9911796707
TMI Blog2019 (8) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) of Section 36, as all sums due to any workman or employees from the provident fund, the pension fund and the gratuity fund, do not form part of the liquidation estate/ liquidation assets of the Corporate Debtor , the question of distribution of the provident fund or the pension fund or the gratuity fund in order of priority and within such period as prescribed under Section 53(1), does not arise - The workmen s dues is mentioned in clause (b) (i) of Section 53(1), which are the dues for the period of twenty-four months preceding the liquidation commencement date. While applying Section 53 of the I B Code , Section 326 of the Companies Act, 2013 is relevant for the limited purpose of understanding workmen s dues which can be more than provident fund, pension fund and the gratuity fund kept aside and protected under Section 36(4) (iii) - This apart, as the provisions of the I B Code have overriding effect in case of consistency in any other law for the time being enforced, we hold that Section 53(1) (b) read with Section 36(4) will have overriding effect on Section 326(1) (a), including the Explanation (iv) mentioned below Section 326 of the Companies Act, 2013. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 53 of the I B Code and pay them the Provident Fund Dues , Pension Fund Dues and Gratuity Fund Dues as these will not constitute part of the liquidation estate. 4. The Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi, by impugned order dated 19th March, 2019, allowed the CA No. 19(PB)/ 2019 and held that the Provident Fund Dues , Pension Fund Dues and Gratuity Fund Dues cannot be part of Section 53 of the I B Code . The State Bank of India , a Secured Creditor , has challenged the order in this appeal. 5. Learned counsel appearing on behalf of the Appellant- State Bank of India submitted that for the purpose of distribution of assets of the Corporate Debtor under Section 53 of the I B Code , dues of employees as mentioned in sub-clause (c) of sub-section (1) therein includes the contribution of Provident Fund . 6. It placed reliance on Explanation below Section 53 to suggest that the workmen s dues shall have the same meaning as assigned to it in Section 326 of the Companies Act, 2013. 7. Reliance has been placed on Explanation (iv) below Section 326 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all liquidation estate assets which shall include the following: - ( a) any assets over which the corporate debtor has ownership rights, including all rights and interests therein as evidenced in the balance sheet of the corporate debtor or an information utility or records in the registry or any depository recording securities of the corporate debtor or by any other means as may be specified by the Board, including shares held in any subsidiary of the corporate debtor; ( b) assets that may or may not be in possession of the corporate debtor including but not limited to encumbered assets; ( c) tangible assets, whether movable or immovable; ( d) intangible assets including but not limited to intellectual property, securities (including shares held in a subsidiary of the corporate debtor) and financial instruments, insurance policies, contractual rights; ( e) assets subject to the determination of ownership by the court or authority; ( f) any assets or their value recovered through proceedings for avoidance of transactions in accordance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority and within such period as may be specified, namely: - ( a) the insolvency resolution process costs and the liquidation costs paid in full; ( b) the following debts which shall rank equally between and among the following: ( i) workmen s dues for the period of twenty-four months preceding the liquidation commencement date; and ( ii) debts owed to a secured creditor in the event such secured creditor has relinquished security in the manner set out in section 52; ( c) wages and any unpaid dues owed to employees other than workmen for the period of twelve months preceding the liquidation commencement date; ( d) financial debts owed to unsecured creditors; ( e) the following dues shall rank equally between and among the following: - ( i) any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not arise. 17. The workmen s dues is mentioned in clause (b) (i) of Section 53(1), which are the dues for the period of twenty-four months preceding the liquidation commencement date. 18. In view of the aforesaid specific provisions, the Explanation (iii) below Section 53, for the purpose of meaning of workmen s dues , the Appellant cannot derive the meaning as assigned to it in Section 326 of the Companies Act, 2013, including the Explanation below it. 19. Section 326 of the Companies Act, 2013, since its amendment w.e.f. 1st December, 2016 provides overriding preferential payments , relevant of which reads as follows: 326. Overriding Preferential Payments. ( 1) In the winding up of a company under this Act, the following debts shall be paid in priority to all other debts:- ( a) workmen's dues; and ( b) where a secured creditor has realised a secured asset, so much of the debts due to such secured creditor as could not be realised by him or the amount of the workmen's portion in his security (if payable under the law), wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due in respect of any compensation or liability for compensation under the said Act in respect of the death or disablement of any workman of the company; ( iv) all sums due to any workman from the provident fund, the pension fund, the gratuity fund or any other fund for the welfare of the workmen, maintained by the company; ( c) workmen's portion'', in relation to the security of any secured creditor of a company, means the amount which bears to the value of the security the same proportion as the amount of the workmen's dues bears to the aggregate of the amount of workmen's dues and the amount of the debts due to the secured creditors. 20. There is a difference between the distribution of assets and preference/ priority of workmen s dues as mentioned under Section 53(1) (b) of the I B Code and Section 326(1) (a) of the Companies Act, 2013. It has also been noticed that Section 53(1) (b) (i) which relates to distribution of assets, workmen s dues is confined to a period of twenty-four months preceding the liquidation commencement date. 21. While applying Section 53 of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
