In this case, the Liquidator released money to Bank towards its share for the credit of the loan account. This was from the sale proceeds of the properties sold.
In the meanwhile, EPFO issued proceedings by invoking Section 8(B) of the EPF and MP Act prohibiting and restraining the Bank from making payments of the said deposit or any part thereof, to any person, whomsoever or otherwise than to the EPFO.
Hon’ble High Court of Madras held that:
(i) Section 53(1) of the IBC, 2016 shall not be applicable to dues governed by Section 36(4) of IBC 2016, which are to be treated outside the liquidation process and liquidation estate assets under the IB Code.
(ii) IB Code which stipulates that the IRP should obtain and review Income Tax and other statutory notices and obtain details of the financial institutions that are maintaining accounts of the CD and inform them of commencement of CIRP of the CD and appointment of IRP.
(iii) The IRP should also immediately give instructions for stopping payment from the account without the authority of the IRP and also change the details of the signatories of the accounts so as to take control of the account. In fact, it is recommended that where required, a new account may be opened.
(iv) In such circumstances, the prohibitory orders or attachment order being sent to the Bank appears out of the rule book. This is not a case where the defaulter is not under liquidation initiated by the IBC. This is also a case where the Bank intimated of the dues.
(v) The orders of the EPFO on the hapless Bank Management is erroneous. The impugned orders of the EPFO are quashed.