TaxTMI 
TaxTMI 
2026 (9) TMI 1849
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....ls Private Limited has 4 units under the ESI Act. Prior to commencement of the CIRP, the Corporate Debtor had incurred substantial statutory liabilities towards contributions payable under the Employees' State Insurance Act, 1948 ("ESI Act") for the period 2012 -2018. On the basis of the monthly contribution returns and statutory assessment notices, a cumulative amount of Rs. 13,38,30,616/- was due and payable to the Employees' State Insurance Corporation ("ESIC") herein the appellant by the corporate debtor. 3. On 16.03.2022, the Corporate Debtor M/s. Sri Lakshmi Srinivasa Jute Mills Private Limited was admitted into CIRP by Ld. NCLT, Amaravati in CP(IB) No.73/9/AMR/2020, and Shri Maligi Madhusudhana Reddy, herein the 1^st respondent, was appointed as the Interim Resolution Professional ("IRP"). The IRP made a public announcement on 17.03.2022, inviting claims from the creditors of the Corporate Debtor. 4. In response thereto, on 07.04.2022, the Appellant submitted its claim in Form-B before the IRP, claiming Rs. 13,38,30,616/- as an Operational Creditor towards the statutory ESI contributions due from the Corporate Debtor. The 1st meeting of the CoC held on 18.04.2022 where....
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....ted dues under the approved Resolution Plan, the Appellant preferred the present appeal. Submissions of the Appellant: 12. The learned Counsel appearing for the Appellant submits that ESIC had submitted claim of Rs. 13,38,30,616/- towards statutory contributions payable under the Employees' State Insurance Act, 1948 ("ESI Act"). However, the Resolution Professional communicated that only 1% of the admitted claim, amounting to Rs. 13,38,306/-, would be paid under the Resolution Plan by treating the claim as ordinary Government dues/dues of an Operational Creditor. 13. Learned Counsel submits that the ESI contributions are statutory contributions intended for the benefit of employees/workmen and are required to be deposited into the Employees' State Insurance Fund in terms of the ESI Act and the Appellant Corporation does not acquire any beneficial ownership therein. It is therefore contended that such amounts cannot be treated in the same manner as an ordinary operational debt. 14. Learned Counsel accordingly submits that unpaid ESI contributions constitute amounts held by the Corporate Debtor in the nature of third-party funds/trust monies and, therefore, do not form pa....
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....egedly not afforded an effective opportunity to place its objections before the CoC at the relevant stage. 21. In support of the aforesaid submissions, learned Counsel for the Appellant places reliance upon various decisions dealing with statutory employee-benefit contributions and their treatment under the IBC. Reliance is first placed upon Nurani Subramanian Suryanarayanan, Liquidator of M/s. Care IT Solutions Pvt. Ltd. v. Employees State Insurance Corporation, wherein the Appellant submits that this Tribunal considered the treatment of statutory contributions under the ESI Act and held that such amounts fall within the exclusion contemplated under Section 36(4)(a)(i) of the IBC, being amounts held for the benefit of third parties. 22. The appellant also placed reliance on the following cases: • Para 45 of Tourism Finance Corporation of India Pvt. Ltd. V. Rainbow Papers Ltd. & Ors., [CA(AT)(Ins) No.354, 364, 404 & 1001/2019 NCLAT Delhi] / State Tax Officer V. Rainbow Papers Ltd. [2022 SCC Online SC 1162] • Para 71,72 & 76 of Jet Aircraft Maintenance Engineers Welfare Association V. Ashish Chhawchharia, Resolution Professional of Jet Airways (India)....
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....aim in Form B, the Appellant cannot subsequently seek to alter the nature or classification of its claim and contend that it ought to be treated otherwise. 26. According to the Respondents, the specific exclusion contemplated under Section 36(4)(a)(iii) relates to provident fund, pension fund and gratuity fund. It is contended that ESI contributions are distinct in nature and constitute insurance contributions under the Employees' State Insurance Act, 1948 ("ESI Act"), and cannot be equated with provident fund, pension or gratuity funds specifically referred to in the said provision. According, to the Respondents, ESIC's claim constitutes a statutory monetary claim against the Corporate Debtor and forms part of the liabilities to be dealt with under the insolvency process. 27. The Respondents contend that, ESIC did not, at the relevant stage, assert that the amounts claimed were third-party assets falling outside the liquidation estate, and that if ESIC intended to contend that the amounts were assets held in trust for a third party and therefore outside the distribution matrix, it ought to have asserted such a position before the Resolution Professional at the appropriate st....
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....r of Shreem Spa & Resorts Ltd. [IA/8(AHM)2022 in CP(IB) 550 of 2018 (NCLT Ahmedabad)] • Mr. Vinod Agrawal Resolution Professional of M/s. Mayfair Leisures Limited [IA/542(AHM)/2022 in CP (IB) 213 of 2018 (NCLT Ahmedabad)] • Ashwini Fal Dessai and Ors. V. Anneel Saraogi and Ors. [Cont.A/01(MB)/2022 in C.P.(IB)-2119(MB)/2019 (NCLT Mumbai)] • Bangalore Turf Club Ltd. and Ors. V. Regional Director, Employees State Insurance Corporation and Ors. [Civil Appeal Nos. 2416 of 2003] 33. It is further submitted that the Resolution Plan has already been approved and has proceeded towards implementation. According to the Respondents, the first tranche of amounts contemplated under the Resolution Plan has already been disbursed to the creditors on 25th and 26th October 2022. The Respondents therefore contend that substantial equities have arisen in favour of the Successful Resolution Applicant and other stakeholders and that the approved Resolution Plan ought not to be reopened at this stage on the basis of a claim which ESIC had itself submitted and pursued as an Operational Creditor. Findings: 34. We have considered the submissions advanced by th....
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.... described as an Operational Creditor claim cannot alter the substantive character of the amount in question. The form prescribed for submission of a claim is procedural in nature and cannot have the effect of converting an amount which is statutorily required to be held for the benefit of the employees into an asset beneficially belonging to the Corporate Debtor. 38. Consequently, the contention of the Respondents that, having submitted the claim in Form B, the Appellant is estopped from asserting the benefit of Section 36(4)(a)(i) cannot be accepted. 39. The contention that Section 36(4)(a)(iii) specifically mentions provident fund, pension fund and gratuity fund and does not expressly mention ESI contributions also does not advance the case of the Respondents. The Appellant's claim under consideration is not being excluded merely by analogy with provident fund, pension fund or gratuity fund. The exclusion flows from the independent operation of Section 36(4)(a)(i), when the statutory character of the ESI contribution is examined in the light of Section 40(4) of the ESI Act, 1948, as explained in Nurani Subramanian and reaffirmed in Regional Director, ESI Corporation v. Man....