The National Company Law Appellate Tribunal (NCLAT), Chennai Bench ruled that Creditors cannot initiate proceedings to recover claims which are not part of the approved resolution plan.
The Corporate Debtor M/s GVR Infra Projects Limited had defaulted in payment of dues/damages/interest, including employees share of contributions, since April 2014, which were deducted from their wages. The total EPF dues up to the date are to the tune of Rs.2,84,69,797/-.
The Adjudicating Authority had vide its Order dated October 15, 2018, initiated CIR Process against the Corporate Debtor ‘GVR Infra Projects Limited’. Under the same, the Interim Resolution Professional (IRP) issued a public announcement inviting claims pending against the Corporate Debtor. The Interim Resolution Professional was subsequently replaced by Respondent, appointed as the Resolution Professional (RP).
The Appellant submitted its claims in Form ‘F’, as suggested by the IRP vide his letter dated December 31, 2018. The claim Form ‘F’ was forwarded to the Resolution Professional on January 7, 2019. The RP, vide an email dated May 10, 2019, asked the Appellant to submit its claim and the supporting documents in Form ‘B’ again. In response to that, the Appellant submitted the claim in Form ‘B’, under protest to RP, along with all supporting documents vide its letter dated May 22, 2019.
The Appellant contended that waving off the Provident Fund dues is not only the violation of Section 11 of the Employees Provident Fund Act (EPF Act), which lays down the priority of charge of Provident Fund dues but also a violation of Section 36 (4) (a) (iii) and Section 30 (2) (e) of the Insolvency and Bankruptcy Code 2016 which lays down that the Provident Fund dues are outside Liquidation Estate.
The Corporate Insolvency Resolution Process against the Corporate Debtor ‘GVR Infra Projects Limited’ was initiated by the Adjudicating Authority vide Order dated October 15 2018. After that, IRP/RP was appointed. During the CIRP under the public announcement, the Appellant submitted the claim in Form ‘B’ for an amount of Rs.1,95,01,301/-about the outstanding Provident Fund dues to RP admitted in total.
The coram of Judicial Member, Justice Venugopal M., and Technical Member V. P. Singh held that once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of the resolution plan by the Adjudicating Authority, all such claims, which are not a part of the resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan.
The NCLAT held that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants its approval under Section 31 could be continued.
“The Appellants claim about Provident Fund dues amounting to ₹1,95,01,301/-, which was earlier raised at the time of initiation of CIRP and was later admitted, stood frozen and will be binding (Emphasis supplied) on all the Stakeholders, including the Central Government. After approval of the Resolution Plan by the Adjudicating Authority, all such claims that are not part of the Resolution Plan shall stand extinguished. No person is entitled to initiate or continue any proceeding regarding a claim that is not part of the Resolution Plan,” the NCLAT said.
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