Delhi High Court
Micro Devices Inc. vs Infocom Digital Systems (P) Ltd. on 9 March, 2018
$~CP-7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision 09.03.2018
+ CO.PET. 147/1996
MICRO DEVICES INC. ..... Petitioner
Through
versus
INFOCOM DIGITAL SYSTEMS (P) LTD. ..... Respondent
Through Mr.V.Sudeer and Ms.Soumyashree
Kulkarni, Advs. for applicant bank Syndicate Bank
Mr.D.Bhattacharya, Adv. for OL
Mr.Rajesh Kumar and Ms.Santwana, Advs. for
EPFO
CORAM:
HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
CA 2057/2013
1. This application is filed by Syndicate Bank for a direction to the OL
to release an amount of Rs.51,18,100/- to the applicant bank instead of
releasing the same to the Employees Provident Fund as is sought to be done
by the OL. Though the application does not mention so learned counsel for
the applicant/syndicate bank submits that the applicant is a secured creditor.
The assets that were mortgaged to the bank were sold and some amount
remains payable by the respondent company. Hence, the present application
has been filed.
2. A perusal of the status report shows that the OL has noted that when
claims were invited EPFO has claimed an amount of Rs.63,66,970/-. The
OL states that based on the adjudication carried out by the statutory
authority under section 7A of the EPFO Act the said amount has been
CO.PET.147/1996 Page 1
allowed for Rs.51,18,100/-.
3. I have heard learned counsel for the parties. Learned counsel for the
Syndicate Bank submits that there are no known or identifiable employees
of the respondent company to whom EPFO has to pay any amount. He
submits that this is also apparent from the report of the OL and that by
paying EPFO they will only be using it to enlarge their own corpus. He
further submits that the proceedings before the Commissioner of EPFO are
void.
4. Learned counsel for the OL, however, states that they have accepted
the claim of EPFO based on statutory orders of the quasi judicial authorities,
namely, Commissioner of Provident Fund.
5. Learned counsel for the EPFO has relied upon judgment of the
Supreme Court in Employees Provident Fund Commissioner vs. Official
Liquidator of Esskay Pharmaceuticals Limited (2011) 10 SCC 727 and
Regional Director E.S.I. Corporation vs. Kerala State Drugs and
Pharmaceutical Limited & Ors, 1995 Supp (3) SCC 148 to plead that the
submissions of learned counsel for the applicant are misplaced.
6. In Employees Provident Fund Commissioner vs. Official Liquidator
of Esskay Pharmaceuticals Limited (supra) the Supreme Court had noted
as follows:-
"48. It is also important to bear in mind that even before the
insertion of Section 529(1) proviso, Sections 529(3) and 529-A
[ Vide Act 35 of 1985, proviso to Section 529(1), sub-section
(3) of Section 529 and Section 529-A were inserted and
amendment of Section 530(1) was carried out.] and
amendment of Section 530(1), all sums due to any employee
from a provident fund, a pension fund, a gratuity fund or any
other fund established for the welfare of the employees were
CO.PET.147/1996 Page 2
payable in priority to all other debts in a winding-up
proceedings [Section 530(1)(f)]. Even the wages, salary and
other dues payable to the workers and employees were payable
in priority to all other debts. What Parliament has done by
these amendments is to define the term "workmen's dues" and
to place them on a par with debts due to secured creditors to
the extent such debts rank under clause (c) of the proviso to
Section 529(1). However, these amendments, though
subsequent in point of time, cannot be interpreted in a manner
which would result in diluting the mandate of Section 11 of the
EPF Act, sub-section (2) whereof declares that the amount due
from an employer shall be the first charge on the assets of the
establishment and shall be paid in priority to all other debts.
The words "all other debts" used in Section 11(2) would
necessarily include the debts due to secured creditors like
banks, financial institutions, etc. The mere ranking of the dues
of workers on a par with debts due to secured creditors cannot
lead to an inference that Parliament intended to create first
charge in favour of the secured creditors and give priority to
the debts due to secured creditors over the amount due from
the employer under the EPF Act."
7. Hence, the settled legal position is that priority has been given to the
amount due from the employer under EPF Act over all other debts.
8. Similarly, in Regional Director, E.S.I. Corporation vs. Kerala State
Drug and Pharmaceutical Limited & Ors., 1995 Supp(3) SCC 148 the
Supreme Court held as follows:-
"3. There is thus no quid pro quo between the persons insured
and the benefit available under the Act. As regards the finding
that the workmen were unidentifiable, what is forgotten is that
under the Act, once an establishment comes to be covered by
the Act, the employer becomes liable to pay the contribution in
respect of the employees in his employment directly or
indirectly. The contribution which had become payable for the
relevant period has to be paid even if the employees concerned
are no longer in employment. Whether the employees are
CO.PET.147/1996 Page 3
unidentifiable today or not is, therefore, irrelevant so long as
the contribution was liable to be paid on their behalf, when
they were in employment."
9. Hence, the submission of learned counsel for the applicant that the
employees who would be the beneficiary of this amount are not identifiable
is a misplaced contention.
10. In my opinion, there are no reasons to reject the report of the OL. The
OL has admitted the dues payable to EPFO of Rs.51,18,100. Accordingly, I
allow the claim of EPFO to the aforenoted extent.
11. Learned counsel for the OL submits that presently a fund of roughly
Rs.62 lacs is available with the OL.
12. Let the OL release the admitted amount to EPFO, as per rules. In case
any surplus is left thereafter the plea of the applicant bank would be
considered.
13. Application stands disposed of.
CP 147/1996
List on 13.7.2018.
JAYANT NATH, J
MARCH 09, 2018
n
CO.PET.147/1996 Page 4
