ORDER

1. This application is filed on 17.06.2022 by Shri Addanki Haresh the Liquidator of Right Engineers and Equipments India Private Limited, under Section 35 (1) (N) r/w Section 53 and 60 (5) (C) of Insolvency and Bankruptcy Code, 2016 interalia seeking to pass an order/direction whether the amounts claimed and payable by the Respondent PF Organisation under Section 7A and 7Q of EPF and MP Act, 1952 are the sums due to workmen and employees from the provident fund and to be considered in priority over other dues; pass an order whether the amounts towards the damages claimed by the Respondent PF Organisation under Section 14B of EPF & MP Act 1952 are dues to the Central Government and to be treated u/s 53 (1) (e) (i) of the IBC 2016.

2. It is stated that the Adjudicating Authority initiated CIRP process of the Corporate Debtor on 29.10.2019 and appointed the Applicant Mr. Addanki Haresh as IRP and later he was appointed as RP. Further, the maximum period permitted for completion of CIRP expired was on 26^th April 2020 and the same was further extended upto 22^nd November 2020. Even though one resolution plan was received during CIRP, but the same was not approved by the Committee of Creditors. Therefore, the RP after discussion with the members of the COC filed an application for liquidation of the Corporate Debtor. Vide order dated 2.12.2020, the Adjudicating Authority initiated Liquidation process of the Corporate Debtor by appointing the Applicant as a Liquidator.

3. The Respondent-Organisation submitted a delayed claim in Form-C under Regulation 17 of the IBBI (Liquidator Process) Regulation 2016 and hence the same was rejected by the Liquidator. Aggrieved by the order of the Liquidator, EPFO appealed to the Hon’ble Adjudicating Authority (AA) and the AA directed the Liquidator to consider the claim. Accordingly, the Liquidator verified and admitted the claim. In addition to the amounts claimed by EPFO in the Form C, the books of accounts of Corporate Debtor reflected certain liabilities towards the Members PF contribution and the Employers PF contribution outstanding for the period prior to the commencement of CIRP. The details of the outstanding amount towards provident claim are as under:

4. Further, for the purpose of liquidating the Corporate Debtor, Liquidator has to form estate of the assets of the CD as per Section 36 of the I & B Code 2016. As per Section 36 4 (a) (iii) of IBC 2016 dedicated funds created internally (plan funds) for PF, Gratuity Pension, Leave encashment etc., will not form part of liquidation estate. However, in the instant case of the present CD, separate fund has not been created.

5. It is submitted that the NCLT and Hon’ble NCLAT in their orders during last four years have held that the amounts due and payable to any workmen or employees from the provident fund, pension fund and gratuity fund are the assets of the workmen/employees and hence shall not be included in the liquidation estate to be distributed pursuant to the order of priority as set out in Section 53 of the IBC. It may also be observed that dues payable to the workmen includes both the employee and employer contribution to the funds and hence it has been heldby the NCLT/NCLAT that the entire arrears towards the provident fund should be liquidated before paying off the other creditors of the Company under liquidation. In certain other cases, it was held by the Appellate Authorities that unfunded Provided Fund and Gratuity Dues i.e., PF amounts for which funds were not kept separately, the claims of PF department need to follow the priority as set out in Section 53 (1) (e).

6. It is stated that the Respondent Organisation made a claim of Rs. 9,08,117/- to