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TaxTMI 
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TaxTMI 
2025 (9) TMI 1345
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....d for condoning the delay of 255 days in filing the appeal against the order dated 23.12.2022 of the Liquidator was dismissed on the ground that liquidation under the Insolvency and Bankruptcy Code, 2016 was a time bound process which came to an end. 3. Relevant portion of the Impugned Order dated 28.06.2024 of the National Company Law Tribunal, Division Bench-I, Chennai, is extracted hereunder:- "20. Heard the submissions made by the Learned Counsel for the parties and perused the records. 21. IBC, 2016 is a time bound process. The Liquidator while rejecting the claim on 23.12.2022 had clearly stated the reason that the process of Liquidation has almost come to an end. The distribution of the amount to the stakeholders had already began at that point of time. The Applicant has pleaded that standing counsel was sick and there was delay. The reasons stated by the Applicant for condoning the delay of almost 255 days do not appear to be plausible. 22. After distributing the entire amount to the stakeholders as per Section 53 of IBC, 2016, the Liquidator has filed an Application seeking dissolution of the Corporate Debtor and the same is pending adjudicati....
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....e Limited, Ashok Nagar, Chennai whose interest is now represented by its Liquidator, the 2nd Respondent. 6. The National Company Law Tribunal (NCLT) vide Order dated 19.09.2022, had ordered liquidation of the Corporate Debtor, namely, K.N.Interior Designs and Engineering Private Limited, Ashok Nagar, Chennai. NCLT had appointed the 2nd Respondent Mr.M.Murugasen as the Liquidator for the said Corporate Debtor. 7. Pursuant to the order dated 19.09.2022, the 2nd Respondent Liquidator initiated the liquidation process of the Corporate Debtor. On 24.09.2022, the Liquidator issued a public announcement fixing the last date for submission of claims as on 19.10.2022. 8. Facts on record reveal that the Petitioner had filed a Claim Statement by way of an Email dated 21.10.2022 in Annexure-A with the 2nd Respondent Liquidator, claiming a sum of Rs. 21,94,745/- towards Provident Fund and allied dues Corporate Debtor namely K.N.Interior Designs and Engineering Private Limited. By Email dated 29.10.2022 of the Liquidator, the claim of the Petitioner was rejected. However, the 2nd Respondent Liquidator further vide Email dated 23.12.2022, rejected the claim of the Petitioner on the groun....
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....ely, K.N.Interior Designs and Engineering Private Limited, Ashok Nagar, Chennai defaulted in the remittance of PF dues for the period between March, 2016 to July, 2021 and therefore, the Petitioner had initiated an enquiry against the Corporate Debtor, namely, K.N.Interior Designs and Engineering Private Limited, Ashok Nagar, Chennai under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 for not complying with the provisions of the Act. 14. It is submitted by the Petitioner that the Corporate Debtor, namely, K.N.Interior Designs and Engineering Private Limited, Ashok Nagar, Chennai defaulted in payment of the regular dues from April, 2016 and had not submitted any records even after repeated requests. 15. It is stated that the monthly salary for the financial year has been worked out by equally dividing the salary component in the employees' benefit expense head by 12 and Employees Provident Fund salary has been worked out as 70% of the monthly salary and that the dues have been calculated accordingly. 16. It is further submitted that the Petitioner is a statutory body and the contribution, interest and damages payable under Secti....
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....m Employees' Provident Fund Organisation (EPFO) regarding the employees as none were enrolled after 2016 towards Employees Provident Fund (EPF). 21. It is submitted that the claim of the Petitioner is for the period thereafter (i.e., after 2016) and therefore even on this count, the claim was liable to be rejected apart from the fact that the said Company has been dissolved under the provisions of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. DISCUSSION:- 22. We have considered the arguments advanced by the learned Counsel for the Petitioner and the learned Counsel for the 2nd Respondent and have also perused the materials on record. 23. The facts narrated above indicates that the Corporate Debtor, namely, K.N.Interior Designs and Engineering Private Limited, Ashok Nagar, Chennai, was ordered to be liquidated by an Order dated 19.09.2022 by the National Company Law Tribunal, Division Bench-I, Chennai. The 2nd Respondent/Liquidator had thus issued a Paper Publication and called for the Claim Statements on 24.09.2022, fixing the last date for filing the Claim Statements as 19.10.2022. 24. The Petitioner filed a formal Claim S....
