TaxTMI 
TaxTMI 
2009 (4) TMI 441
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....became the Liquidator of the said company. During the course of winding up proceedings of the company, by an order passed on 10-8-2005, made in C.A. No. 633 of 2005, this court permitted the Official Liquidator to invite claims from the creditors of the company under Liquidation. Accordingly, notice, inviting claims in Form No. 63 has been published in leading newspapers fixing the last date for receipt of the claims as 28-10-2005. In response thereto, the ESI Corporation acting through its Regional Director filed its claim on 28-2-2007, in Form No. 66 making a claim in a sum of Rs. 1,44,230. During the course of investigation, counsel on behalf of the appellant-Corporation has participated in the investigation on 30-1-2008 and produced certain documents, based upon which notice of admission/rejection of proof of debt in Form No. 69 has been issued by the Official Liquidator on 30-9-2008, admitting certain portion of the claim while rejecting the rest of the portion. Aggrieved by that portion of the said order, the present company application has been moved which is treated as an appeal as is required to be so treated, in terms of rule 164 of the Companies (Court) Rules, 1959. 3....
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....im payment of damages in terms of section 85B of the Employees' State Insurance Act, 1948 (Act 34 of 1948) (henceforth referred to as "the ESI Act"). Section 85B of the ESI Act enables the corporation to recover from the employer who fails to make or pay the amounts, by way of penalty, such damages not exceeding the amount of arrears. Therefore, it pre-supposes a determination and quantification of the damages. In fact the proviso to section 85B of the ESI Act makes two things clear : (1) Before recovering such damages, the employer shall be given a reasonable opportunity of being heard. (2) The ESI Corporation may reduce or waive the damages recoverable under this section in relation to an establishment which is a sick industrial company in respect of which a scheme for rehabilitation has been sanctioned by the BIFR. In the instant case, by the date the ESI Corporation lodged its claim or even by the date the Official Liquidator has issued the notice of admission/rejection of proof of debt in Form No. 69 on 30-9-2008, the ESI Corporation has not carried out the exercise under section 85B of the ESI Act. Therefore, without first determining the damages payable by the employer, no c....
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....s been passed afresh on 9-3-2009. 7. I am afraid that even this order is an unsustainable one. The ESI Corporation is aware that M/s. Kera Sinters Ltd., has been ordered to be wound up by this court by virtue of the provisions contained under section 449 of the Companies Act, 1956. The Official Liquidator attached to this court becomes its Liquidator and, hence, it lodged the claim with the Official Liquidator. It is the Liquidator of a company which is under the process of winding up, who has to be put on notice if any charge or liability is to be created, after an order of winding up is passed against the company. No reasons are forthcoming as to why the Corporation has not chosen to put the Official Liquidator on notice and instead it had preferred to keep the former Managing Director of the company on notice before passing the orders under section 85B. The former Managing Director either by his participation or otherwise cannot create any additional liabilities for a company which is under the process of winding up. No such additional liability can be created to bind the company. For this failure itself, the order passed on 9-3-2009, clearly becomes unenforceable as against ....
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....nt has been made is for providing a great security cover for the employees working in the factories and other establishments covered by the said Act. The benefits which the insured persons or their dependants, as the case may be, are entitled, have been provided for under section 46 of the said Act. Thus, the benefits have been conferred as a measure of social security not only to the employees but also to their dependents in case of any death resulting from the injury sustained by the employee during the course of his employment. The benefits also include sickness and maternity benefits. Therefore, greater degree of vigil is required to be exercised by the Corporation and its inspectors appointed under section 45 for securing faithful compliance with the provisions of the said Act. In terms of section 59, the ESI Corporation was also required to establish and maintain hospitals, dispensaries and other medical and surgical services for the benefit of the insured persons. Therefore, recovery of contributions from every employer alone holds the key for the purpose of carrying out successfully the objects for which the said enactment has been brought in. It will also be relevant at th....
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....o precedence over a prior secured debt. Therefore, in the face of these principles reiterated in SICOM Ltd.'s case (supra) by the Supreme Court, one wonders as to how the ESI Corporation can claim any right of precedence in the matter of repayment of its debts over any other secured creditor of the company under liquidation. 11. Further, a perusal of the provisions contained in section 94 of the ESI Act clearly indicates that a fiction has been created therein holding that that they shall be deemed to be included among the debts which, are set out under section 530 of the Companies Act, 1956, in the distribution of the property or the assets of the company being wound up, to be paid in priority to all other debts, the debt or amount due in respect of any contribution or any other amount payable under the said Act. Therefore, the amount payable to the ESI Corporation by the employer is made to fall under section 530 of the Companies Act, 1956, so as to regulate the preferential payments mentioned therein which are essentially of revenue dues or tax dues by the company. Whereas, section 529A has been incorporated by the Companies (Amendment) Act, 1985, creating an overriding prefe....