must adhere to statutory requirements, including full payment of Provident Fund and Gratuity dues. The Tribunal reiterated that the CoC's decisions are subject to compliance with the law. 5. Allegations of Undervaluation and Scope of the Successful Resolution Applicant (SRA): The appellants raised concerns about the alleged undervaluation of the Corporate Debtor's assets and the SRA's intentions. The Tribunal found no substantial evidence to support these allegations and concluded that there was no material irregularity in the approval of the Resolution Plan. The Tribunal dismissed the allegations related to undervaluation and the SRA's scope of performance. Conclusion: The Tribunal directed the Successful Resolution Applicant to make full payment of unpaid Provident Fund and Gratuity dues to the workmen/employees up to the date of the Corporate Insolvency Resolution Process (CIRP), after deducting amounts already paid. The appeals were allowed in part, focusing on ensuring compliance with statutory provisions for Provident Fund and Gratuity payments. The Tribunal upheld the rest of the Resolution Plan, finding no other material irregularities.
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