The Delhi Bench of the National Company Law Tribunal (NCLT) has held that provident fund dues are not assets of the Corporate Debtor and have to be paid in full.
The Adjudicating Authority vide Order dated 21st January 2020 initiated the “Corporate Insolvency Resolution Process” (“CIRP”) against the Corporate Debtor-HAIL Tea Limited. In pursuance of the Public Announcement, Assam Tea Employees Provident Fund Organization, the Appellant-Organization submitted its claim in Form-B for an amount of Rs. 2,10,13,797.92/-.
The claim was on account of default on part of the Corporate Debtor to deposit its Provident Fund Contribution, Provident Fund Administrative Cost, Interest for the delay in deposit of the Provident Fund Dues, Interest for delay in deposit of Deposit Linked Insurance Dues and Provident Fund Contribution due and payment for the period commencing from 28th March 2019 till 26th September 2019.
The Resolution Professional admitted the entire claim of the Appellant- Organization of Rs. 2,10,13,797.92/-. The Resolution professional shared a copy of the Judgement dated 03rd January 2022 and made part payment of Rs. 64,30,222/-.
It was contended by the Counsel for the Appellant-Mr. Karan Mehra that Provident Fund Dues were entitled to be paid in full as the Resolution Professional having admitted the amount of Rs. 2,10,13,797.92/-, was required to be paid in full. He further submitted that non-payment of the full amount is a violation of the provision of Section 30(2)(e).
In light of the precedent, the NCLT observed that the provident fund dues are not the assets of the Corporate Debtor and they have to bepaid in full and held the Appellant as entitled to payment of full provident fund dues.
The bench directed to make the payment of the balance amount of the Provident Fund to the Appellant to save the Resolution Plan from invalidity and allowed the appeal.
Mr Dhruv Surana, Mr Madhav Bhatia, and Mr Aditya Pandey appeared for respondent 1 and Mr Mohit Yadav, MrR.Pratap Singh, Advocates appeared for respondent 2.
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