(2024) ibclaw.in 1007 NCLT
IN THE NATIONAL COMPANY LAW TRIBUNAL
Indore Bench
Regional Provident Fund Commissioner, EPFO
v.
Satyendra Prasad Khoraniya (RP)
IA/373/MP/2024 in TP/199/MP/2019, CP(IB)/424/2019
Decided on 11-Nov-24
Smt. Chitra Ram Hankare (Judicial Member) and Shri Kaushalendra Kumar Singh (Technical Member)
Add. Info:
Corporate Debtor: CMM Infraprojects Ltd.
For Appellant(s): Ld. Adv. Ms. Darshana Baghel a.w. Ld. Adv. Ms. Nupur Rao & Ld. Adv. Ms. Shalbha Singh
For Respondent(s): Ld. Adv. Mr. Amol Vyas a.w. Mr. Satyendra Prasad Khorania (RP in person)
Brief about the decision:
Facts of the case
- The applicant had filed its claim on 28.11.2023, before the approval of the resolution plan by the CoC, however, not in a proper format as prescribed under the Code. The said letter was however, addressed to the IRP namely Mr. Navin Khandelwal, whereas by that time RP namely Mr. Satyendra Prasad Khoraniya was already in place and the address of IRP was also different.
- The applicant vide letter dated 28.11.2023 addressed to IRP had filed its claim for Rs 55,347/- and had also sent a reminder letter dated 16.02.2024 to the IRP of the corporate debtor. Further, the applicant department initiated proceedings against the corporate debtor for assessment of dues under section 7A, 14B/7-Q of the EPF and MP Act, 1952. Following the completion of this assessment, the applicant vide letter dated 17.05.2024 submitted its revised claim of Rs 27,31,674/- to the RP. The RP vide email dated 23.05.2024 requested the applicant to submit a bifurcated claim for the period prior to CIRP and period during the CIRP.
- The RP has taken several pleas in its defense that the claim of the applicant was rejected vide email dated 28.08.2024, on the ground of belated filing after approval of the resolution plan on 18.12.2023 by the CoC; that, the initial claim filed on 28.11.2023, did not adhere to the prescribed format under the Code and was submitted to the erstwhile IRP, whereas the current RP was already appointed on 27.04.2023.
- This present application has been filed on 03.09.2024, by Regional Provident Fund Commissioner (Applicant) under section 60(5) of the Insolvency and Bankruptcy Code, 2016 r.w. Rule 11 of the NCLT Rules, 2016, against Resolution Professional (RP) of the corporate debtor i.e., CMM Infraprojects Limited, seeking directions to the RP to consider the claim and also SRA to amend the resolution plan to provide for the claim of the applicant.
Decision of the Adjudicating Authority
A. Treatment of EPFO dues during CIRP
- The claim however filed belatedly on 28.11.2023 in improper format and to the IRP, is only a technical issue that can be overlooked and condoned.(p7)
- The issue relating to the claim of interest and damages under sections 7Q and 14B of the EPF Act was dealt by the Hon’ble NCLAT in the matter of Anuj Bajpai versus Employee Provident Fund Organisation, Regional Office and others (2024) ibclaw.in 437 NCLAT where it was ruled that all dues under EPF Act, including those pertaining to interest and damages, do not form part of the liquidation estate of the corporate debtor, these amounts are outside the scope of distribution under section 53 of the Code. Further, the Hon’ble NCLAT while deciding the matter had also relied on the Hon’ble Supreme Court judgment in the case of Maharashtra State Cooperative Bank vs. Provident Fund Commissioner (2017) ibclaw.in 119 SC wherein the Hon’ble Supreme Court interpreted the expression “any amount due from an employer” in section 11(2) of the EPF Act to include not only principal dues but also interest payable under section 7-Q and damages under section 14-B of the EPF Act.(p8)
- In the present case, no liquidation proceedings have started. Rather, the Resolution Plan is placed for approval of this Adjudicating Authority. Nevertheless, in view of the decision held by the Hon’ble NCLAT in the matter of Anuj Bajpayee (Supra) relying upon the Hon’ble Supreme Court decision in the case of Maharashtra State Cooperative Bank (supra), it is very evident that the dues towards provident fund, gratuity and pension will have to be paid.(p9)
- In this context, it is noted that as per the provisions of the EPF Act, the employer is responsible for deducting the employee’s contribution from their salary and pay the same to the account of the provident fund together with the employer’s contribution thereon within the prescribed time under the said act. Later at the time of retirement, the provident fund department pays this amount to the concerned employees together with the interests earned thereon. Thus, in case, any employer defaults in depositing these contributions in the required provident fund account and retains the same to itself, then such amount retained by the employer will be the amount kept by the employer under trust. Therefore, the same will have to be considered as a liability payable to the EPFO Department even in the process of resolution of the Corporate Debtor.(p9
B. Condonation of the delay in filing of the claims of EPFO
- The Hon’ble Tribunal also notes that during the hearings made as regards the approval of the resolution plan (IA/152/MP/2024), the Successful Resolution Applicant (SRA) has modified its plan by putting an addendum by way of new clause no. 22 on page no. 48 of the resolution plan, and this said addendum has been approved by the CoC by 91.15% votes. The said addendum has been filed by the RP through an affidavit dated 30.09.2024.(p9)
- Therefore, considering the facts as discussed herein above, the Hon’ble Tribunal first condones the delay on the part of the EPFO Department in putting their claim before the RP.(p10)
C. There is no bar in carrying out for assessment of the dues even during moratorium period
- As regards the contention raised by the RP that the said order is passed in violation of the moratorium period the Hon’ble Tribunal finds that there is a difference between assessment of the claim and recovery of the claim and in the instant case the EPFO has never initiated any recovery proceedings against the RP.
- There is no bar in carrying out for assessment of the dues even during moratorium period which would be payable by RP and/or SRA in terms of the provisions of the EPF Act and included accordingly in the resolution plan.(p10)
D. Other issues
- The Hon’ble Tribunal also notes that EPF due are now computed for the year 2018 & onwards. It is not understood why the office of the EPF had not initiated any action against the corporate debtor/erstwhile management. They have initiated their enquiry/assessment proceedings after almost 5 years. The Hon’ble Tribunal further notes that the claim raised by the EPFO does not specifically mention the details of the individual employees in whose respect the PF dues have been computed by the EPFO. Their claim based upon the notional computation cannot be considered as payable to the EPFO.(p11)
- In view of the above, the Hon’ble Tribunal is of the considered view that the EPFO will have to provide the name & number of employees with year-wise details of the employees with respect to whom assessment have been made by them, together with the detailed computation based on which the claim has been raised. Such details will have to be furnished by the EPFO to the RP.(p12)
- Then RP and/or SRA, in case resolution plan gets approved, will be at liberty to raise their objection as regard computation made by the EPFO and in that case the EPFO will have to consider the objection and revise their computation.(p12)
- With these above directions the application i.e. IA/373/MP/2024 in TP/199/MP/2019, CP(IB)/424/2019, stands disposed of.(p13)
Judgment/Order: