TaxTMI 
TaxTMI 
2021 (5) TMI 444
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....his Appeal for the sake of convenience. Brief facts: 2. The Corporate Debtor M/s GVR Infra Projects Limited had defaulted in payment of dues/damages/interest, including employees share of contributions, since April 2014, which were deducted from their wages. The total EPF dues up to the date are to the tune of Rs. 2,84,69,797/-. 3. The Adjudicating Authority had vide its Order dated October 15, 2018, initiated CIR Process against the Corporate Debtor 'GVR Infra Projects Limited'. Under the same, the Interim Resolution Professional (in short, 'IRP') issued a public announcement inviting claims pending against the Corporate Debtor. The Interim Resolution Professional was subsequently replaced by Respondent No.1, appointed as the Resolution Professional (in short, 'RP'). 4. The Appellant submitted its claims in Form 'F', as suggested by the IRP vide his letter dated December 31, 2018. The claim Form 'F' was forwarded to the Resolution Professional on January 7, 2019. The RP, vide an email dated May 10, 2019, asked the Appellant to submit its claim and the supporting documents in Form 'B' again. In response to that, the Appellant subm....
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...., 2019, before the Adjudicating Authority under Section 30 (6) of I&B Code read with Regulation 39 (4) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016 seeking approval of the same. The Adjudicating Authority approved the Resolution Plan vide its Order dated July 20, 2020, a Monitoring Committee was also constituted, and Respondent No. 1/RP has been appointed as the Monitoring Agent. 11. The Resolution Plan subsumes all the Financial Creditors, Operational Creditors, and any pending statutory dues per the payout plan under the Resolution Plan. The Resolution Plan also subsumes all the dues of the Appellant as well, and the total claim amount of Rs. 1,95,01,301/-, as filed in Form 'B', was admitted and considered under the Resolution Plan. 12. Despite filing a claim of Rs. 1,95,01,301/-, in the present Appeal, the Appellant raises a claim of Rs. 2,84,69,797/-, i.e. much higher than the amount claimed by the Appellant in its claim before the Resolution Professional. There is no basis on which the Appellant has raised the additional claim, despite having full knowledge of the CIRP and having calculated its dues, which were admitted, cannot no....
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....reatment in the approved Resolution Plan in terms of Section 31 of the Code. Every Stakeholder, including the present Appellant, is bound by such treatment of its claim in the approved Resolution Plan. 16. We have heard the arguments of the Learned Counsel for the parties and perused the record. Discussions and findings 17. The Appellant challenges the approved Resolution Plan because the Adjudicating Authority has failed to consider and appreciate the legislative intent behind the exclusion of Provident Fund dues from the Liquidation Estate of the Corporate Debtor. The Adjudicating Authority has failed to consider that Provident Fund dues ought to be given priority over all other dues owed by the Corporate Debtor in view of the express provision of Section 36 of the Insolvency and Bankruptcy Code 2016 and Section 11 of the Employees Provident Fund and Miscellaneous Provision Act 1952 (in short "EPF Act"). The Appellant further contends that the Adjudicating Authority vide the impugned Order upheld a Resolution Plan which waves off the major portion of the Provident Fund dues owed by the Corporate Debtor. 18. Admittedly the Corporate Debtor "GVR Infra Projects Limited" has defa....
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....nowledge of the CIRP and having calculated its due, which was admitted, cannot now enhance the same and seek more and has now estopped from doing so. 24. The RP submits that debts of the Corporate Debtor stood crystallised as on the date of initiation of CIRP. Further, it is established law by the Hon'ble Supreme Court that all claims which have not been submitted to or dealt with by the Resolution Professional stood extinguished. 25. The RP further contends that there is no occasion for referring to the provisions of Section 36 (4) (a) (iii) of the I&B Code in the present matter since it would only arise upon the formation of the Liquidation Estate by the Liquidator in terms of the I&B Code. In the facts of the present case, it is a matter of record that the Corporate Debtor has not gone into Liquidation and is currently under Insolvency Resolution. Moreover, there is no fund that could be excluded from the Liquidation Estate in terms of Section 36 (4) (a) (iii) of the I&B Code to be paid to the Appellant. Since no separate corpus was created for the Provident Fund, the said provisions are not applicable in the present case. 26. It is necessary to mention that the Hon'b....
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....Provident Fund and Miscellaneous Provisions Act, 1952. It is apparent that the establishment, to which the said Scheme of Employees' Provident Fund applies, has to create a fund in accordance with the provision of the Act and the Scheme. Section 5(1-a) provides that the Fund shall vest in, and be administered by the Central Board constituted under Section 5(a). Section 4 of the Payment Gratuity Act, 1972 provides that Gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years - (a) On his superannuation, (b) On his retirement or resignation, (c) On his death or disablement due to accident or disease. In this case, we are not concerned with determination about the entitlement of Gratuity by the employees of the 'Corporate Debtor '. Payment of Gratuity to employees depends on their entitlement of Gratuity, subject to the fulfilment of the conditions laid down under the payment of Gratuity Act, 1972 and also on the availability of the fund in this regard. Based on the judgment of this Appellate Tribunal in case of the State Bank of India Vs. Moser Baer Karamchari Union and....
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....f [any Scheme or Insurance Scheme]5 or under any of the conditions specified under Section 17, 6[the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf] may recover 7[from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme:] 8[Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard:] 9[Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under Section4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme.]]" 31. It is thus clear that before coming into force of the Insolvency and Bankruptcy Code 2016 while sanctioning a scheme for rehabilitation of a sick company under Section 4 of the Sick ....
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....he I&B Code. Only thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims. If that is permitted, the very calculations on the basis of which the resolution applicant submits its plans, would go haywire and the plan would be unworkable. 87. We have no hesitation to say, that the word "other stakeholders" would squarely cover the Central Government, any State Government or any local authorities. The legislature, noticing that on account of obvious omission, certain tax authorities were not abiding by the mandate of I&B Code and continuing with the proceedings, has brought out the 2019 amendment so as to cure the said mischief. We therefore hold, that the 2019 amendment is declaratory and clarificatory in nature and therefore retrospective in operation. CONCLUSION 95. In the result, we answer the questions framed by us as under....