36 (4) (a)

The residuary jurisdiction of NCLT under Section 60(5)(c) of the IBC provides a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings – Biotor Industries Ltd. (In Liquidation) Represented By Liquidator Mr. Sanjay Kumar Agarwal Vs. Gujarat Industrial Development Corporation – Gujarat High Court

Hon’ble High Court held that the reading of the Section 60(5)(c) indicates that the NCLT shall have a jurisdiction to entertain or dispose of any question arising out of or in relation to insolvency resolution. While in the case of Gujarat Urja (2021) ibclaw.in 44 SC and Tata Consultancy Services Limited (2021) ibclaw.in 167 SC the contract was central to the success of CIRP. Reading paras 80 to 87 of the judgment in Gujarat Urja (supra), what is evident is that the residuary jurisdiction of NCLT under Section 60(5)(c) of the IBC provides a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings. Reading the relevant paragraphs in Tata Consultancy Services Limited (supra), the NCLT can intervene when, it is even the case of the petitioner that there is an embargo under the IBC. In the application filed by the respondent which is pending before the NCLT, it is open for the petitioner to take all the contentions raised in this petition. The residuary jurisdiction of the Tribunal therefore to decide this issue had already been invoked by the respondent and the petition therefore, at the hands of the petitioner company which seeks the protective umbrella under the IBC itself can oppose the prayers made in that application. For all the aforesaid reasons therefore, the petition is dismissed. Rule is discharged.

The residuary jurisdiction of NCLT under Section 60(5)(c) of the IBC provides a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings – Biotor Industries Ltd. (In Liquidation) Represented By Liquidator Mr. Sanjay Kumar Agarwal Vs. Gujarat Industrial Development Corporation – Gujarat High Court Read Post »

Since no provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is in conflict with any of the provisions of the IBC, the applicability of even Section 238 of the IBC does not arise – Employees Provident Fund Organisation Vs. Sh. Nipan Bansal RP – NCLT Chandigarh Bench

The Adjudicating Authority held that since no provisions of the above said Act is in conflict with any of the provisions of the I & B Code, the applicability of even Section 238 of the Code does not arise. PF dues are not the assets of the CD as amply made clear by the provisions of Section 36(4)(a)(iii) of the Code, 2016.

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. In the event of any grievance on the part of the corporate debtor with regard to PF arrear demand, there is a provision in the EPF & MP Act, 1952 for appeal against the demand raised by the EPFO Authorities.

Since no provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is in conflict with any of the provisions of the IBC, the applicability of even Section 238 of the IBC does not arise – Employees Provident Fund Organisation Vs. Sh. Nipan Bansal RP – NCLT Chandigarh Bench Read Post »

NCLT directs Successful Resolution Applicant to make necessary payments under the provisions of EPF and MP Act, 1952 after the approval of Resolution Plan – Employees Provident Fund Organisation Vs. Sh. Darshan Singh Anand The IRP – NCLT Chandigarh Bench

NCLT held that 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”. 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. In the event of any grievance on the part of the corporate debtor with regard to PF arrear demand, there is a provision in the EPF & MP Act, 1952 for appeal against the demand raised by the EPFO Authorities.

NCLT directs Successful Resolution Applicant to make necessary payments under the provisions of EPF and MP Act, 1952 after the approval of Resolution Plan – Employees Provident Fund Organisation Vs. Sh. Darshan Singh Anand The IRP – NCLT Chandigarh Bench Read Post »

Workmen and Employees are entitled for payment of full amount of Provident Fund and Gratuity till the date of commencement of the insolvency – Jet Aircraft Maintenance Engineers Welfare Association Vs. Ashish Chhawchharia RP of Jet Airways (India) Ltd. & Ors. – NCLAT New Delhi

Following questions arise for consideration in this case:

I. What is the extent and the limitation of the judicial review by the Adjudicating Authority and the Appellate Tribunal in context of a Resolution Plan approved by the CoC with requisite majority?

II. Whether the workmen and employees are entitled to receive the payment of provident fund, gratuity and other retirement benefits in full since they are not part of the liquidation estate under Section 36(4)(b)(iii) of the Code?

III. Whether the workmen and employees are entitled to receive their dues from the Corporate Debtor as per the provisions of the Code i.e. the minimum liquidation value envisaged under Section 30(2)(b) by referring to waterfall mechanism provided under Section 53(1) of the Code?

IV. Whether the Resolution Plan approved by the Adjudicating Authority violates the provisions of Section 30(2)(b) of the Code since it does not provide the minimum amount to the workmen/ employees as contemplated under Section 30(2)(b)?

V. Whether the Resolution Plan as approved by the Adjudicating Authority violates provisions of Section 30(2)(e) of the Code since it contravenes provisions of Industrial Disputes Act, 1947 it having not provided for retrenchment compensation to the workmen/employees who were so entitled under Section 25-F and 25-FF of the Industrial Disputes Act, 1947 and other legislations?

