NCLAT Urges IBBI To Amend CIRP Regulations To Include Claim Which Are Not Filed But Reflecting In Book/Record Of Corporate Debtor

The National Company Law Appellate Tribunal (NCLAT) principal bench comprising of Justice Ashok Bhushan, Ms. Shreesha Merla and Mr. Naresh Salecha in the case of Employees Provident Fund Organisation versus Subodh Kumar Agarwal urges the IBBI to consider an amendment to the IBBI (Insolvency Process for Corporate Persons) Regulations in order to include claims in information which though not filed with the Resolution Professional but clearly reflects in the books/records of the Corporate Debtor. Employees Provident Fund Organisation (EPFO) filed an appeal before the NCLAT challenging the order dated 14.12.2021 passed by NCLT Kolkata wherein NCLT approved the resolution plan of Ambient Computronics Private Limited since no payment was stipulated towards EPFO in the approved Resolution Plan. Brief Facts Ambient was brought under the purview of Employees Provident Fund and Miscellaneous Provisions Act, 1952 with effect from 01.11.2017 and committed default in compliance of the act for the period October, 2011 to October, 2020. EPFO registered a case against Ambient on 01.12.2020 for assessment of the dues of all employees of Ambient and sent a show cause notice dated 02.12.2020 to Ambient under Section 7A of the 1952 Act. Subsequently, Corporate Insolvency Resolution Process (CIRP) was initiated against Ambient on 10.12.2020. EPFO sent a letter dated 12.10.2021 to the Resolution Professional of Ambient intimating about the pending inquiry to the extent of INR 6.16 Lakhs. Since Ambient was registered under MSME Act, Resolution Plan submitted by the Director of Ambient was approved by NCLT, Kolkata on 14.12.2021. Thereafter, EPFO issued a final order dated 21.01.2022 under Section 7A of the 1952 Act fastening a liability of INR 12.17 Lakhs upon Ambient. Contentions of EPFO It was contended on behalf of EPFO that both the Resolution Professional and the Successful Resolution Applicant were well aware about the proceedings pending before EPFO and therefore, they ought to have provide for payment of provident fund dues under the Resolution Plan. It was further contended that since the Resolution Plan does not provide for any payment towards provident funds, the same deserves to be set aside. Contentions of Resolution Professional It was contended on behalf of the Resolution Professional that since no claim was filed by EPFO, there was no requirement to entertain the claim of EPFO in the Resolution Plan. It was further contended that the assets in provident fund are not the assets of Corporate Debtor and therefore, no amount is required to be paid by the Ambient. Contentions of Successful Resolution Applicant (SRA) It was also contended by the Successful Resolution Applicant that since no claim was filed by EPFO, there was no requirement to include the claim of EPFO in the Resolution Plan and relied upon the case of Ghanashyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Limited to contend that all claims which are not part of resolution plan shall stand extinguished. Decision/Analysis by NCLAT NCLAT observed that is clear that no claim was submitted by EPFO but the it cannot be denied that both the Resolution Professional and SRA were well aware about the proceedings pending before EPFO under Section 7A of 1952 Act. NCLAT noted the duties and responsibilities of Resolution Professional under the Code and the Regulations and noted that; "The provisions of the Code and Regulations do not contemplate any cognizance of any ongoing proceeding under which Corporate Debtor may be saddled with any liability financial or otherwise." NCLAT further held that; "Although Section 18 of the Code uses the expression "collate all the claims" but the said expressions being followed by the words "submitted by creditors", the Resolution Professional is entitled to contend that unless the claim is received by him, he has no obligation to include it in the list of claims or even the Information Memorandum." However, the bench observed that there are certain gaps in the statutory scheme of the code to cover the statutory claims which are part of ongoing proceedings. Regulation 36(2)(l) cast an obligation upon the Resolution Professional to collect other information which it deems relevant but the same will be under subjective satisfaction of Resolution Professional and does not cast any obligation for bringing in the notice of the Committee any ongoing proceeding where statutory liabilities were likely to accrue on the Corporate Debtor. In view of the above, NCLAT urges the IBBI to consider whether regulation required any amendment regarding the same. "14. The Regulation framing authority need to consider as to whether the Regulations need any amendment, clarification so as to include in the Information Memorandum any ongoing statutory proceeding which...

NCLAT Urges IBBI To Amend CIRP Regulations To Include Claim Which Are Not Filed But Reflecting In Book/Record Of Corporate Debtor

Akshay Sharma

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NCLAT Urges IBBI To Amend CIRP Regulations To Include Claim Which Are Not Filed But Reflecting In Book/Record Of Corporate Debtor

Akshay Sharma

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INR 1099+GST

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This is a premium content
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