Harish Taneja vs Employee Provident Fund Organization & Anr.

ORDER

a)

To allow the present application;

b)

To pass an order directing to the Respondent No. 2 to De-freeze the bank account bearing No. 201002091939 of the Corporate Debtor and direct the Indusind Bank to transfer that amount in favour of Corporate Debtor’s Liquidation Account.

c)

To pass any other or further order (s) as this Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the case.

17(1)(d) the financial institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution professional.

1)

The Bench notes that the Applicant has appraised the officials of the Respondent No. 1 and 2. The Bench has no doubt in its mind that the attachment is violative of Section 14 of the Code and thus needs to be lifted.

2)

The Bench further notes that the respondent No. 1 i.e. Dy. Commissioner of State Tax has already submitted its claim before the liquidator vide its FORM-B date 12.04.2021. The said claim has been accepted by liquidator. The claim of the Respondent (Dy. Commisioner of State Tax) will be dealt in the manner as provided under Section 53 of the IBC and therefore, Respondent No. 1 i.e. Dy. Commissioner of State Tax cannot continue to enforce its lien over the bank accounts of the Corporate Debtor.

3)

In this regard the Bench notes that Hon’ble NCLT, Principal Bench New Delhi in Om Prakash Agarwal Vs. Tax Recovery Officer 4 & Anr. in like circumstance held that “the monies of the CD lying in the bank account shall be construed to be an asset of the CD even if attachment order is passed against the same. IBC 2016 to have overriding effect and accordingly directed the Bank to defreeze the account.

1)

Appeal arises out of Order dated 4^th December, 2020 passed by NCLT Ahmedabad Bench Court-2 (Ins.) No. 32/2021 in I.A. No. 769/2020 in CP (IB) No. 107/NCLT/AHM/2019.

2)

The Appellant-Liquidator had moved the Adjudicating Authority with a prayer to pass directions upon Respondent No. 2 i.e. Bank to defreeze the Account No. 08432090000149 held in the name of the Corporate Debtor.

3)

NCLT after hearing the Appellant passed the orders, relevant part of which is as under.

In response to the notice of office of Assistant Commissioner of State Tax. It is the prime duty of the liquidator to apprise the competent authority of the State Tax Office. As the State Tax Authority is having ample power to take cognizance of the matter by passing an appropriate order. Liquidator may approach before the competent authority, i.e. office of the State Tax, and get redress and/or apprise the present status of the corporate debtor company with the relevant provisions as provided in the IBC 2016. In view of that, the instant application is not maintainable and the liquidator is at liberty to approach before the competent authority to redress his grievances. Accordingly, the instant application is dismissed, as not maintainable.

4)

Hon’ble NCLAT after hearing the matter the and acceptance of submission of Appellant find that the NCLT has failed to exercise jurisdiction vested in it to give relief to the Appellant in the context of the position of law under Section 238 of IBC.

5)

NCLAT allow the Appeal and the Impugned Order is quashed and set aside. The Respondent No. 2 i.e. Bank is directed to defreeze the Account No. 08432090000149 held in the name of Corporate Debtor- M/s Brew Berry Hospitalities Pvt. Ltd.

ii.

That on 22.02.2019 the PF recovery officer, Gurgaon issued letter to the Branch Manager Induslnd bank limited, Ground & first Floor, Sco-3, Sector- 10A, Gurgaon, Haryana for attachment of bank account bearing number 159555553000 and 201002091939 in respect of account of company as well as account of managing director Sh. Ashwini Arya for recovery the PF dues under section 8F of the EPF & MP Act 1952.

iii.

That on 06.03.2019, the EPFO issued letter to the Induslnd Bank Limited against the name of another director Sh. Manish Arya bearing account no. 159654519672 and also establishment account no. 250002021094 for recovery the PF dues and also standing instructions to the said bank to forward demand draft in favour of RPFC Gurgaon being the amount payable by the company/corporate debtor.

iv.

That on 27.03.2019 the EPFO wrote a letter to Induslnd Bank Limited, Ground and First Floor, Sector- 10A, Khansa Road, Gurgaon to investigate suspicious fraud in Account No. 201002091931 which pertains to M/s Perfact Color Digital Prints Private Limited, because by using forged letter they tried to open Bank Account in M/s Axis Bank Limited.

v.

That on 04.04.2019 & 06.05.2019 the EPFO had issued show cause notice under section 8F (3x) EPF & MP Act 1952 to M/s Perfact Color Digital Prints Private Limited maintaining bank account in Induslnd Bank Limited wherein the EPFO directed to pay the PF dues from the Account of company as well as Director Sh. Ashwini Arya. That on 18.06.2019 the PF authority issue summon to the Branch Manager of Induslnd Bank Limited to appear in person for recovery of PF dues and non-compliance of attachment order passed by the PF authority.

vi.