VI. Whether the demerger of entire workforce except of 50 employees as Asset Protection Team to AGSL is illegal and contrary to the provision of Section 25-FF of Industrial Disputes Act, thus, violates Section 30(2) of the Code?

VII. Whether the workmen/employees are entitled for payment of Rs.750 crores (or more) as CIRP cost subsequent to insolvency commencement date they being on the roll of the Corporate Debtor and principle of no work no pay could not have been applied by the Resolution Professional?

VIII. Whether for computing the payment to secured financial creditors under Section 53(1)(b) only the value of their security interest has to be taken into consideration or their entire financial debt is to be considered while computing their entitlement?

IX. Whether the Resolution Plan being contingent and conditional ought not to have been approved in view of the law laid down by the Hon’ble Supreme Court in “Ebix Singapore Pvt. Ltd. Vs. CoC of Educomp Solutions Ltd. & Anr., (2022) 4 SCC 401”?

X. Whether the allocation of fixed amount of Rs.15,000/- each to the Operational Creditors (other than workmen/employees) in the resolution plan can be held to be fair and equitable and deserves no interference by this Appellate Tribunal?

XI. Whether the claim of Regional Provident Fund Commissioner verified to the extent of Rs.24,40,65,594/- arising out of an order dated 17.10.2018 passed under Section 14B of Employees’ Provident Funds & Miscellaneous Provisions Act 1952 can be treated as secured debt and the Appellant was entitled to receive the amount as secured creditors?

XII. Whether the claim of Department of State Tax which was submitted within time created a charge in favour of the Department on the assets of the Corporate Debtor by virtue of operation of law and the State Tax Department has the security interest and is a secured creditor?

XIII. Reliefs, if any, to which the appellants are entitled?

Workmen and Employees are entitled for payment of full amount of Provident Fund and Gratuity till the date of commencement of the insolvency – Jet Aircraft Maintenance Engineers Welfare Association Vs. Ashish Chhawchharia RP of Jet Airways (India) Ltd. & Ors. – NCLAT New Delhi Read Post »

Resolution Professional is not duty bound to make adequate provisions for Provident Fund when the Corporate Debtor did not have separate Provident Fund Account – Mr. B. Parameshwara Udpa RP of M/s. Easun Reyrolle Ltd. Vs. Assistant PF Commissioner, Employees’ Provident Fund Organization – NCLAT Chennai

Questions in this appeal

(i) Whether an Attachment Order on Bank Account of the Corporate Debtor imposed before the initiation of CIRP, can continue during Moratorium under Section 14 of the Code, 2016?

(ii) Whether, the Resolution Professional is duty bound to make adequate provisions for Provident Fund even though the Corporate Debtor did not have separate Provident Fund Account.

(iii) Whether the Adjudicating Authority can direct Resolution Professional to make provisions for Provident Fund without receiving claims for the same by the concerned Authority?

Resolution Professional is not duty bound to make adequate provisions for Provident Fund when the Corporate Debtor did not have separate Provident Fund Account – Mr. B. Parameshwara Udpa RP of M/s. Easun Reyrolle Ltd. Vs. Assistant PF Commissioner, Employees’ Provident Fund Organization – NCLAT Chennai Read Post »

The law as it exists today does not oblige the IRP/RP to send any information to any creditor or statutory authority even if the records of the Corporate Debtor reflect any liabilities of the Corporate Debtor towards them – Employees Provident Fund Organisation Vs. Mr. Subodh Kumar Agarwal RP Ambient Computronics Pvt. Ltd. – NCLAT New Delhi

NCLAT held that it is the statutory obligation of the Corporate Debtor to contribute to the dues of workmen and employees towards the provident fund, the pension fund and the gratuity fund. If above funds are deficient or the Corporate Debtor has failed to perform its statutory obligation, it is the Corporate Debtor who has to make payment towards the above funds which amounts have to be kept out of the liquidation assets. Although Section 18 of the Code uses the expression “collate all the claims” but the said expressions being followed by the words “submitted by creditors”, the Resolution Professional is entitled to contend that unless the claim is received by him, he has no obligation to include it in the list of claims or even the Information Memorandum. It is the statutory obligation of the Corporate Debtor to contribute to the dues of workmen and employees towards the provident fund, the pension fund and the gratuity fund. If above funds are deficient or the Corporate Debtor has failed to perform its statutory obligation, it is the Corporate Debtor who has to make payment towards the above funds which amounts have to be kept out of the liquidation assets.

