NCLT empowered to pass ad-interim orders prior to admitting insolvency application: NCLAT
The National Company Law Appellate Tribunal (“NCLAT”) has held that the National Company Law Tribunal (“NCLT”) is empowered to pass ad-interim orders, including an order restraining the Corporate Debtor from alienating its assets, prior to admitting an insolvency application under the provisions of the Insolvency and Bankruptcy Code, 2016 (“IBC”), in the case of NUI Pulp and Paper Industries Pvt. Ltd. (“Appellant/Corporate Debtor”) v. M/s Roxcel Trading GMBH (“Respondent/Operational Creditor”).
The Respondent had filed an insolvency application under IBC against the Appellant. However, the Appellant informed the NCLT that there was an existing dispute between the parties thus, required time to file a reply to the Appellant’s application. The NCLT postponed the matter and provided time to the Appellant to respond, and passed an interim order that the Appellant must maintain their assets and accounts till the time the insolvency application is admitted or rejected, except for the withdrawal of the legitimate expenses required for the carrying on day to day business expenses. The Appellant appealed against this order and argued that before the admission of application under Section 7 or 9 of the Insolvency and Bankruptcy Code, 2016, the NCLT has no jurisdiction to restrain a Corporate Debtor from creating any third party interest on the assets of the Corporate Debtor.
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The NCLAT invoked Rule 11 of the National Company Law Tribunal Rules which provides that the NCLT has inherent powers to make such orders as may be necessary to meet the ends of justice. This power has been given to the NCLT to ensure that no party can abuse the process of the Tribunal and the NCLAT has rightly held that to meet the ends of justice, it is always open to the NCLT to pass appropriate interim orders.
Workers who are permitted to work off-site are considered employee under EPF Act: SC
The Supreme Court (“SC”) in the case of The Officer In-Charge, Sub-Regional Provident Fund Office (“Appellant”) v. M/s Godavari Garments Ltd. (“Respondent”) held that merely because workers are permitted to the work off site, it would not take away their status as “employees” for the purpose of Employees Provident Fund and Miscellaneous Provisions Act, 1952 (“EPF Act”).
The Appellant engaged women workers to make garments for their own homes and were provided with raw materials. However, the sewing machines used by the women were owned by them and not provided by the company. The Provident Fund Officer held that the women workers fell within the definition of “employee” under the EPF Act, but the High Court set aside the order because the Appellant does not possess any direct or indirect control over the women workers.
When the matter was appealed before the Supreme Court, the issue was whether the women workers employed fell within the definition of “employee” under the EPF Act. The SC reiterated the settled position of law in this regard and cited several cases in this regard and wherein, after relying on various tests employment tests like “Organization Test”, “Control Test” etc. to determine that the workers were “employees” of the Respondent.
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The EPF Act is a social welfare legislation which was created for the benefit of workmen. It has been noted that Employers allow the workers for off-site work so as to exclude them from getting any employee benefits. The judgment reiterates the settled position of law and has upheld the spirit with which the social welfare legislations were enacted.
This judgment is a step-in positive direction as it would allow the workers to enjoy employee rights.
Maternity incentive scheme to be administered through EPFO
The Central Government in a press release confirmed that they are working on an incentive scheme (“Scheme”) of reimbursement of 07 weeks wages for entities that provide 26 weeks maternity benefits to their women employees as per the Maternity Benefits (Amendment) Act, 2017. For a company to avail of this incentive, the women employees working in their company should earn less than Rs. 15,000/- per month, be a member of Employees Provident Fund Organization (“EPFO”) for at least one year, and not be covered by Employees State Insurance Corporation (“ESIC”).
The Scheme will be carried out through the EPFO and will be implemented after obtaining the approval of competent authorities.
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The implementation of the Scheme will incentivize the employers to grant their women employees the maternity benefit leaves as guaranteed under the Maternity Benefits Act, 2017. Women employees in small scale businesses often do not get the benefits as provided under the law. This Scheme will encourage more and more employers to provide maternity benefits to their women employees.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.