TaxTMI 
TaxTMI 
2019 (3) TMI 352
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....m of EPFO for ESIC Receivership period (i.e from 08.06.2015 to Oct 2017) as a charge on liquidation process. iv. Direct the RP to drop the categorization of EPFO dues under 53(1 )(f) as 'other remaining debts & dues' v. Direct the RP to rectify the errors as pointed above and revise the statement and thus render justice. 2. The factual matrix of the case is that the Respondent Mill viz., M/s. Karpagam Spinners Pvt. Ltd. (hereinafter referred as Corporate Debtor) is an establishment covered under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The Corporate Debtor defaulted in payment of dues/damages/interest including the Employees' share of contributions, which were deducted from the wages of the poor employees to the tune of Rs. 71,76,644/- and now the Corporate Debtor is in the liquidation. 3. Assistant P.F Commissioner, Employees Provident Fund Organisation (Hereinafter referred as EPFO) submitted their claim in Form 'C to the tune of Rs. 72,69,087/. The liquidator rejected the claim of Rs. 5,89,159/ out of the total claim of Rs. 72,69,087/-pertaining to the period with effect from June, 2015 to June, 2017 and related interest and dam....
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....ended to secure the terminal social security benefit made available by the statute to the working class. Taking into consideration that Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is a social benefit legislation, and the evil consequences of Provident Fund dues being defeated by prior claim of the secured and unsecured creditors, the legislature took care to declare that irrespective of when the debt is created the dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 would always remain first charge and shall be paid first out of the assets of the establishments. The Applicant further submitted that the non-obstanate clause contained in Section 35 of the Securitisation and Reconstruction Act has to be construed and given effect to having regard to the object and purpose of the said Act and so construed it does not in any way effect the operation of provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952. 9. The Applicant has refereed the order passed by this Authority in the case of M/s. Jt. CCT v. Moka Technology Services Ltd. [TCP/81/IB/2017, dated 4-7-2018] wherein the submissions of the RP we....
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....That the permission accorded to the use of machinery shall be disaccorded at any time due to non payment of dues or failure to comply the conditions. (5) That the attached properties shall be handed to recovery officer of the EPFO, SRO, Tirunelveli after completion of lease/conversion job work etc. on "as is where is" basis. (6) That the payment of recovery shall be in favour of Regional P.F. Commissioner, Tirunelveli in Demand Draft. (7) That the Recovery Officer/Enforcement Officer shall be allowed to inspect the attached properties during the lease/job work period. 12. But during the Corporate Insolvency Resolution Process of the Corporate Debtor, it has been noticed by the resolution professional that some of the machineries attached by EPFO were missing. 13. The liquidator has submitted that as the machineries of the corporate debtor were attached by the EPFO organization for recovery of dues, any loss caused to the Corporate Debtor in respect of the said attached machineries has to be adjusted against the claim of EPFO. Therefore, at the time of settlement of dues as per section 53 of the Insolvency and Bankruptcy Code, 2016, read with Regulation 29 of the Insolvency ....
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....s. The said Mr. Thirumalappan also took charge as receiver on the very same day, along with all assets and machineries of the company in liquidation. The Applicant has further submitted that the notice of appointment of receiver was informed by ESIC after his appointment and taking charge on 08.06.2015 by letter dated 14.10.2015 seeking for misplaced permission to take charge. This was only a post-facto permission taken after making things a fait accompli, as receiver was already appointed and had taken charge on 08.06.2015 itself. 18. The Applicant has submitted that the EPFO was unaware of the earlier fact that machineries were already handedover bu ESIC to Mr. Thrumalappan even as earlu as on 08.06.2015. At any rate, the permission granted by EPFO was notional in nature because whosoever is at the helm of affairs of running the company has inherent and inalienable right to continue to use the machinery to run the business. The main purpose of the letter dated 16.10.2015 was to state the conditionalities for repossession of machinery by EPFO. 19. The Applicant has submitted that the decision to accept the resignation of the receiver by ESIC, based on letter of resignation dated....
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....e and thus there can be no limitation restricting to due for 24 Months alone prior to the order of winding up. The Applicant has placed reliance on the judgment of Hon'ble Supreme Court given in the case of M/S Hindustan Times Ltd. v. Union Of India [1998] 2 SCC 242, wherein it was held that Limitation Act would not be applicable to EPF & MP Act, 1952. Thus, the company in liquidation is liable for all EPFO claims regarding contribution, interest and damages and there is no time limitation fixed for such dues. Thus, as per the submissions of the applicant the contention of the liquidator restricting the claim of EPFO to 24 months preceding the date of liquidation of the CD is not sustainable in law. 24. The Applicant further submitted that under Section 11A of EPF & MP Act, the EPFO has a statutory first and paramount charge on all assets of the defaulting establishment regarding its claims. The said statutory charge created is not affected by the provisions of IBC Code 2016 or any other law, but has strengthened the prior and paramount charge and rights of EPFO to safeguard the employees /workmen dues, as the provision of EPF & MP Act is a social welfare legislation and the c....
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....2012. He should have taken steps for safe custody of the attached properties as per the provisions laid down in the second Schedule to the Income-tax Act 1962. However, instead of safeguarding the attached machinery and recover the dues by sale, permitted the recovery officer, ESIC to use the machinery for running the business of the Corporate Debtor, which is against the provisions of the recovery proceedings. 30. It needs to be placed on record that as per the provisions of Section 8G of the EPF &MP Act, 1952, the provisions of the second and third schedules to the Income-tax Act, 1961 (43 of 1961) and the Income-Tax Certificate Proceedings rules, 1962, as in force from time to time, shall apply with necessary modifications as if the said provisions and the rules refereed to the arrears of the amount mentioned in section 8 of this Act instead of the income tax. Provided that any reference in the said provisions and the rules to the "assesse" shall be construed as a reference to an employer as defined in this Act. 31. In the light of the applicability of the above stated provisions, the recovery officer, EPFO attached the machinery prior to the attachment made by the Recovery O....
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....it is the duty of the Recovery Officer of the EPFO to take suitable action against the ESIC for non-fulfilment of the terms and conditions laid down in the letter No. MD/TNY/20247/enf.I/C. 13/51103/2015 dated 16.10.2015, by which permission was granted to the ESIC to use the machineries and recover the loss caused due to missing of the machineries. 36. It is also correct on the part of the Liquidator to state that the Applicant has wrongly submitted that Mr. S. Thirumalaippan,who has been appointed as receiver by the ESIC is the Managing Director of the Corporate Debtor. In this regard the liquidator has submitted Form 32 filed on 14.07.2006 wherein Mr. Ligori Vanchi Arasu's name is mentioned as Managing Director of the CD. An order dated, 16.12.2004 of erstwhile Company Law Board and the copy of the petition in the said case is placed on record, which reflect that one Mr. Ligori Vanchi Arasu was the Managing Director of the Corporate Debtor. In order to confirm the same the Liquidator has also placed on record a copy of the information obtained from the EPFO under the RTI Act. 37. Further, the Applicant would contend that Section 11 (2) of the Employees' Provident Funds ....