TaxTMI 
TaxTMI 
2022 (7) TMI 831
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....ding a payment to the tune of Rs. 1,48,15,127/- towards interest component and order dated 04.03.2020, passed under Section 14B of EPF & MP Act, demanding a payment for an amount of Rs. 2,14,51,028/- towards damages and penalty. Pursuant to the above stated orders, the Respondent has issued notices to the Corporate Debtor seeking recovery of the above stated amounts through notice dated 25.06.2020. The notice has been called in question by the Liquidator in IA No. 1085 of 2020. 2. The fact in brief are that Corporate Insolvency Resolution Process ("CIRP") was initiated against the Corporate Debtor vide order dated 23.03.2018 passed by this Adjudicating Authority and a moratorium was imposed under section 14 of the Code. The Corporate Debtor at the time vide its order dated 06.04.2018 informed the Respondent about the initiation of CIRP and imposition of moratorium against the Corporate Debtor. The Respondent, despite the intimation of moratorium issued summons dated 04.10.2018 under Section 7A of EPF & MP Act 1952 for conducting inquiry on outstanding Provident Fund dues. It has been asserted that the Corporate Debtor pursuant to the summons, on 22.10.2018 appeared before the Co....
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....F. dues for the pre-CIRP period have been admitted and are payable. The corporate debtor made a payment of amount of Rs. 8,19,60,981/- (Rupees Eight Crore Nineteen Lakh Sixty Thousand Nine Hundred and Eighty-One Only) towards the P. F. dues arising during CIRP period. Out of this amount, an amount of Rs. 7,45,52,732/- was paid by the Applicant/Liquidator. Further, the P. F. dues amounting to Rs. 20,54,381/- arising during the Liquidation Period were also paid by the Applicant/Liquidator in full. 4. It is submitted that not even a single employees P.F dues have been calculated by the Respondents. Therefore, in absence of details of identified workmen and employees, no dues in the first place could exist. It has thereafter been submitted that the Respondents continued to act in flagrant contravention of the Code and issued a Recovery Notice dated 25.06.2020 demanding the payment of an amount of Rs. 34,13,51,098/- (Rupees Thirty-Four Crores Thirteen Lakhs Fifty-one Thousand and Ninety-Eight Only) in pursuance of the order dated 06.03.2020 passed under Section 7A of EPF & MP Act, 1952. 5. It is therefore asserted by the Applicant that the Orders and Recovery Notices have been pas....
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....h are in question. 9. The Respondent in its defence has contended that the proceedings carried on Are assessment proceedings and are not barred under section 14 of the Code. The applicant on the other hand has contended that the orders under challenge have been passed in violation of the moratorium imposed by this Learned Adjudicating Authority vide order dated 23.03.2018. The Applicant has relied upon the judgement of the Hon'ble Supreme Court of India Anand Rao korada Vs. Varsha Fabrics (P) Ltd. And Ors. (AIR 2020 SC 222) where the Hon'ble Supreme Court rejected the orders passed by the Hon'ble High Court of Odisha which had directed for carrying out auction of the assets of the Corporate Debtor during moratorium. Reliance have also been placed on the judgement of the Learned NCLAT in Anju Agarwal v. Bombay Stock Exchange [Company Appeal (AT) (Insolvency) No. 734 of 2018] wherein Section 28 of the "SEBI ACT, 1992" has been held to be inconsistent with Section 14 of the I&B Code". Further, reliance has been placed on Dewan Housing Finance Limited vs SEBI (Appeal No. 206 of 2020), wherein the Learned Securities Appellate Tribunal, Mumbai while quashing the show cause notice and ....
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....payable and not the dues to the said funds. 12. In view of the above-mentioned issues raised, the issue which demands consideration is whether the Orders and Notices issued by the Respondent are in breach of the moratorium imposed by the Adjudicating Authority and whether the same could be passed during the Liquidation period. 13. The purpose of imposition of a moratorium has been expounded by the Hon'ble Supreme Court in the case of P. Mohanraj and Others vs. Shah Borthers Ispat Pvt. Ltd, wherein the Hon'ble Supreme Court has held that the moratorium is imposed to shield the Corporate Debtor from pecuniary attacks to enable it to get a breathing space so that it can continue as a going concern to ultimately rehabilitate itself. The observations of the Hon'ble Supreme Court are as under: "While Section 14(1) (a) refers to monetary liabilities of the corporate debtor, Section 14(1) (b) refers to the corporate debtor's assets, and together, these two clauses form a scheme which shields the corporate debtor from pecuniary attacks against it in the moratorium period so that the corporate debtor gets breathing space to continue as a going concern in order to ultimately re....
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....se may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary); (2) The officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely:- (a) enforcing the attendance of any person or examining him on oath; (b) requiring the discovery and production of documents; (C) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses; and any such inquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860)." 17. The Circular dated 14.02.2020 issued by the Respondent itself suggests and states that proceedings initiated under Section 7 A of the EPF & MP Act, 1952 are legal in nature and the proceedings under the same must be done in an extremely cautious manner. The extract is as under: "2. The minimum standard of evidence for commencement of any legal proceeding is existence of a prima facie case an....
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....is, if permitted, will lead to numerous proceedings being initiated against the Corporate Debtor which will frustrate the object of the Code and the completion of the Corporate Insolvency Resolution Process in a time bound manner. 20. Further, the said proceedings, as rightly pointed out by the Applicant also barred during the Liquidation Period. In this regard, as is observed under section 33(5) of the Code, no suit or legal proceedings can be initiated by or against the Corporate Debtor. The only exception is provided to the Corporate Debtor itself to initiate proceedings with the permission of the Adjudicating Authority. Once there is an embargo put on the initiation of any legal proceedings initiated by the Respondent are clearly barred under the law, therefore, the enquiry itself was vitiated having been initiated in violation of the moratorium imposed and also against the spirit of Section 33(5) of the Code. 21. The Respondent has also contended that the dues being claimed by the Respondent are social welfare dues and the actions have been taken for the benefit of the employees and workmen. However, as rightly pointed out by the Applicant, the orders do not provide the ....