9911796707
TMI Blog2022 (3) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... nd dues in terms of the provisions of the Employees Provident Funds and Miscellaneous Provident Fund Act, 1952 immediately by releasing the balance amount of (₹ 1,35,06,391 full dues (minus) considered in the Resolution Plan ₹ 78,00,000). The impugned order dated 02nd April, 2019 approving the Resolution Plan stands modified - appeal disposed off. - Company Appeal (AT) (Ins) No. 483 of 2019 - - - Dated:- 11-3-2022 - [Justice Ashok Bhushan] Chairperson And (Dr. Ashok Kumar Mishra) Member(Technical) For the Appellant : Mr. Shantanu Awasthi, Mr. Shikhar Mittal, Advocates For the Respondents : Mr. Abhishek Anand, Mr. Sahil Bhatia, Advocates for RP Mr. ManishKaushik, Mr. Anubhav Gupta, Mr. Ajit Singh Joher, Advocates for R2 3 JUDGMENT 1. The present appeal has been filed by the Appellant under Section 61 of the Insolvency and Bankruptcy Code, 2016 (in short Code ) against the impugned order dated 02.04.2019 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi in CA 371/C-II/ND/2018 (IB) -334(ND)/2017. 2. In order to bring clarity it is mentioned that originally as per the Appeal filed on 29th April, 2019 there w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Adjudicating Authority vide its order dated 26th October, 2017 initiated the CIRP of the CD/Respondent No.3 under Section 9 of the Code. Mr. Naveen Kumar jain was appointed as the Interim Resolution Professional by the Adjudicating Authority who took charge on 18th November, 2017. The IRP was changed in the 1st Committee of Creditors (CoC) meeting held on 22nd December, 2017 and Mr. Vinay Talwar, the Resolution Professional (RP) was confirmed by the Adjudicating Authority on 29th January, 2018 (appearing at page no.42 at para 3 of the impugned order). 5. The CD in CIRP is engaged in designing and manufacturing of customized solutions in the field of electronic/IT applications including digital solutions. The liabilities of the CD as verified by the RP is ₹ 68.50 Crore. The Resolution Applicant has provided an amount of ₹ 12.99 Crore towards settlement of all past dues and liabilities of the CD which includes an amount of ₹ 9 crore towards Secured Financial Creditors and ₹ 50 lac towards Unsecured Financial Creditors . The employees and workman are getting ₹ 1.03 crore against the claim of ₹ 8.17 crore. What is stated in the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod upto March, 2018 against which only ₹ 78 lacs has been provisioned for in the Resolution Plan submitted by the Resolution Applicant. The Ld counsel for the Appellant has submitted that this is a misconduct on the part of R1/RP in calculating the provident fund amount. The employee has alleged that there is a disparity in releasing the percentage of payment between the dues of Financial Creditor and rightful due of employees and workmen. The plan is discriminatory and non-payment of PF dues amounts to violation of the provisions of EPF and MP Act, 1952. They have also alleged that initiation of CIRP has been filed first by the employees and workmen under Section 9 of the Code and their interest has not been taken care of in the Resolution Plan. The Resolution plan provides for unequal treatment to the employees and is violative of the principles enshrined under Article 14 of the Constitution of India. There is a large gap between the percentage of payment released to the Financial Creditor and workman. They have also challenged that how Resolution Applicant who is in totally unrelated business in dairy industry is eligible to take over highly technical and specialized fie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the resolution plan. Post amendment, Regulation 38 reads as follows: 38. Mandatory contents of the resolution plan.- (1) The amount due to the operational creditors under a resolution plan shall be given priority in payment over financial creditors. (1-A) A resolution plan shall include a statement as to how it has dealt with the interests of all stakeholders, including financial creditors and operational creditors, of the corporate debtor. xxx xxx xxx 82. An argument has been made by counsel appearing on behalf of the petitioners that in the event of liquidation, operational creditors will never get anything as they rank below all other creditors, including other unsecured creditors who happen to be financial creditors. This, according to them, would render Section 53 and in particular, Section 53(1)(f) discriminatory and manifestly arbitrary and thus, violative of Article 14 of the Constitution of India. Section 53(1) reads as follows: 53. Distribution of assets.-(1) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st sought to be protected, having relation to the object sought to be achieved by the statute in question, Article 14 does not get infracted. For these reasons, the challenge to Section 53 of the Code must also fail. 10. It was also stated by the Ld. Counsel that the financial creditors are being paid 21.6% and the operational creditors are paid 12.67%. It was also submitted by them that it is the ultimate decision of the CoC to decide what to pay and how much to pay each class or sub-class of creditors. The payments approved by the CoC are a commercial decision of the CoC and Appellant has no locus standi to challenge the commercial decision of the CoC. They have referred the decision of Hon ble supreme court in the case of K.Shashidhar Vs. Indian Overseas Bank Civil Appeal No.10673 of 2018 para 33 has given below: 33.There is an intrinsic assumption that financial creditors are fully informed about the viability of the corporate debtor and feasibility of the proposed resolution plan. They act on the basis of thorough examination of the proposed resolution plan and assessment made by their team of experts. The opinion on the subject matter expressed by them after due de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot take certain decisions relating to management of the corporate debtor without the prior approval of at least 66% of the votes of