One Page Series (05) by MS Mano Ranjani, Adv & IP #Ready to Read
In the matter of M/s GVR Infra Projects Ltd With regards to Statutory Dues / Claims not part of the Rplan.
COURT
NCLT, Chennai, NCLAT, Chennai.
FACTS OF THE CASE
- Appellant is PF Dept and Respondents are RP of the CD and Resolution Applicant.
- Appellant is aggrieved by the order of NCLT approving the Rplan waiving off a major portion of PF dues owed by CD in violation of Sec 11 of EPF Act & Sec 36(4)(a)(iii) & Sec 30(2)(e) of IB Code.
- Respondents contention is that Appellant initially submitted its claim in Form B for Rs.1.95 crores & later raised its claim to Rs.2.85 Cr without any reason. Provisions of Sec 36(4)(a)(iii) would apply only during liquidation and not during CIRP. No separate corpus was maintained for PF by the CD & CD not in a position to pay even if it goes into liquidation
CASE LAWS
- Essar Steel India Ltd V Satish Kumar Gupta (Supreme Court): Successful RA cannot suddenly be faced by undecided claim after his Rplan gets accepted.
- Savan Godiwala, Liq of Lanco Infratech Ltd V Apalla Siva Kumar (NCLAT): PF, Gratuity, Pension etc do not come within the purview of Liq estate u/s 53.
- SBI V Moser Baer Karamchari Union (NCLAT): Sums due to workmen and employees from PF, Pension fund & gratuity do not form part of Liq assets of CD & therefore, the question of their distribution in order of priority u/s 53 does not arise. Yet, Liquidator has to make sufficient provision for payment of gratuity according to their eligibility, even if no separate gratuity fund is maintained. Distribution of workmen dues is confined to 24mnths preceding liq commencement date.
- Ghanshyam Mishra & Son Pvt Ltd V Edelweiss Asset Reconstruction Co Ltd: (Supreme Court): RPlans undergo deep scrutiny by RP & COC after various negotiations & modifications, COC approves the Rplan. Then Adjudicative Authority is required to arrive a subjective satisfaction as required u/s 30(2). Once Rplan is approved by NCLT u/s 30(1) claims provided in the Rplan stand frozen and will be binding on the CD, employees, creditors, guarantors & all stakeholders. 2019 amendment to Sec 31 of IB Code is clarificatory and declaratory in nature and is therefore effective from the date on which IB Code has come into effect. So, all dues including statutory dues, if not part of Rplan, shall stand extinguished and no proceedings on that can be continued.
ANALYSIS & JUDGEMENT
- U/s 4 of SICA while sanctioning a scheme for rehabilitation of a sick company central board constituted under EPF Act was authorised u/s 14B to reduce or waive off the damages levied about an establishment which is a sick industrial company.
- After approval of Rplan u/s 31, the claims as provided in the RPlan shall stand frozen and will be binding on the CD employees, creditors, guarantors & all stakeholders. No person is entitled to initiate / continue any proceedings regarding a claim that is not part of the Rplan. Rs.1.95Cr claimed in Form B stands frozen and will be binding. All claims that are not part of Rplan stand extinguished. Appeal sans merit and deserves to be dismissed.
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About the Author: MS Mano Ranjani – MBA, LLM (Corporate Laws); Corporate and Commercial laws practitioner, legal and management consultant and also an Insolvency Professional qualified under provisions of the Insolvency Bankruptcy Code 2016. She is one of the partners of MetLaws, a family run legal firm based out of Hyderabad. MS Mano Ranjani has 25 years of rich and diverse experience in the corporate world associated with multinationals like Procter & Gamble India Limited, Hindustan Lever Limited and an educational institute like ICFAI University (Icfai Business School) before being qualified as Insolvency Professional and practicing Advocate. She is into Corporate and Commercial laws practicing at various courts including the National Company Law Tribunals, Debt Recovery Tribunals, Commercial Courts, High Courts etc.
She can be reached at 9848559322.
Disclaimer: The entire contents of this document have been prepared on the basis of the information existing at the time of the preparation. The author and IBC Law Reporter do not take responsibility for the same and this document cannot used to be quoted before any authority under any law.
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