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....(5) of section 17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specified under section 17, the Central Provident Fund Commissioner 1 (2011) 2 Comp LJ 465 (SC) 2 Supreme Court Judgment in Civil Appeal No.6893 of 2009 dated 08.10.2009 sat 4/8 C.A.No.239 of 2014.doc or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf may recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the scheme. Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard: The section provides for an adjudication of damages after hearing the employer in the matter. The order passed under Section 14B is subject to an appeal to the Employees' Provident Funds Appellate Tribunal. The Tribunal has the power to pass any order confirming, modifying or annulling the order appealed against or referring the matter back to the authority for a fresh adjudication. It is only after the order of adjudicat....
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....ties completed. However, in terms of the directions passed in WP(C) 9530/2020 titled M/s.Civicon Engineering Contracting India Private Limited Vs. Central Board of Trustees and others vide order dated 4th December 2020, EPFO's orders have to be uploaded regularly. The directions contained in the said order as under: "......Accordingly, it is directed that the Central Provident Fund Commissioner ("CPFC") shall pass immediate practice directions in respect of uploading of all orders which are passed by the Regional Provident Fund Commissioners (RPFCs), Assistant Provident Fund Commissioners (APFC), Central Government Industrial Tribunal (CGIT) and any other officials/authorities who adjudicate disputes. The said practice directions shall stipulate the manner of passing orders, timelines for uploading, timelines for communication to parties etc., which shall be adhered to by all the adjudicating authorities/officers. The orders ought to be, in addition, communicated by email to the parties while simultaneously being uploaded on the EPFO webside. Final orders under Section 14B and Section 7Q may be submitted along with the claim if any. 5. Details of indi....
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....hall not sell the immovable and movable property or actionable claims of the corporate debtor in liquidation to any person who is not eligible to be a resolution applicant.]. (g) to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business; (h) to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself; (i) to obtain any professional assistance from any person or appoint any professional, in discharge of his duties, obligation....
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....quidator shall hold the liquidation estate as a fiduciary for the benefit of all the creditors. (3) Subject to sub-section (4), the liquidation estate shall comprise all liquidation estate assets which shall include the following:- (a) any assets over which the corporate debtor has ownership rights, including all rights and interests therein as evidenced in the balance sheet of the corporate debtor or an information utility or records in the registry or any depository recording securities of the corporate debtor or by any other means as may be specified by the Board, including shares held in any subsidiary of the corporate debtor; (b) assets that may or may not be in possession of the corporate debtor including but not limited to encumbered assets; (c) tangible assets, whether movable or immovable; (d) intangible assets including but not limited to intellectual property, securities (including shares held in a subsidiary of the corporate debtor) and financial instruments, insurance policies, contractual rights; (e) assets subject to the determination of ownership by the court or authority; (f) any assets or their value r....
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....istribute the proceeds from realization within [ninety days] from the receipt of the amount to the stakeholders. The insolvency resolution process costs, if any, and the liquidation costs shall be deducted before such distribution is made. While distributing the proceeds from realization, the Liquidator has to take note of the amounts due as claimed and the amounts that are discernible from the records. 35. Regulation 42 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 is extracted below:- "Regulation 42: Distribution. 42. (1) Subject to the provisions of Section 53, the liquidator shall not commence distribution before the list of stakeholders and the asset memorandum has been filed with the Adjudicating Authority. (2) The liquidator shall distribute the proceeds from realization within [ninety days] from the receipt of the amount to the stakeholders. (3) The insolvency resolution process costs, if any, and the liquidation costs shall be deducted before such distribution is made." 36. Section 53 of the Insolvency and Bankruptcy Code, 2016 deals with "Distribution of Assets". It is extracted below:- ....
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....ual proportion within the same class of recipients, if the proceeds are insufficient to meet the debts in full; and ii. the term "workmen's dues" shall have the same meaning as assigned to it in section 326 of the Companies Act, 2013 (18 of 2013). 37. The reasons for rejecting the Claim Statement dated 21.10.2022 extracted in the order dated 29.10.2022 is untenable. It has been rejected only on the ground that it has not been filed in Form-1 and instead had been filed just as an Annexure-A to e-mail dated 21.10.2022 and that there was a delay in filing Claim Statement on 21.10.2022. This rejection, in our view, is a hyper technical one. 38. There was only a marginal delay of 2 days. Thus, the rejection of the Claim Statement of the Petitioner by the 2nd Respondent/Liquidator was unjustified on account of marginal delay of 2 days without adjudicating the claims of the Petitioner. 39. In any case, even if the 2nd Respondent/Liquidator wanted to reject the Claim Statement of the Petitioner based on the Communication dated 26.10.2022 of the Managing Director of the Corporate Debtor, the 2nd Respondent/Liquidator ought to have sought permission from the 1st Respondent National ....
