Regional Director, ESIC V/s Manish Kumar Bhagat Liquidator of Gupta Dyeing & Printing Mills Pvt Ltd
IA/184(AHM)2021 in CP(IB) 537 of 2018
Facts:
1.Corporate Debtor was brought under CIRP based on an application filed under Section 9 of IBC on 06.02.2019 and was taken to liquidation on 19.12.2019. The Liquidator has also filed an application for dissolution of the company on 21.06.2022 which is pending before this Tribunal.
2.Application has been filed by the Regional Director, ESIC, Ahmedabad, Gujarat under Rule 11 of NCLT rules, 2016 against the Liquidator of M/s Gupta Dyeing & Printing Mills Pvt Ltd, Navrangpura, Ahmedabad for settling the claim due to the ESIC Fund. The applicant has prayed to pass orders restraining the liquidator from including the ESI contribution in the liquidation estate and to give priority of dues of ESI corporation and give pari passu charge with secured creditors on assets for the dues payable amounting to Rs.1,21,49,393/-.
Issue: Whether the application can be admitted?
Submissions:
Applicant:
1.Counsel submitted that the authorized officer found that from April 2011 to March 2014, the Corporate Debtor did not deposit the ESI Contribution to the applicant corporation to the tune of Rs.61,23,945/-. So, the Applicant initiated the proceedings u/s. 45A of ESI Act and passed the order and also issued recovery certificate, dated 19.07.2016, against the Corporate Debtor.
2.Counsel submitted that the representative of the Applicant appeared before the Learned Liquidator and requested to release the amount towards dues of unpaid amount of ESI Contribution as the ESI Contribution is nothing but the workers dues as this amount could have been used for the numerous benefits in favour of the workers.
3.It relied on various settled cases with regard to the priority of the dues of the EPF Act and not to include the dues of EPF Contribution into Liquidation Estate/Assets as per Section 36 of IBC, prayed to give identical treatment to the ESI Contribution as the contribution was held by the corporate debtor as trustee as the corporate debtor ought to have deposited with the ESI Corporation for the various benefits of the workers/employees of the corporate debtor.
Respondents:
1.Counsel submitted that it is admitted fact (admitted by applicant) that applicant corporation is a statutory corporation hence, the dues of applicant corporation falls under the category of statutory dues and applicant is entitled to get their dues as per priority mentioned under Section 53 of the Code not as per Section 39(5) of ESI Act because as per Section 238 of the Code it is obvious that the Code will override anything inconsistent contained in any other enactment, including the ESI Act.
Decision: NCLT dismissed the application
Rationale:
1.Hon’ble Tribunal noted that liquidator had considered the claim of the applicant in terms of provisions of IBC 2016 and also included the applicant as an Operational (Unsecured) Creditor. Applicant also attended various COC meetings during the CIRP. The claim was settled in terms of the IBC provisions treating the applicant as an operational unsecured creditor and proportionately allotted the amount to be disbursed.
2.It held that The consequences of non-payment of employees contribution from wages deducted in terms of Section 40(4) of the ESI Act, 1948 and when not paid would be the responsibility of the principal employer which amounts to “breach of trust” and is punishable under IPC 406, 409 and also an offence u/s 85 of ESI Act. The liquidator has admitted the claims as per provision of the IBC 2016. The applicant has not proceeded in any manner against the Corporate Debtor, individually for which a provision is available in the ESI Act.
Order copy:
