9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (4) TMI 855 - Tri - Insolvency and BankruptcyAttachment of movables by Respondent-EPFO for recovery of PF dues prior to the initiation of CIRP - Order of Attachment issued by the PF Authorities-Respondent not hit by moratorium - Respondent did not file any claim during the process of CIRP or thereafter when this Tribunal ordered for the Liquidation of the Corporate Debtor - HELD THAT - Since the admission of the Petition on 05.10.18 and initiation of CIRP of the Corporate Debtor, the concerned Corporate Debtor has become, due to its insolvency, amenable to the jurisdiction of this Tribunal. Upon initiation of the CIRP of the Corporate Debtor it is to be noted that a sequence of steps is required to be initiated by this Tribunal and the IRP appointed by this Tribunal, including action under Section 13 of IBC, 2016, the declaration of moratorium for the purposes of Section 14 of IBC, 2016 and causing a public announcement calling for the submission of claims under Section 15 of IBC, 2016. Perusing the definition 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 insolvency is deemed to be included amongst the debts - it is advised of PF authorities, instead of creating a legal logjam of the insolvency or liquidation process, they are required to approach the issue in a prudent and level headed fashion and in the interest of the employees/workmen concerned 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. The onus of this Tribunal as an Adjudicating Authority named in IBC, 2016 are of much wider amplitude as compared to the statutory authority named in EPF MP Act, 1952 as 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 - 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. 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, this Tribunal has the jurisdiction to entertain the application as filed before it and it is accordingly dealt with. Application disposed off.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) and appointment of Interim Resolution Professional (IRP). 2. Liquidation of Corporate Debtor and the role of the Liquidator. 3. Issuance of sale notice by Employees' Provident Fund Organisation (EPFO) and its implications. 4. Jurisdiction of the Tribunal vis-a-vis EPF & MP Act, 1952 and IBC, 2016. 5. Priority of EPF dues and their exclusion from the liquidation estate. 6. Validity of attachment orders issued by EPFO before and during CIRP. 7. Conduct of auction by the Liquidator and its legality in light of existing attachments. 8. Directions for compliance and resolution of outstanding claims. Detailed Analysis: 1. Initiation of CIRP and Appointment of IRP: The Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor, M/s. SAS Autocom Engineers India Pvt. Ltd., by this Tribunal on 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. The Tribunal appointed the Applicant as the Interim Resolution Professional (IRP), who continued as the Resolution Professional (RP) following the decision of the Committee of Creditors (CoC). 2. Liquidation of Corporate Debtor and Role of the Liquidator: Based on the CoC's recommendation for liquidation, the RP filed an application seeking the liquidation of the Corporate Debtor, which was ordered by the Tribunal on 08.07.2019. The Liquidator then moved an application to stay the sale of the Corporate Debtor's movable properties by EPFO, which was initially stayed by the Tribunal. 3. Issuance of Sale Notice by EPFO: The EPFO issued a sale notice dated 23.07.2019 for the sale of the Corporate Debtor's movable properties, claiming an outstanding amount of ?38,89,229/-. The Liquidator contested this sale notice, stating that EPFO did not file a claim during the CIRP or liquidation process. The Tribunal directed EPFO to file necessary forms before the Liquidator for proper consideration and to follow the procedure under IBC, 2016. 4. Jurisdiction of the Tribunal vis-a-vis EPF & MP Act, 1952 and IBC, 2016: The Tribunal has exclusive jurisdiction under Section 238 of IBC, 2016, which overrides other laws. The Tribunal's jurisdiction includes entertaining applications or proceedings by or against the corporate debtor, claims made by or against the corporate debtor, and questions of priorities or law arising out of insolvency resolution or liquidation proceedings. 5. Priority of EPF Dues and Exclusion from Liquidation Estate: Section 36(4)(a)(iii) of IBC, 2016, provides that all sums due to any workman or employee from the Provident Fund, Pension Fund, and Gratuity Fund are not to be included in the liquidation estate assets. The Tribunal noted that EPF authorities must file claims during the CIRP or liquidation process to put the IRP/RP/Liquidator on notice about the claim. 6. Validity of Attachment Orders Issued by EPFO: The attachment of movable properties by EPFO was effected on 25.04.2018, prior to the initiation of CIRP on 05.10.2018. The Tribunal held that the attachment order issued by EPFO is not hit by the declaration of moratorium under Section 14 of IBC, 2016, following the ratio of the Hon'ble NCLAT. 7. Conduct of Auction by the Liquidator: The Liquidator conducted an auction on 12.02.2020 while the matter was pending before the Tribunal. The Tribunal set aside the auction as it could not be sustained in view of the statutory first charge on the assets of the Corporate Debtor in relation to PF dues, which had not been discharged. 8. Directions for Compliance and Resolution of Outstanding Claims: The Tribunal directed that the Liquidator can pay off the amount due under the EPF & MP Act, 1952, to the satisfaction of EPFO, in priority to all other debts. If the Liquidator fails to do so, EPFO is free to proceed with the recovery of PF dues as per the provisions of EPF & MP Act, 1952. Any surplus after appropriation of PF dues should be lodged with the Liquidator as part of the liquidation estate assets. Conclusion: (i) EPFO is entitled to the satisfaction of full PF dues including interest, as reflected in the Proclamation of Sale Notice issued on 23.07.2019. (ii) The attachment of movables by EPFO prior to the initiation of CIRP is valid and not affected by the moratorium under Section 14 of IBC, 2016. (iii) The auction conducted by the Liquidator is set aside due to the existing statutory first charge on the assets. (iv) The Liquidator is directed to pay off the PF dues within two weeks, failing which EPFO can proceed with the recovery. Any surplus after PF dues appropriation should be lodged with the Liquidator. The applications IA/370/2020, IA/31/2021, and MA/868/2019 are disposed of accordingly.
|
