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TMI Blog2022 (8) TMI 879X X X X Extracts X X X X X X X X Extracts X X X X ..... he EPFO - it is a settled issue that when it comes to non-payment of the EPF arrears by the Corporate Debtor the issue is one of compliance of Law . As clarified in the extracts, all the dues raised by the EPFO under various sections, including interests and penalties are to be paid by the new establishment under Section 17B of the Employees Provident Funds and Miscellaneous Act, 1952. Furthermore, under Section 30(2)(e) of the Resolution Plan, in order to be legitimate, the resolution plan cannot contravene any of the provisions of any law in force. Thus, in the present context, it is incumbent on the RP/SRA to ensure that Section 17B of the EPF and MP Act, 1952 are complied with. As mentioned, Section 17B lays down that in case of a transfer of Establishment, the person to whom the establishment is transferred is liable to pay the contributions and other sums due from the employer under any provision of the EPF and MP Act, 1952. Thus, the amount of Rs. 62,24,082/- demanded by the authorised officer of EPFO by letter dated 13.06.2019 and served on the Kotak Mahindra Bank on 05.07.2019 to be fully complied. The applicant's prayer to lift the lien from the account bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the corporate debtor. In the meanwhile, CIRP was initiated by this Adjudicating Authority order dated 29.10.2019 and a moratorium was declared in view of Section 14 of the IBC, 2016. Subsequently, the applicant-Resolution Professional wrote to the Bank requesting to remove all the debit freeze on his account No. 1211116245. The Resolution Professional also requested respondent No. 2-EPFO to file a claim with the Resolution Professional by its letter dated 21.01.2020. The Resolution Professional had also requested respondent No. 2-EPFO to put on hold the proceedings initiated by the EPFO by its letter dated 30.01.2020. It is stated that despite the above correspondence by the Resolution Professional, respondent No. 2-EPFO, has not filed its claim with him nor the respondent No. 1-Kotak Mahindra Bank had lifted the lien marked in the current account of the corporate debtor bearing No. 1211116245 for an amount of Rs. 62,24,082/-. 4. Notice was issued to respondents on 10.11.2020. The reply was filed by respondent No. 2-EPFO by Diary No. 01064/3 dated 09.02.2021 and Diary No. 00071/9 dated 09.02.2021. None appeared on behalf of respondent No. 1-Kotak Mahindra Bank and responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the applicant and have perused the records carefully. 8. Before adjudicating on the matter, the relevant Sections of the EPF and MP Act, 1952 are extracted below for the sake of clarity:- Section 7A of the EPF MP Act, 1952 Section 7A in The Employees' Provident Funds and Miscellaneous Provisions Act, 1952 [7A. Determination of moneys due from employers.-] (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order,- (a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and (b) determine the amount due from any employer under any provision of this Act, the Scheme or the [Pension] Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.] Section 7Q of the EPF MP Act, 1952 7Q. Interest payable by the employer.-The employer shall be liable to pay simple interest at the rate of twelve per cent per annum o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyer for payment to him of the entire amount of such money, or if it is more than the amount due, an amount sufficient to discharge the amount due. (5) The Central Provident Fund Commissioner or any officer not below the rank of Assistant Provident Fund Commissioner may, if so authorised by the Central Government by general or special order, recover any arrears of amount due from an employer or, as the case may be, from the establishment by distraint and sale of his or its movable property in the manner laid down in the Third Schedule to the Income-tax Act, 1961 (43 to 1961).] Section 14B of the EPF MP Act, 1952 14B. Power to recover damages.-Where an employer makes default in the payment of any contribution to the Fund [the [Pension] Fund or the Insurance Fund] or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 [or sub-section (5) of section 17] or in the payment of any charges payable under any other provision of this Act or of [any Scheme or Insurance Scheme] or under any of the conditions specified under section 17, [the Central Provident Fund Commissioner or such other officer as may be authorised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sikander Singh Jamuwal vs. Vinay Talwar and Others, Company Appeal (AT)(Ins) No. 483 of 2019; Case Citation (2022) iblaw in 221, NCLAT, the relevant part of which reads as follows: It is very much clear vide Section 30(2)(e) that the Resolution Plan does not contravene any of the provisions of the law for the time being in force. The Resolution Professional/Adjudicating Authority is to look at the compliance of the provisions of law. In this context, we have to refer to Section 17B of the Employees Provident Funds and Miscellaneous Act, 1952 which is depicted below: [17B. Liability in case of transfer of establishment.--Where an employer, in relation 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 transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 'Resolution Plan' stands modified to the extent above. The appeal preferred by 'Regional Provident Fund Commissioner' is allowed with aforesaid observations and directions. No costs. It is also noted that the Judgment of the Hon'ble NCLAT in the case of Tourism Finance Corporation of India Ltd. vs. Rainbow Papers Ltd.(supra) has been affirmed by the Hon'ble Supreme Court Civil Appeal No. 1920 of 2020 decided on 20-05-2020(2020) ibclaw.in 145 SC. (emphasis supplied) 11. In short, it is a settled issue that when it comes to non-payment of the EPF arrears by the Corporate Debtor the issue is one of compliance of Law . As clarified in the extracts above, all the dues raised by the EPFO under various sections, including interests and penalties are to be paid by the new establishment under Section 17B of the Employees Provident Funds and Miscellaneous Act, 1952. 12. Furthermore, under Section 30(2)(e) of the Resolution Plan, in order to be legitimate, the resolution plan cannot contravene any of the provisions of any law in force. Thus, in the present context, it is incumbent on the RP/SRA to ensure that Section 17B of the EPF and MP Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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