The court underscored the statutory priority of provident fund dues in insolvency, affirming the need for Liquidators to adhere strictly to the provisions of the IBC and EPF Act.

ORDER

1. This Application has been filed by the Regional PF Commissioner- II (hereinafter called ‘the Applicant’) under Sec. 42 and Sec. 60(5) of the Insolvency and Bankruptcy Code read with Rule 11 of the National Company Law Tribunal Rules, 2016, for following reliefs:-

a) set aside the decision of the Liquidator rejecting the claim of the Applicant vide email dated 22.06.2023 and direct him to reconsider the claim made In Form-F dated 30.12.2020, by the Applicant at Annexure- A and thereafter, to release the amounts claimed therein in its entirety, by allowing this Application in the interest of justice and equity.

2. Brief facts relevant for disposal of the application are as follows: -

(a) This Adjudicating Authority, vide order, dated 21.09.2020 in I.A. 395/BB/2020 had directed liquidation of the Unitex Apparels Private Limited (“Corporate Debtor”) under Section 33(2) of the Code and appointed Mr. Ratnakar Shetty IBBI Registration no. IBBI/IPA-001/IP-P-01630/2019-2020/12718 as the Liquidator of the Corporate Debtor.

(b) Pursuant thereto, the Liquidator made a public announcement for inviting claims against the Corporate Debtor on 05.12.2020 after receiving the order on 03.12.2020, providing the last date for submission of claims as 02.01.2021.

(c) The Applicant submits that, it had filed Claim as an Operational Creditor in Form-F dated 30.12.2022 before the Liquidator claiming an amount of Rs. 6,97,11,270/- (Rupees Six Crores Ninety -Seven Lakhs Eleven Thousand Two Hundred and Seventy Only) towards Provident Fund dues from Unitex Apparels Pvt. Ltd. However, by an email communication dated 22.06.2023, the Liquidator rejected the claim of the Applicant stating that only Rs.47,592/- (Rupees Forty Seven Thousand Five Hundred and Ninety-Two Only) shall be apportioned towards the Provident Fund dues of workers, which was subsequently paid to the Applicant vide a Demand Draft dated 16.05.2023 as full and final settlement towards the claim filed by the Applicant.

(d) Applicant submits that the Corporate Debtor as a default establishment had mounted arrears of provident dues, penal damages and interest and movable properties of the Corporate Debtor were attached by applicant. However after the initiation of Corporate Insolvency Resolution Process of the Corporate Debtor, the Respondent who was earlier the Resolution Professional of the Corporate Debtor restrained the applicant for initiating any recovery action on account of moratorium. Subsequently after the initiation of Liquidation of the Corporate Debtor, the first Stakeholders Consultation meeting of the Corporate Debtor was held by the Respondent on 21.2.2023 wherein the representative of the Applicant stressed to Respondent to consider its claims on priority as per Section 11 of the EPF Act, 1952 but the Respondent only released a sum of Rs.47,592 against the total statutory liability of Rs. 6,97,11,270 and intimated to the Applicant vide mail dated 22.6.2023

(e) The Applicant aggrieved by the order of Liquidator herein has preferred an appeal on 23.11.2023 against the rejection of claim by the Official Liquidator under Section 42 r/w 60(5) of the Insolvency and Bankruptcy Code, 2016 (“IBC/Code”) read with Rule 11 of the National Company Law Tribunal Rules, 2016 for considering the balance EPF dues Rs.6,96,63,678 because the modalities resorted by the liquidator while distributing the assets of the Company is contrary to the provisions of Section 36(4)(a) (ii) and Section 155(2) of the Code. Moreover, the Respondent having stepped into the shoes of Corporate Debtor is duty bound to release the provident fund dues to the entitled employees and other beneficiaries of the fund but despit