The dues of workmen/employees from Provident Fund do not come within the meaning of ‘Liquidation Estate’ for the purpose of distribution of assets u/s 53 of IBC and the damages levied by EPFO u/s 14B of the EPF & MP Act, 1952 which are dues of Government and will be paid in order of priority u/s 53 of IBC, 2016 – Shri Addanki Haresh Liquidator of Right Engineers and Equipments India Pvt. Ltd. Vs. Recovery Officer, Employees Provident Fund Organisation – NCLT Bengaluru Bench
In this important judgment on treatment of claim/demand and penalty raised by EPFO, NCLT Bengaluru Bench held that:
(i) The demand/claim raised prior to the moratorium will not form part of liquidation estate and should be paid in priority; secondly, the claim/demand and penalty raised during moratorium period is not allowable under the provisions of the IBC; and the penal damages claimed under Section14B of EPF & MP Act, 1952 which is prior to the moratorium period will be treated under Section 53 of IBC, 2016.
(ii) The dues of workmen or employees from the provident fund do not come within the meaning of ‘liquidation estate’ for the purpose of distribution of assets under Section 53 of the Code. Accordingly, it is to be paid in priority over other dues.
(iii) The damages levied by EPFO under Section 14B of the EPF & MP Act 1952 which are dues of Government and will be paid in order of priority under Section 53 of IBC, 2016.