That on 09.12.2019 the Adjudicating Authority has appointed IRP for initiation of Corporate Insolvency Resolution process (CIRP) against Corporate Debtor and after it came to the knowledge of PF department, the PF Department has been submitted their claim Form along with document before the IRP for the statutory dues of Rs. 1,40,60,827/-. That on 12.03.2020 the PF department issued letter to the IRP to provide the PF amount in top priority as per provision Section 11(2) of EPF & MP Act 1952.

vii.

That on 25.09.2020 the EPF department issued letter to Sh. Harish Taneja Resolution Professional (RP) in respect of removable of lien of bank account no. 201002091939 in respect of the M/s Perfact Color Digital Prints Private Limited wherein the respondent informed that the lien on the above-mentioned bank account number was imposed much before the initiation of Corporate Insolvency Resolution Process. The lien was imposed vide attachment notice no. GN/GGN/28558/recovery cell/ compl./c-8/3667 dated 07.02.2019 under the provisions of EPF & MP Act 1952 for recovery of statutory PF dues but the Corporate Insolvency Resolution Process was initiated on 09.12.2019, hence the request for removal lien from bank account number cannot be acceptable. In this connection, the respondent referred judgment of Hon'ble NCLAT Company Appeal (AT) (Insolvency) No. 1521/2019 dated 08.06.2020 wherein the NCLAT, New Delhi has opined that the attachment of properties made by the statutory authority under there laws, before the commencement of moratorium, is legally valid.

viii.

It is well settled law as per EPF & MP Act that EPF dues are statutory and of the subscribers of Provident Fund. Hence, ignoring the EPF dues is totally injustice to subscribers of the Fund and huge loss to the department as EPFO provides social security benefits to the Industrial workers i.e. Retirement or old age benefits, Provident fund, Superannuation Pension, invalidation pension, Family pension and Deposit Linked Insurance. It also provides wider terminal benefits to the industrial workers for example, payment of terminal benefits in various contingencies such as retrenchment, closure, retirement on reaching the age of superannuation, voluntary retirement and retirement due to incapacity to work. Hence, claim of Appellant must be dealt in the interest of subscribers and department considering the section 11 (2) and section 17B of the EPF & MP Act and Section 36(4)(a)(iii) of Insolvency and Bankruptcy code, 2016.

ix.

In view of the aforesaid fact and circumstances, it is therefore most respectfully prayed that this Adjudicating Authority may be pleased to direct the Applicant to considered the EPF dues and provide the same as per provision under Section 11(2) of the EPF & MP Act, 1952. In view of the aforesaid fact and circumstances, the Applicant requests this Adjudicating Authority to pass any other orders directing the respondent to pay the EPF dues amount, which Adjudicating Authority may deem fit and appropriate in the interest of justice.

"Section 238: "Provision of this code to override other Laws- The Provisions of this code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for time being in force or any instrument having effect by virtue of any such law."

8.

The Learned Counsel has referred to this Order of Hon’ble Supreme Court as well as the Judgment referred by the Hon’ble Supreme Court in the Order and submits that the freezing of Account by the Respondent No. 1 is not maintainable and the Liquidator cannot be made to run to the parties and Authorities under the Sales Tax Act to get the Account defreezed. Learned Counsel submits, and, rightly says that Liquidation Proceedings are time-bound to maximize the value and all the Creditors are entitled to get their dues only in terms of Section 53 of I & B Code, 2016 and different Creditors cannot be allowed to resort to different proceedings and enactments only because they are Authorities under earlier enactments considering the Provision of Section 238 of I & B Code, 2016.

9.

We accept the submissions made by the Learned Counsel for the Appellant.

10.

We find that the Adjudicating Authority has failed to exercise jurisdiction vested in it to give relief to the Appellant in the context of the position of law under Section 238 of IBC.

11.

For the above reasons, we allow the Appeal. The Impugned Order is quashed and set aside. The Interlocutory Application No. 769 of 2020 filed by the Appellant in CP (IB) No. 107/NCLT/AHM/2019 before Adjudicating Authority shall be treated as allowed with following directions:

i.

The Respondent No. 2 is directed to defreeze the Account No. 08432090000149 held in the name of Corporate Debtor-M/s. Brew Berry Hospitalities Pvt. Ltd., at Kotak Mahindra Bank Ltd.- the Respondent No. 2.