NCLT Rules Resolution Applicants Not Liable for Post-Plan Approval Costs Excluded from Corporate Debtor's Financial Records [Read Order]
Once the Resolution Plan has been implemented, no additional obligations can be imposed beyond what was settled in the approved plan-NCLT
NCLT – Financial Records – Post-Plan Approval Costs Excluded -NCLT Rules – NCLT Mumbai – Taxscan
NCLT – Financial Records – Post-Plan Approval Costs Excluded -NCLT Rules – NCLT Mumbai – Taxscan
In a significant ruling, the National Company Law Tribunal ( NCLT ) of Mumbai bench has held that no liability can be imposed on the Successful Resolution Applicant after the approval of the plan by the Committee of Creditors if such liability is not identifiable from the financial records of the Corporate Debtor.
EPFO ( Employees Provident Fund Organisation ), Applicant, requested to issue appropriate direction to RP to consider the claim under Section 36(4)(a)(iii) and to release the statutory PF dues on priority towards the payment of the debts as per the provisions of section 11 of EPF & MP Act, 1952 and to pass such other Order/direction as it deemed fit and proper in the fact and circumstances of the case.
The Applicant contended that before the approval of the Resolution Plan by the NCLT, it forwarded a claim amounting to Rs 1,24,05,644/- to the Resolution Professional after becoming aware of the Insolvency Resolution Process. The Resolution Professional rejected this claim approximately six months after the approval of the Resolution Plan by the NCLT.
It was argued by the applicant that there was no opportunity to approach NCLT prior to the approval of the Resolution Plan due to this timing. The Applicant further submitted that the letter which communicated the rejection of the claim didn't provide evidence that the Resolution Professional fulfilled all statutory duties under Section 25 including the handling of provident fund, pension fund, and gratuity fund.
The NCLT noted that the last date for submitting claims was set as July 26, 2017. The Applicant, however, only submitted its claim on January 2, 2019. The Resolution Professional responded to this claim with a rejection letter.
The rejection was based on the grounds that the Human Resources Department of the Company already filed consolidated claims for the employees and workers covering dues such as salaries, wages, provident fund (PF), Employee State Insurance Corporation ( ESIC ) contributions, and Tax Deducted at Source (TDS) up to June 2017 just prior to the commencement of the CIRP.
It was noted that some employees individually filed their claims which were accepted and incorporated into the Approved Resolution Plan.
The NCLT held after the approval of the Resolution Plan by the Committee of Creditors, no additional liability can be imposed on the Successful Resolution Applicant unless such liability is clearly identifiable from the financial records of the Corporate Debtor.
The Bench comprising Prabhat Kumar (Technical Member) and Justice Virendrasingh Bisht (Judicial Member) found that the claims for Provident Fund and other employee dues were appropriately considered in the Resolution Plan according to the financial records of the Corporate Debtor. It held that once the Resolution Plan has been implemented, no additional obligations can be imposed beyond what was settled in the approved plan.
To Read the full text of the Order CLICK HERE
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