NCLAT (16.08.2021) in The Central Board of Trustees, EPF Vs. The Liquidator (Sri. Gorur Narasimhamurthy Venkataraman) M/s. Bunt Solar India Pvt. Ltd. [Company Appeal (AT) (CH) (INS) No. 10 of 2021] held that;
“However, as no provisions of the ‘Employees Provident Funds and Miscellaneous Provisions Act, 1952’ is in conflict with any of the provisions of the ‘I&B Code’ and, on the other hand, in terms of Section 36 (4) (iii), the ‘Provident Fund’ and the ‘gratuity fund’ are not the assets of the ‘Corporate Debtor’, there being specific provisions, the application of Section 238 of the ‘I&B Code’ does not arise”.
In view of the nil value and keeping in view of the dissolution of the company there being no other source to pay to the Employees Provident Fund, being a Government Agency, we are of the view that since the Corporate Debtor was dissolved, the company is no more in existence in the eye of law. Therefore, keeping in view of the aforesaid facts we cannot pass any directions against a non- existence entity. The appeal is devoid of merits and liable to be dismissed, accordingly the same is ‘Dismissed’.
Excerpts of the order;
The present ‘Appeal’ filed against the Order of the Learned ‘Adjudicating Authority’ dated 06.01.2021 passed in IA No. 02 of 2021 in CP (IB) No. 72/BB/2019, whereby the ‘Adjudicating Authority’ (National Company Law Tribunal, Bengaluru Bench, Bengaluru) dissolved the Corporate Debtor company.
Appellants Submissions’: -
# 1. The Learned Counsel for the ‘Appellant’ submitted that the ‘Appellant’ was not party to the proceedings before the ‘Adjudicating Authority’ and they have never been informed about the Impugned Order. It is submitted that the ‘Appellant’ is a Statutory Organisation comes under Ministry of Labour and Employment, Government of India and it has to act in accordance with law and procedure vested with power to overlook the implementation of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The ‘Appellant’ is custodian of interest of the poor workers and the Employees Provident Fund Organisation is a Social Welfare Legislation.
# 2. The Learned Counsel for the ‘Appellant’ submitted that M/s. Bunt Solar India Pvt. Ltd., under liquidation has defaulted in payment of Employees Provident Fund and allied dues to the tune of Rs. 2,34,10,240/- and the details have been (extracted from Page: 08) of Appeal Paper Book.
# 9. The Learned Counsel submitted that the claim of the ‘Appellant’ was rejected by the IRP at the time of CIRP proceeding on technical grounds for not having notarized the Claim Form. The IRP advised the ‘Appellant’ to rectify and submit the claim which was not done, hence, the ‘Appellant’ was not a claimant during CIRP proceedings. While so the Committee of Creditors (CoC) of Corporate Debtor i.e. M/s. Bunt Solar India Pvt. Ltd., have recommended for liquidation of Corporate Debtor. In view of Liquidation value of Corporate Debtor being nil and accordingly, the Hon’ble ‘Adjudicating Authority’ ordered for liquidation of Corporate Debtor under Section 33 of IBC 2016.
#10. During liquidation process, the Liquidator called for claims through public announcement, one in English newspaper and one in Regional language (Kannada). The Liquidator, considering the ‘Appellant’ as a Government Department, requested them to submit the proper claim referring to the public announcement. It is submitted that in spite of the request, the ‘Appellant’ has not submitted a proper claim and hence, he was not included as Stakeholder under the liquidation process. As the claim of the ‘Appellant’ has been rejected by the liquidator as the claim was defective (not Notarized) and Finalised the list of claim and stakeholders as per regulation 31 of (Liquidation Process Regulation). It is submitted that the ‘Appellant’ has lost the opportunity to become Operational Creditor during CIRP and Stakeholder during Liquidation process and he did not participate any of the proceedings, before the ‘Adjudicating Authority’ during these two years’ of time and now, the Corporate Debtor was dissolved vide Impugned Order dated 06.01.2021 of the Hon’ble ‘Adjudicating Authority’. The Learned Counsel submitted that in view of the reasons the ‘Appellant’ has no Locus Standi to file this appeal before this ‘Tribunal’ also for the reason that the ‘Appellant’ is not an aggrieved party, as defined under Section 61 of IBC 2016.
# 11. The Learned Counsel for the Respondent also submitted that one of the Operational Creditor namely M/s. Rashmika Info Technologies Pvt. Ltd. had filed the application initiating Corporate Insolvency Resolution Process, against M/s. Bunt Solar India Pvt. Ltd., vide application no. CP (IB No. 72/BB/2019) under Section 9 of the IBC 2016. The said application was admitted by the Hon’ble ‘Adjudicating Authority’ on 14.06.2019, and appointed the Respondent as IRP.