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....s occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. 6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so." Making a justice-oriented approach from this perspective, there was sufficient cause for condoning the delay in the institution of the appeal. The fact that it was the "State" which was seeking condonation and not a private party was altogether irrelevant. The doctrine of equality before law demands that all litigants, including the State as a litigant, are accorded the same treatment and the law is administered in an even-handed manner. There is no warrant for according a step-motherly treatment when the "State" is the applicant praying for condonation of delay. In fact experience shows that on account of an impersonal machinery (no one in charge of the matter is directly hit or hurt by the judgment sought to be subjected to appeal) and the inherited bureaucratic methodology imbued with t....
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....om security interest is created; 45. The expression "security interest" has been defined in Section 3(31) of the Insolvency and Bankruptcy Code, 2016 which reads as under:- (31) "security interest" means right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person: Provided that security interest shall not include a performance guarantee; 46. The Petitioner or for that matter any other Government Entity as a "secured creditor" within the meaning of Section 3(30) of the Insolvency and Bankruptcy Code, 2016, are entitled to have their claims adjudicated before the 2nd Respondent/Liquidator. Thus, the Employment Provident Fund Organisation, the Petitioner is a "secured creditor" within the meaning of Section 3(30) of the Insolvency and Bankruptcy Code, 2016. 47. The Hon'ble Supreme Court in State Tax Officer Vs. Rainbow Papers Limited, (2023) 9 SCC 545 has held as under:- ....
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....e Insolvency and Bankruptcy Code, 2016 in M/s.Avenue Realty (A Partnership Firm) Vs. The Assistant Commissioner in W.P.(MD) No.8260 of 2025 vide Order dated 14.08.2025. "CONCLUSION:- 118. That apart, a secured creditor like the 1st Respondent stands on a different footing and is a class apart from other creditors. As per Section 52(1) of the Code, a secured creditor in the liquidation proceedings at best may relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets from the liquidator in the manner specified in Section 53 of the Code or realize its security interest in the manner specified in Section 52 of the Code. 119. Under Section 52(1) of the Code, a Secured Creditor in liquidation proceedings may:- (a) relinquish its security interest to the liquidation estate and receive proceeds from the sale of assets by the liquidator in the manner specified in Section 53. (b) realise its security interest in the manner specified in this section. 120. If a secured creditor decides to realise its security, the amount of insolvency resolution process costs payable by the secured creditor shal....
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....or or any person connected therewith in taking possession of, selling or otherwise disposing off the security, the secured creditor may make an application to the Adjudicating Authority to facilitate the secured creditor to realise such security interest in accordance with law for the time being in force. (6) The Adjudicating Authority, on the receipt of an application from a secured creditor under subsection (5) may pass such order as may be necessary to permit a secured creditor to realise security interest in accordance with law for the time being in force. (7) Where the enforcement of the security interest under sub-section (4) yields an amount by way of proceeds which is in excess of the debts due to the secured creditor, the secured creditor shall- (a) account to the liquidator for such surplus; and (b) tender to the liquidator any surplus funds received from the enforcement of such secured assets. ....................... 129. Thus, even if no Claim Statement was filed, a secured creditor stands on a separate foot and can enforce the right independently. Only if the secured creditor realizes its security interest under Sec....
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....debtor to the creditor, or, if two or more creditors join in the petition, the aggregate amount of debts owing to such creditors, amounts to five hundred rupees, and (b) the debt is a liquidated sum payable either immediately or at some certain future time, and (c) the act of insolvency on which the petition is grounded has occurred within three months before the presentation of the petition. Provided that where the said period of three months referred to in clause (c) expires on a day when the Court is closed, the insolvency petition may be presented on the day on which the Court reopens. [Added by Insolvency Law (Amendment) Act, 1950 (3 of 1950), section 2.]. (2) If the petitioning creditor is a secured creditor, he shall in his petition either state that he is willing to relinquish his security for the benefit of the creditors in the event of the debtor being adjudged insolvent or give an estimate of the value of the security. In the latter case he may be admitted as a petitioning creditor to the extent of the balance of the debt due to him after deducting the value so estimated in the same way as if he were an unsecured creditor." 13....