TaxTMI 
TaxTMI 
2026 (3) TMI 1082
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....Respondents in the Company Petition, i.e., the Liquidator of M/s. Abra Motors Private Limited, the Company under Liquidation, to recover and realize from the assets of the Corporate Debtor the amount due to be paid to the Appellant, and if the same has already been distributed, to recover it, and to pay the EPFO dues on a priority basis over other Creditors, and to furnish the complete payment details, address, and other contact details regarding the quantification and distribution of money, including to whom and when it was distributed. 3. The facts which emerged for consideration are that the Corporate Debtor was established under the provisions of the Companies Act and was covered as per the stipulations contained under the EPF & Miscellaneous Provisions Act of 1952, that the Corporate Debtor had defaulted in payment of the employees' contribution, although the same had already been deducted for the Financial Years 2008-2019 from the salary of the employees and that the total EPF amount determined to be due was Rs. 26,16,268/-. 4. On filing of an application under Section 9 of the I & B Code, 2016 by the Operational Creditor against the Corporate Debtor, M/s. Abra Motors P....
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....hest of the Liquidator under Section 54 of the I & B Code, 2016 was decided by the impugned order dated 25.01.2024, which is the subject matter under challenge in the connected Company Appeal, i.e., Company Appeal (AT) (CH) (INS) No. 181/2024. 8. The appellant filed an application, IA(IBC)/1785(CHE)/2023 seeking directions to the respondent liquidator to recover the amount to be realized from the assets of the Corporate Debtor for its distribution and the ultimate payment of the Employees Provident Fund dues on a priority basis for the Financial Years 2008-2009 to 2018-2019, has been closed due to the closure of the liquidation process and the order of dissolution passed on 25.01.2024. 9. The same was considered by the Ld. Tribunal and, by the impugned order dated 19.01.2024, after considering the rival contentions, the Ld. Tribunal rejected the application on the ground that, since there were no assets of the Corporate Debtor left, the same could not be considered. This is an aspect that can now be borne out from the order of dissolution dated 25.01.2024 passed in IA(IBC)/1128(CHE)/2022. The relevant para is given below. "14. From the averments made in the Applicati....
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....ll under Section 53 relating to the waterfall mechanism, the amount due to be paid to workmen or employees from the Provident Fund would stand excluded, being assets owned by a third party but in possession of the Corporate Debtor. Accordingly, he contends that the Stakeholders would be responsible to forthwith return the money received by them in the distribution process which they were not entitled to receive at the time of distribution, and that it was required to be remitted to the Appellant in light of the provisions contained under Regulation 43 of the IBBI (Liquidation Process) Regulations, 2016. 12. The Ld. Tribunal considered various ratios laid down by the Hon'ble Apex Court, particularly in the matter of Jet Aircraft Maintenance Engineering Welfare Association, which decided the question of whether Workmen and Employees were entitled to receive their dues under the head of PF, pension and gratuity in priority from the liquidation estate of the Corporate Debtor as per the provisions of the Code. 13. Ld. Tribunal considered the implications laid down in Jet Aircraft Maintenance Engineering Welfare Association (supra) as well as the judgment rendered in Tamilnad Merca....
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....der Section 53 as per the waterfall mechanism for meeting the CIRP costs, as detailed in Para 26 of the impugned order. 15. Ld. Counsel for the Respondent has submitted that Creditors, as defined under the I & B Code, 2016, had been paid out of the amount thus received as income tax refund, that the entire was effected on 30.09.2021 and no payment was made thereafter. 16. It is seen that the liquidator has distributed the amount received through income tax refund, that is the only fund available with him, under three heads-priority payment u/s 36(4)(a)(iii), CIRP costs and liquidation costs. The issue to decide now is whether the said act is valid considering there was a claim of EPFO which has to be treated on priority and whether the distributed amount should have been ordered to be recovered under the provisions of regulation, 43 of liquidation regulations to be paid to EPFO. We tend to agree with Ld. NCLT that CIRP and liquidation processes are statutory processes and the costs of the same must be paid to the extent possible because without that, the entire process of insolvency resolution will come to a standstill. The ratios relied upon by the appellant to those cases w....
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.... the contingency that where the Corporate Debtor has been put into liquidation and its assets have been completely liquidated, the Corporate Debtor shall be dissolved upon an application preferred under Section 54 of the I & B Code, 2016. It is upon the application of the Liquidator that the Ld. Adjudicating Authority must pass an appropriate order of dissolution of the Corporate Debtor, depending upon the facts and circumstances of each case. 22. In the instant case, we do not have to make a detailed analysis as to how the Corporate Debtor has been put to dissolution, owing to the admitted facts already considered by us in the earlier judgment rendered in Company Appeal (AT) (CH) (INS) No. 72/2024, which shall be read in conjunction with this Judgment. The following facts are not in dispute:- (i) That the Corporate Debtor, M/s. Abra Motors Private Limited, was placed into liquidation by virtue of an order passed in IBA No. 42/2020 on 08.05.2020. (ii) It is not in controversy that the first meeting of the Committee of Creditors was held on 03.08.2020, in which the Corporate Debtor was resolved to be liquidated because "the Corporate Debtor had no assets and the....