the Committee of Creditors. Section 28 of the Code is important and is set out hereinbelow: 28. Approval of committee of creditors for certain actions (1) Notwithstanding anything contained in any other law for the time being in force, the resolution professional, during the corporate insolvency resolution process, shall not take any of the following actions without the prior approval of the committee of creditors namely:- (a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in their meeting; (b) create any security interest over the assets of the corporate debtor; (c) change the capital structure of the corporate debtor, including by way of issuance of additional securities, creating a new class of securities or buying back or redemption of issued securities in case the corporate debtor is a company; (d) record any change in the ownership interest of the corporate debtor; (e) give instructions to financial institutions maintaining accounts of the corporate debtor for a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 38. This Regulation fleshes out Section 30(4) of the Code, making it clear that ultimately it is the commercial wisdom of the Committee of Creditors which operates to approve what is deemed by a majority of such creditors to be the best resolution plan, which is finally accepted after negotiation of its terms by such Committee with prospective resolution applicants. 46. This is the reason why Regulation 38(1A) speaks of a resolution plan including a statement as to how it has dealt with the interests of all stakeholders, including operational creditors of the corporate debtor. Regulation 38(1) also states that the amount due to operational creditors under a resolution plan shall be given priority in payment over financial creditors. If nothing is to be paid to operational creditors, the minimum, being liquidation value - which in most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximise the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commerci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, on the request of the representative of the operational creditor was enhanced to 10% finally to 12.67% and the Resolution Plan has been unanimously approved in the 9th meeting of the CoC where representative of the Operational creditor was present. c. They have also stated that since the company has no separate gratuity fund so the employees are not eligible to get the gratuity however the Resolution Applicant has committed to make a payment of 20% of the gratuity claim. They have also stated that the commercial decision of the CoC is non-justiciable. Hence, the appeal needs to be dismissed. 12. The Adjudicating Authority has approved the Resolution Plan vide impugned order dated 02nd April, 2019 in terms of the approval of the CoC and has also made the following observations as depicted below: While we are not endorsing any specified waivers or extinguishing of claims, the Resolution Applicant shall be entitled to all such waivers as are legally permissible under law. 13. We have carefully gone through the submissions made by the Ld counsel for the parties and the documents available on records and laid down provisions of the I B Code, 2016, r/w the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in the event of a liquidation of the corporate debtor under section 53; or (ii) the amount that would have been paid to such creditors, if the amount to be distributed under the resolution plan had been distributed in accordance with the order of priority in sub-section (1) of section 53, whichever is higher, and provides for the payment of debts of financial creditors, who do not vote in favour of the resolution plan, in such manner as may be specified by the Board, which shall not be less than the amount to be paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1. - For removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2. - For the purpose of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under any provision of this Act or the Scheme or [the [Pension] Scheme or the Insurance Scheme], as the case may be, in respect of the period up to the date of such transfer: Provided that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer.] From the above stated provisions of the PF Act that the Resolution Applicant is also liable to pay the contribution and other sums due from the employer under any provisions of this act as the case may be in respect of the period up to the date of such transfer. All this requires that the explicit provisions of the above said PF Act needs to be complied with. This aspect is justiciable as a duty has been casted on the Resolution Professional/Adjudicating Authority/ on this Tribunal. This is not a commercial wisdom as compliance of law is a must. The aspect of parity for paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Desai, who spoke for the Bench, in his inimitable style, in the following words: The approach of the respondents raises a vital and none too easy of answer, question as to why pension is paid. And why was it required to be liberalised? Is the employer, which expression will include even the State, bound to pay pension? Is there any obligation on the employer to provide for the erstwhile employee even after the contract of employment has come to an end and the employee has ceased to render service? - What is a pension? What are the goals of pension? What public interest or purpose, if any, it seeks to serve? If it does seek to serve some public purpose, is it thwarted by such artificial division of retirement pre and post a certain date? We need seek answer to these and incidental questions so as to render just justice between parties to this petition. The antiquated notion of pension being a bounty a gratituous payment depending upon the sweet will or grace of the employer not claimable as a right and, therefore, no right to pension can be enforced through Court has been swept under the carpet by the decision of the Constitution Bench in Deoki Nandan Prasad ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
