Provident Fund Dues Are Not Assets Of Corporate Debtor

Facts of the case

• NCLT Kolkata Bench initiated Corporate Insolvency Resolution Process against the Corporate Debtor HAIL Tea Limited (Respondent).
• The Assam Tea Employees Provident Fund Organization, (Appellant) submitted its claim for an amount of Rs. 2,10,13,797.92/- on account of non-deposition of PF contribution, administrative cost, interest for delay in deposition of PF and EDLI dues.
• The resolution plan proposed an amount of only Rs. 1,07,21,592/-.
• The learned counsel for the appellant challenged the proposal and by virtue of Section 30(2)(e) of IBC, 2016 and Section 11(2) of EPF Act, 1952 filed an appeal before NCLAT, Delhi that the dues are to be paid in full.

Legal Precedent

Regional P.F. Commissioner Vs Ashish Chhawchharia, Resolution Professional for Jet Airways (India) Ltd. & Anr.
In the aforementioned case, the claim of the PF Commissioner for an amount of Rs.24,40,65,594 on account of PF dues was not accepted by the company. Consequently, an appeal was filed by the commissioner before NCLAT, where the Tribunal held that.
The Provident Fund dues are not subject to distribution under Section 53 of the insolvency and
Bankruptcy Code, 2016 and hence, the same shall be paid in full.
The Tribunal directed the Successful Resolution Applicant to make the payment of the admitted claim
towards PF dues so as to prevent the plan from invalidity.

Judgement

The Tribunal held that the facts of the present case are fully covered by the aforementioned precedent and hence, disposed of the appeal by directing the respondent to pay the balance amount of Provident Fund i.e., Rs. 1,02,92,206.

Shivam Bansal, Article Assistant, Audit, SW India

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