# 12. The IRP constituted Committee of Creditors (CoC). The Corporate Debtor does not own any Assets/Properties. As such the liquidation value being nil and (CoC) recommended for liquidating Corporate Debtor through Resolution Professional. The ‘Adjudicating Authority’ passed order for liquidation of Corporate Debtor as per Section 33 of IBC in IA 408 of 2019 in CP 72 of 2019, vide order dated 05.09.2019. The ‘Appellant’ should have filed an appeal within thirty days from the date of receipt of the copy of the Order, but, did not participate in any of the proceedings before the ‘Adjudicating Authority’. It is submitted that the liquidation value of Corporate Debtor is being nil and as such, the liquidation estate is also nil value. The liquidator took action as per liquidation order and followed rules and regulations as prescribed under law.
# 13. In view of the submissions, the Learned Counsel for the Respondent prays this Bench to dismiss the appeal.
Analysis/Appraisal: -
# 14. Heard the Learned Counsel appearing for the Respective Parties, perused that the pleadings documents and the ‘Citations’ relied upon by parties.
# 15. It is an admitted fact that M/s. Bunt Solar India Pvt. Ltd., has been dissolved by Impugned Order dated 06.01.2021 passed by the ‘Adjudicating Authority’ (NCLT Bengaluru Bench, Bengaluru), the point for considering is whether the ‘Appellant’ can seek a direction as prayed in this appeal, when the Corporate Debtor was dissolved and there being nil value.
# 16. Before going into the crux of the issue, the facts for consideration are that M/s. Bunt Solar India Pvt. Ltd., Corporate Debtor was under Corporate Insolvency at the behest of M/s. Rashmika Info Technologies Pvt. Ltd. who filed an application under Section 9 of the IBC before the ‘Adjudicating Authority’. Thereafter, the Insolvency Resolution Professional followed due procedure with regard to post CIRP and followed due process of law. Having nil value,` the Committee of Creditors recommended for liquidation of the Corporate Debtor and in pursuance thereof, the IRP filed an application for liquidation of the Corporate Debtor, accordingly the ‘Adjudicating Authority’ ordered commencement of liquidation of the Corporate Debtor on 05.09.2019. The liquidator issued public announcement on 05.10.2019 in English newspaper inviting claims from the stakeholders of the Corporate Debtor on or before 30.10.2019.
# 17. The ‘Appellant’ during CIRP process filed claim in Form ‘F’ dated 03.07.2019 (Annexure-2 of the Paper Book). From the perusal of the claim, it is seen that the ‘Appellant’ claimed a sum of Rs. 2,34,10,240/-. The IRP vide letter dated 06.07.2017 asked the ‘Appellant’ to submit claim in Form ‘E’ and stated that the claim which was made on 03.07.2019 in Form ‘F’ is a wrong submission. The ‘Appellant’ forwarded Form ‘E’ on 08.07.2019 to the IRP and stated that the EPF dues as claimed in Form ‘E’ be remitted in priority to all other dues by way of Demand Draft drawn in favour of the Regional Provident Fund Commissioner, RR Nagar, Bangalore. As stated supra, the IRP made public announcement of the liquidation of the Corporate Debtor in Form ’B’ in Kannada (Vernacular language) as well as English Newspaper, inviting claims from stakeholders. Since the company was liquidated by the Hon’ble ‘Adjudicating Authority’. The ‘Appellant’ submitted their claim in Form ‘F’ dated 11.10.2019.
