TaxTMI 
TaxTMI 
2026 (1) TMI 659
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....me to time, having regard to the changed circumstances of industrial development in the country and to the law as per its needs due to industrial growth. 2. It provides that every establishment which is in the form of a factory or engaged in an industrial activity as specified in Schedule 1 of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, or in any industry where more than 20 persons are employed, or any other establishment not engaged in an industrial activity but where 20 or more persons are working, shall also be notified by the Official Gazette to receive the benefits which are to be extended to workmen under the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act of 1952). If we examine the Act in its entirety and the SOR of the Act of 1952, the provisions of the Act have been given an overriding effect, being a beneficial legislation intended to ensure that employers and the majority of employees working in such establishments or factories are made liable to contribute their share, which is to be paid to employees/workmen as and when the necessity arises or as it becomes due u....
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....ld affect employees of the Corporate Debtor. In this case, since the Corporate Debtor was admittedly covered under the scheme framed under the Act of 1952, the employer was responsible for contributing its share towards the aforesaid benefits to the workmen and ought to have remitted the amount within the time frame contemplated under the Act and the schemes framed thereunder. Failing this, actions were contemplated under the Act, particularly under Section 7 onwards. The issue specifically relates to the benefits payable and liabilities arising from default under Section 7A, namely interest payable under Section 7Q and damages under Section 14B. Although Section 8 provides the mode of recovery, we need not discuss it in detail. The controversy in this appeal concerns whether the Corporate Debtor was liable for interest under Section 7Q and damages under Section 14B, which the Appellant claims but which have been rejected by the impugned order now under challenge. 5. In Company Appeal (AT) (CH) (Ins) No. 145/2024, Employees' Provident Fund Organization versus M/s. SDU Travels Private Limited, the Appellant challenges the impugned order dated 28.03.2024, passed in IA (IBC) No. 27....
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..... The Appellant argued that they were unaware of the CIRP proceedings due to the COVID period and shortage of staff, which continued until 2022, and therefore could not file the claim in time. 10. The Appellant further submitted that the impugned order denied acceptance of the claim under Sections 7Q and 14B because the Resolution Plan had been approved by the CoC and was pending before the Adjudicating Authority, and considering the claim would delay the CIRP. However, during the hearing of the present appeal, it was admitted by the Resolution Professional that the plan has not yet been approved by the Adjudicating Authority, thereby negating the basis adopted in the earlier decisions relied upon. 11. The Appellant further argued that the rejection of the claim on the ground of limitation, being delayed by 388 days, is erroneous because limitation is not an absolute bar in entertaining claims. Under Regulation 12 of the IBBI (IRP for Corporate Persons) Regulations, 2016, the first proviso requires submission within the time mentioned in the public announcement, i.e., up to the date of issue of the 'Request for Resolution Plan' or 90 days from the insolvency commencement date....
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....ute statutory dues and, under Section 11(2) of the Act of 1952, have priority over all other debts. Section 11(2) is extracted hereunder: "11. Priority of payment of contributions over other debts.-^1[(1)] ^2[Where any employer is adjudicated insolvent or, being a company, an order for winding up is made, the amount due- (a) from the employer in relation to ^3[an establishment] to which any ^4[Scheme or the Insurance Scheme] applies in respect of any contribution payable to the Fund ^5[or, as the case may be, the Insurance Fund], damages recoverable under Section 14-B, accumulations required to be transferred under sub-section (2) of Section 15 or any charges payable by him under any other provision of this Act or of any provision of the ^6[Scheme or the Insurance Scheme]; or (b) from the employer in relation to an exempted ^7[establishment] in respect of any contribution to ^8[the Provident Fund or any Insurance Fund] (in so far as it relates to exempted employees), under the rules of ^9[the Provident Fund or any Insurance Fund] ^10[any contribution payable by him towards the [Pension]^11 Fund under sub-section (6) of Section 17,] damages recoverable und....
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....lation 12 is directory, not mandatory. 20. The Appellant also submitted that since the Resolution Plan had only been approved by the CoC and was yet to be approved by the Adjudicating Authority, it was not too late to consider EPF claims under Sections 7Q and 14B. A combined reading of Regulation 12, Section 30(2) of the Code, and Section 11(2) of the Act of 1952 would show that the claim ought not to have been rejected. 21. The question of limitation under Regulation 12 was considered by the Supreme Court in State Tax Officer v. Rainbow Papers Ltd., where the claim of the State had been rejected as belated. The Supreme Court held that Regulation 12 is directory, not mandatory, particularly for statutory dues. Relevant paragraphs 39 and 40 are extracted: "39. The adjudicating authority (NCLT) and the appellate authority (Nclat) have held that the claim of the State is belated. Regulation 12 of the 2016 Regulations deals with the time period for submission of a claim along with proof, as stipulated in the public announcement under Section 15 IBC. The time period is, however, not mandatory but only directory. 40. In Vishal Saxena v. Swami Deen Gupta [Vishal Sa....
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....ing the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar persons who may jump on to the bandwagon. The described above, in Essar Steel, 8 the court cautioned against allowing claims after the resolution plan has been accepted by the CoC. 22. We have thus come to the conclusion that the NCLAT's impugned judgment cannot be faulted to reopen the chapter at the behest of the appellant. We find it difficult to unleash the hydra-headed monster of undecided claims on the resolution applicant." 26. The Tribunal further relied on M/s Adept Technology Pvt. Ltd., stating that condoning extraordinary delay would defeat the purpose of the IBC. However, this judgment did not consider the Supreme Court's ruling in Rainbow Papers, which expressly held that Regulation 12 is directory, and the Supreme Court even set aside the approved Resolution Plan. "59. The appeals are allowed. The impugned orders [Tourism Finance Corpn. of India Ltd. v. Rainbow Papers Ltd., 2019 SCC OnLine NCLAT 910], [STO v. Chandra Prakash Jain, 2020 SCC OnLine NCLAT 536] are set aside. The resolution plan approved by the CoC is also....