The law as it exists today does not oblige the IRP/RP to send any information to any creditor or statutory authority even if the records of the Corporate Debtor reflect any liabilities of the Corporate Debtor towards them – Employees Provident Fund Organisation Vs. Mr. Subodh Kumar Agarwal RP Ambient Computronics Pvt. Ltd. – NCLAT New Delhi Read Post »

Wages/Salaries of the Workmen/Employees for the period during CIRP can only be included in the CIRP costs if it is established that the IRP/Resolution Professional managed the operations of the Corporate Debtor as a Going Concern during the CIRP and that the concerned workmen/employees actually worked during the CIRP – Sunil Kumar Jain and others Vs. Sundaresh Bhatt and others – Supreme Court

The issue before Hon’ble Supreme Court is with respect to wages/salaries of the workmen/employees during the CIRP period and the amount due and payable to the respective workmen/employees towards Pension Fund, Gratuity Fund and Provident Fund. Hon’ble Supreme Court held that:

i) that the wages/salaries of the workmen/employees of the Corporate Debtor for the period during CIRP can be included in the CIRP costs provided it is established and proved that the Interim Resolution Professional/Resolution Professional managed the operations of the corporate debtor as a going concern during the CIRP and that the concerned workmen/employees of the corporate debtor actually worked during the CIRP and in such an eventuality, the wages/salaries of those workmen/employees who actually worked during the CIRP period when the resolution professional managed the operations of the corporate debtor as a going concern, shall be paid treating it and/or considering it as part of CIRP costs and the same shall be payable in full first as per Section 53(1)(a) of the IB Code;

ii) considering Section 36(4) of the IB code and when the provident fund, gratuity fund and pension fund are kept out of the liquidation estate assets, the share of the workmen dues shall be kept outside the liquidation process and the concerned workmen/employees shall have to be paid the same out of such provident fund, gratuity fund and pension fund, if any, available and the Liquidator shall not have any claim over such funds.

Wages/Salaries of the Workmen/Employees for the period during CIRP can only be included in the CIRP costs if it is established that the IRP/Resolution Professional managed the operations of the Corporate Debtor as a Going Concern during the CIRP and that the concerned workmen/employees actually worked during the CIRP – Sunil Kumar Jain and others Vs. Sundaresh Bhatt and others – Supreme Court Read Post »

The Successful Resolution Applicant should release full provident fund dues in terms of the provisions of the Employee’s Provident Fund and Miscellaneous Provident Act, 1952 & PF dues are not the assets of the CD as amply made clear by the provisions of Section 36(4)(a)(iii) of the I& B Code, 2016 – Sikander Singh Jamuwal Vs. Vinay Talwar RP- NCLAT New Delhi

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The Successful Resolution Applicant should release full provident fund dues in terms of the provisions of the Employee’s Provident Fund and Miscellaneous Provident Act, 1952 & PF dues are not the assets of the CD as amply made clear by the provisions of Section 36(4)(a)(iii) of the I& B Code, 2016 – Sikander Singh Jamuwal Vs. Vinay Talwar RP- NCLAT New Delhi Read Post »

The claim of wages cannot be sanctioned unless the statutorily constituted forums either under the Industrial Dispute Act, Payment of Wages Act and Bonus Act have rendered its decision – Sabu K.V. Vs. Shri. Ravindra Chaturvedi Liquidator of Excel Glasses Ltd. – NCLT Kochi Bench

AA held that it is the settled position of law that the provident fund, the pension fund and the gratuity fund, do not come within the purview of liquidation estate for the purpose of distribution of assets under Section 53 of the Code. Based on this, the only inference which can be drawn is that Pension Fund, Gratuity Fund and Provident Fund can’t be utilised, attached or distributed by the liquidator, to satisfy the claims. Section 36(2) of the Code 2016 provides that the Liquidator shall hold the Liquidation Estate in fiduciary for the benefit of all the Creditors. The Liquidator has no domain to deal with any property of the Corporate Debtor, which is not the part of the Liquidation Estate. It is clear that in terms of sub-Section (4)(a)(iii) of Section 36 all sums due to any workman or employees from the Provident Fund, Pension Fund and the Gratuity Fund, do not form part of the liquidation estate/liquidation assets of the Corporate Debtor.

The claim of wages cannot be sanctioned unless the statutorily constituted forums either under the Industrial Dispute Act, Payment of Wages Act and Bonus Act have rendered its decision – Sabu K.V. Vs. Shri. Ravindra Chaturvedi Liquidator of Excel Glasses Ltd. – NCLT Kochi Bench Read Post »

After approval of the Resolution Plan by the AA, all claims that are not  part  of  the  Resolution  Plan  shall  stand  extinguished,  No  person  is entitled to initiate or continue any proceeding regarding a claim that is not part of the Resolution Plan – Regional Provident Commissioner EPFO Vs. Vandana Garg – NCLAT Chennai

NCLAT held that the Appellants claim about Provident Fund dues amounting  to  ₹1,95,01,301/-,  which  was  earlier  raised  at  the  time  of initiation of CIRP and was later admitted, stood frozen and will be binding on all the Stakeholders, including the Central Government. After approval of the Resolution Plan by the Adjudicating Authority, all such claims that are not  part  of  the  Resolution  Plan  shall  stand  extinguished.  No  person  is entitled to initiate or continue any proceeding regarding a claim that is not part of the Resolution Plan.

After approval of the Resolution Plan by the AA, all claims that are not  part  of  the  Resolution  Plan  shall  stand  extinguished,  No  person  is entitled to initiate or continue any proceeding regarding a claim that is not part of the Resolution Plan – Regional Provident Commissioner EPFO Vs. Vandana Garg – NCLAT Chennai Read Post »

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