NCLAT directs MCA, IBBI to amend statutory claims rule
The National Company Law Appellate Tribunal (NCLAT) has directed the ministry of corporate affairs (MCA) and Insolvency and Bankruptcy Board of India (IBBI) to make changes to the insolvency laws on creditor claims.
The directive comes after observing certain gaps in the current Insolvency and Bankruptcy Code (IBC) regime that deals with statutory claims.
The tribunal is of the opinion that the government and the regulator will have to consider an amendment to the IBC in this regard. This may oblige the resolution professional (RP) to include the claims of the statutory authority in the resolution plan. This is even if it’s not reported or filed with them but reflecting in the books of a firm seeking resolution.
The appellate tribunal was hearing the case of Employees Provident Fund Organisation (EPFO) versus Subodh Kumar Agarwal. EPFO had challenged an order by the National Company Law Tribunal, (NCLT), Kolkata, which had approved the resolution plan of insolvent firm Ambient Computronics.
The resolution plan of the firm did not show EPFO as one of the parties towards which debt was owed.
Noting the RP’S responsibilities defined under the
IBC, the tribunal said that, “The provisions of the code and regulations do not contemplate any cognizance of any ongoing proceeding under which a corporate debtor may be saddled with any liability, financial or otherwise.” This order was made public on Monday. The NCLAT observed that no claim was submitted by the EPFO but it cannot be denied that both RP and bidders were aware about Ambient owing them ~6.16 lakh.
The resolution plan did not include the organisation as one of the parties towards which debt was owed. The EPFO then challenged the resolution plan and imposed provident fund dues of ~12.17 lakh on Ambient.
The RP contended that provident funds are not the assets of the corporate debtor (Ambient), and therefore, no amount is required to be paid by the firm.
“The order is not related to general claims. It is related to statutorily-backed claims. The order is trying to protect the interests of workmen and employees, whose statutory dues were deducted by the employer. Even though IBC or regulations do not cover their claims, they cannot be made to suffer. It confirms the age-old legal principle that social legislations have to yield to economic legislation,” said Abhishek Swaroop, partner at Saraf and Partners.
Talking about the contentious code provision, the tribunal pointed out that it says “collate all the claims.” but said expressions are being followed by the words “submitted by creditors.”