# 18. The stand of The Liquidator / Respondent is that the claim which was submitted in Form ‘E’ has not been Notarized and requested the ‘Appellant’ to resubmit the Form ‘E’ duly notarized as per the regulations. Further, after the public announcement made on 05.10.2019 in English Newspaper and Kannada (Vernacular language), the Respondent vide letter dated 16.10.2019 stated that as per the public announcement, the last date of filing of the claims by Operational Creditor is on 30.10.2019, and all the Operational Creditors have to submit proof of claim, in respect of liquidation forms that is in Form ‘C’ duly Notarized, as per regulations of IBC 2016. Further it is also stated by the Respondent in their letter dated 16.10.2019 that “Considering you are Government Department and you had made claims earlier with respect to IRP, this mail is sent to you for your necessary action”. Further, the Respondent vide e-mail dated 23.10.2020 addressed to the ‘Appellant’ whereby it is stated that “Dear employer as per our records, you have failed to remit contributions of your employees due for Twenty Three wage months. This prima facie shows wilful default on your part failure to remit the contributions and interest due of such belated remittances within fifteen days may cause and invoke after the provisions of prosecution, complaint under Section 406/409/IPC and coercive actions for recovery of dues”. Even the Respondent also addressed e-mail on 23.09.2020 stating that the ‘Appellant’ failed to remit contributions of its employees due for Twenty Two wage months. After passing of the dissolution order, the Respondent herein vide letter dated 01.02.2021 addressed to the ‘Appellant’ whereby it is stated that referring to the dissolution of the Corporate Debtor and also enclosed the copy of the dissolution order for their information. From the records, it is seen that the ‘Appellants’ though made their claims during CIRP, however, the claims have not been notarized as per the procedure. However, prima facie, the value of the assets of the Corporate Debtor being nil, the Liquidator may not be able to pool the funds, distribute the same(sum) in pursuance of Section 53 of the I&B Code 2016.
# 19. The main contention of the ‘Appellant’ is that Section 53 of the IBC is not applicable in the case of EPF. Since the Employees Provident Fund Act is a special Act and prevails over all other acts and submits that the dues which are payable to the employees cannot be treated as part of the asset of the Corporate Debtor.
# 20. There is no dispute with regard to that and we are in agreement with the said position of law. Even Section 36(4(a) (iii)) of I&B Code 2016 states that the following shall not be included in the ‘Liquidation Assets’ and shall not be used for recovery in the liquidation Sub Section:(4) of Section:36 of IBC reads as
“The following shall not be included in the Liquidation Estate assets and shall not be used for recovery in the Liquidation. Sub Clause (iii) of clause (b) of sub-Section (4) of Section 36 reads as under, “All sums due to any Workman or employee from the provident fund, the pension fund and the gratuity fund”.
From reading of this provision, it is clear that a liquidation estate does not include the sums due to any workman or employee from the Provident Fund etc. The Learned Counsel for the ‘Appellant’ also relied upon the Judgment of this Bench, whereby this ‘Tribunal’ is also of the view that “Para 44” of the said Judgment, reads as:-
“However, as no provisions of the ‘Employees Provident Funds and Miscellaneous Provisions Act, 1952’ is in conflict with any of the provisions of the ‘I&B Code’ and, on the other hand, in terms of Section 36 (4) (iii), the ‘Provident Fund’ and the ‘gratuity fund’ are not the assets of the ‘Corporate Debtor’, there being specific provisions, the application of Section 238 of the ‘I&B Code’ does not arise”.
“Para 45” – Therefore we direct the ‘Successful Resolution Applicant’, 2 nd Respondent (‘Kushal Limited’) to release full provident fund and interest thereof in terms of the provisions of the ‘Employees Provident Funds and Miscellaneous Provisions Act 1952’ immediately, as it does not include as an asset of ‘Corporate Debtor’. The Impugned Order dated 27.02.2019 approving the ‘Resolution Plan’ stands modified to the extent above.”
# 21. We completely agree with the Judgment of this ‘Tribunal’. In the above Judgment of this ‘Tribunal’, the Company was under Resolution Process and the plan was submitted and this ‘Tribunal’ is directed to modify the plan further directed to release, the Provident Fund and interest therefor, since the Provident Fund does not include as an asset of the Corporate Debtor. However, in the present case, the Corporate Debtor value is nil and the ‘Adjudicating Authority’ in its Liquidation Order clearly mentioned that except two fixed deposits amounting Rs.1,41,129/- and Rs.1,00,000/- which would be matured on 09.02.2020 and 06.02.2022 respectively, there is no other assets of the Corporate Debtor.
# 22. Further, from the statement of Account maintained by the Liquidator of the Corporate Debtor, the Receipts of amounts shown as Rs. 2,72,862/-. Even the Liquidator claimed more amount than the amounts to be received by the Corporate Debtor. Being nil value of the Corporate Debtor. Apart from the liquidation asset being nil, there are no other assets or receivables by the Corporate Debtor which was under liquidation and now the same was dissolved.
Findings: -
# 23. In view of the nil value and keeping in view of the dissolution of the company there being no other source to pay to the Employees Provident Fund, being a Government Agency, we are of the view that since the Corporate Debtor was dissolved, the company is no more in existence in the eye of law. Therefore, keeping in view of the aforesaid facts we cannot pass any directions against a non- existence entity. The appeal is devoid of merits and liable to be dismissed, accordingly the same is ‘Dismissed’. No Orders as to Cost.
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