PF, Pension, and Gratuity due to employees cannot be used by debtor to settle with its creditors: NCLT
The Principal Bench of the National Corporate Law Tribunal (“NCLT”) passed an order, in the case of Alchemist Asset Reconstruction Co. Ltd. v. Moser Baer India Limited, whereby it ruled that provident fund, pension fund, and gratuity fund that the corporate debtor owes to its employees will not form part of the corporate debtor’s assets. Therefore, such dues cannot be used by the corporate debtor for settling any claims of its creditors under Section 53 of the Insolvency and Bankruptcy Code, 2016 (“Code”). The NCLT made this ruling after reviewing Section 36 of the Code which excludes all sums of money owed to workmen from the assets of the corporate debtor.
Section 53 of the Code specifies the priority in which the assets of the corporate debtor will be distributed to the creditors of the corporate debtor.
The present case was filed by workmen seeking release of their provident fund, pension fund, and gratuity fund from the scheme of distribution of proceeds from the liquidation of assets of the corporate debtor in the preferential order provided in the Code.
Quick View:
- The order from the NCLT’s Principal Bench reaffirmed a previous order from the Mumbai Bench of the NCLT in the case of Asset Reconstruction Co. (India) Ltd. v. Precision Fasteners Ltd., thereby reiterating the stance of the tribunal with regards to the treatment of workmen dues in the case of liquidation. The order is a welcome move towards safeguarding the interests of workmen in such instances.
Delhi HC bans firms selling Patanjali products as their actions violated the Patanjali’s trademarks
The Delhi High Court (“Delhi HC”), in the case of Patanjali Ayurved Limited (“Patanjali”) v. Masala King Exports Trading Pvt Ltd and others (“Infringing Companies”), has passed an ex-parte interim injunction against the Infringing Companies from exporting Patanjali’s products to international markets.
Patanjali had argued that it had allowed the Infringing Companies to sell its products in India and had not given the Infringing Companies the right to sell Patanjali’s products abroad.
The Delhi HC, on hearing the arguments of Patanjali, held that as owners of the product’s trademarks, Patanjali has the right to distribute through whichever channels it deems fit. Therefore, by selling Patanjali’s product abroad, which Patanjali had not approved, would violate the Patanjali’s trademark. On the above basis, the Delhi HC passed an interim injunction against the Infringing Companies and issued notices to all of them.
Quick View:
- By upholding the existing law, the ruling by the Delhi HC of upholding the absolute rights of trademark owners is welcomed. Trademark owners can now decide the manner in which third parties can use their trademark. By also passing an ex-parte injunction, the Delhi HC has clearly shown that it will pass such orders at the earliest in order to protect the interests of the trademark owners.
There is no time limit for completing a serious fraud investigation: SC
The Supreme Court (“SC”), in the case of Serious Fraud Investigations Office v. Rahul Modi and Another etc. ruled that under the Companies Act, 2013, there can be no time limit prescribed on the Serious Fraud Investigation Office (“SFIO”) to complete an investigation.
Section 212 of the Companies Act, 2013, stipulates that if the Central Government authorizes the SFIO in investigate the affairs of a company, then such investigations will need to be conducted om accordance of the provisions of the Companies Act, 2013. The SC, on a review of the Companies Act, 2013, ruled that the Companies Act, 2013 does not stipulate a time limit on any investigations conducted by the SFIO, and accordingly, there can be time limit imposed on the SFIO.
Quick View:
- This ruling has reiterated the law with regards to the timeline of conducting serious fraud investigations. Considering that the SFIO only handles extremely serious matters, as the name indicates, the SC, by not placing a time limit, has ensured that the SFIO can conduct a thorough investigation of the matter it is investigating.
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.