Regional PF Commissioner, Jaipur vs Pratibha Khandelwal (RP) & Ors.

Per: Justice Rakesh Kumar Jain: (Oral)

This order shall dispose of two appeals bearing CA (AT) (Ins) No. 439 of 2022 which has been filed by the Regional PF Commissioner, Jaipur to challenge the validity of the order dated 13.10.2021 by which an application bearing I.A. No. 186/JPR/2019 purported to have been filed by Resolution Professional (RP) under Section 30(6) r/w Section 31 of the Insolvency and Bankruptcy Code, 2016 (in short ‘Code’) seeking approval of the resolution plan has been allowed (hereinafter referred to as ‘first appeal’) and CA (AT) (Ins) No. 64 of 2023 again filed by the same Appellant against the order dated 20.10.2022 by which an application bearing I.A. No. 331/JPR/2021 filed under Section 60(5) of the Code seeking direction to the RP to consider the claim of Rs. 8,98,945/- in terms of the order dated 10.07.2019, having been passed by Assessment Officer under the EPFO, has been dismissed (hereinafter referred to as ‘second appeal’).

Shorn of unnecessary details, the Appellant in both the appeals is common. The Appellant filed an application under Section 60(5) bearing I.A. No. 331/JPR/2021 during the pendency of the proceedings initiated on account of filing of I.A. No. 186/JPR/2019. In this application, it is averred that the Appellant is entitled to an amount of Rs. 5,85,819/- having been assessed by the Assessment Officer by order dated 10.07.2019 and Rs. 3,13,126/- assessed under Section 7 by the same officer is also liable to be paid to the Appellant as it forms part of the total dues of the EPF.

Briefly stated, in From B, as provided under Regulation 7 of the IBBI (CIRP) Regulations, the Appellant has averred that:

However, it is not denied that on 18.02.2019 no order of assessment was passed which ultimately came to be passed on 10.07.2019 which is evident from the orders of assessment appended with the first appeal as Annexure A5 Colly. Meaning thereby, the amount under Section 14-B of the EPF Act, 1952 (in short ‘the Act’) and 7Q of the Act were crystalized and determined on 10.07.2019.

The Adjudicating Authority rejected the application filed by the Appellant on 20.10.2022, inter alia, on the ground that not only the order for approval of the resolution plan has been passed on 13.10.2021 but also the disputed amount does not form part of form B.

Aggrieved against the aforesaid two orders, the present appeals have been preferred and the only argument raised by the Appellant is that as per Section 36(4)(iii) the amount of provident fund cannot form part of the liquidation estate and has to be returned as it is. It is further submitted that although the RP has admitted the claim of Rs. 15,62,128/- but the claim of Rs. 5,85,819 and 3,13,126 which has been assessed as interest and penalty also forms part of EPF dues, therefore, the RP has committed an error as well as the Adjudicating Authority in not allowing the claim of Rs. 24,61,073/-.

On the other hand, Counsel appearing on behalf of the Respondent (RP) has vehemently contested the argument raised by the Appellant, inter alia, on the ground that the RP has not committed any error much less the Adjudicating Authority in only admitting the claim of Rs. 15,62,128/- because the said amount has been mentioned as the amount due of contribution in Form B but in so far as the amount of Rs. 8,98,945/- i.e. Rs. 5,85,819 and 3,13,126 of the penalty and interest is concerned, the said amount was not determined at that time and was not part of Form B as it came to be determined later on 10.07.2019 much beyond the timelines provided under the Code. In support of his submissions, he has relied upon an order of this Tribunal rendered in the case of EPFO Vs. Fanendra Harakchand Munot & Anr. CA (AT) (Ins) No. 427 of 2023 decided on 19.04.2023 to contend that there was a similar issue involved in that case where the claim was made at a belated stage and the same was rejected by the Adjudicating Authority and upheld by this Appellate Tribunal and the said judgment has been upheld by the Hon’ble Supreme Court in Civil Appeal No. ....2023 (Diary No. 25286 of 2023) decided on 25.08.2023 in which the Hon’ble Supreme Court has observed that “Delay condoned. Having heard the learned counsel for the appellant – Employees Provident Fund Organization1, we are of the view that the Commissioner and employees of the EPFO must take steps to ensure that there is compliance with the timelines provided under the Insolvency and Bankruptcy Code, 20162. Failure may have legal consequences. The employees of the EPFO must be aware of the consequences in order to ensure compliance. In case there is dereliction of duty, action should be taken against erring employees in accordance with law. Having said so, we are of the opinion that the impugned judgment does not, in any way, affect the rights of the EPFO to proceed in accordance with law, in view of Section 36(4)(a) (iii) of the IBC. Recording the aforesaid, we do not find any good ground and reason to interfere with the conclusion(s) reached in the impugned judgment and hence, not inclined to issue notice. The appeal is dismissed. Pending application(s), if any, shall stand disposed of”.

In rejoinder, Counsel for the Appellant has submitted that disputed amount was also mentioned in Form B as it was expected to be assessed as such but the ultimate order has been passed on 10.07.2019.

We have heard Counsel for the parties and perused the record with their able assistance. The issue involved in this case is as to whether the amount which has been assessed by the Appellant at a later date i.e. on 10.07.2019 and was not an assessed amount, being part of Form B as on 18.02.2019 has rightly been rejected by the RP and the Adjudicating Authority?

Counsel for the Appellant has also referred to a decision of the Hon’ble Supreme Court in the case of Sundresh Bhatt, Liquidator of ABG Vs. CBIT & Customs, Civil Appeal No. 7667 of 2021 decided on 26.08.2022 and submitted that in the said case, the Supreme Court has concluded that the amount can be assessed and it is further submitted that the amount which has been assessed can be recovered being part of the statutory dues. In this regard, Counsel for the Respondent has submitted that in the case of Sundresh Bhatt (Supra), the Hon’ble Supreme Court has also held that the amount can be assessed but it can be claimed only in strict compliance of the time periods prescribed under the IBC before the Adjudicating Authority. In the present case, we have found that CIRP was initiated on 12.06.2018, public announcement was made on 15.06.2018, the time period provided of 90 days expired on 15.09.2018 but still keeping in view the fact that it is a matter qua the amount of EPF, Form B was as on 18.02.2019 was entertained but in so far as the amount of interest and penalty is concerned, there was an inordinate delay as it has been assessed on 10.07.2019.

Before parting with this order, Counsel for the Appellant has drawn our attention to an observation made by the Adjudicating Authority in the first appeal in Para 15 of the impugned order where it has been said that “statutory dues of the CD are also settled at 10% of the admitted claims”. In this regard, it is submitted that in view of the judgment of this Tribunal rendered in the case of Jet Aircraft Maintenance Eng. Welfare Vs. Ashish Chhaachharia RP, 2022 SCC Online NCLAT the admitted claim has to be released. Counsel for the Respondent has submitted that there is no quarrel with the law laid down by this Court in this regard which has further been affirmed by the Hon’ble Supreme Court in appeal.

In view thereof, the first appeal is partly allowed only to the extent that the amount of Rs. 15,62,128/-, being statutory dues of the provident fund shall be paid by the Resolution Applicant. The rest of the contention raised in this appeal are hereby rejected. In so far as the second appeal is concerned, the same is dismissed.