Provident Fund Authorities Need Not File Form-G with Liquidator – Mr. Chidambaram Ramesh

Provident Fund write on keyboard isolated on laptop background

Provident Fund Authorities Need Not File Form-G with Liquidator

– By Mr. Chidambaram Ramesh [Author of The Law of Employees’ Provident Funds – A Case-law Perspective]

The National Company Law Tribunal, Kochi Bench, has recently passed an order [V-con Integrated Solutions Pvt. Ltd. vs Acharya Techno Solutions (India) Pvt. Ltd and another][1] holding that the contribution, interest and damages payable by the Corporate Debtor under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, are statutory dues and not claims which can be submitted to the Liquidator. The Bench has further directed that the Employees’ Provident Fund Organisation need not file Form G [Proof of claim by any other stakeholder in terms of Regulation 20 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016] before the Liquidator and that the dues claimed by the EPFO should be paid in full.

  The Kochi Bench has relied on the Supreme Court’s order in Kushal Ltd. vs Regional Provident Fund Commissioner-I.[2] The brief facts relating to the Kushal Ltd. case are as follows. In the Corporate Insolvency Resolution Process of M/s Rainbow Paper Limited (Corporate Debtor), the Resolution Professional filed an application under Sec.30(6), read with Section 31 of the Insolvency & Bankruptcy Code, 2016, seeking approval of the Resolution Plan submitted by M/s Kushal Limited (Successful Resolution Applicant).  The Resolution Plan submitted to the Adjudicating Authority suggested payment of partial dues relating to Provident Funds. The same was approved by the NCLT, Ahmedabad Bench, in its order dated 27th February 2019. The Regional Provident Fund Commissioner-I, Ahmedabad challenged the NCLT order contending that the Resolution Plan was violative of section 30(2)(e) of the I & B Code [which stipulates that the resolution plan does not contravene any of the provisions of the law for the time being in force].

The RPFC contended that the successful resolution applicant was supposed to pay the entire provident fund dues (including the penal damages and simple interest charged under Section 7Q of the EPF & MP Act, 1952). Still, only part of the amount has been allowed in the Resolution Plan, which was against the provisions of Section 36(4)(iii) of the I & B Code [according to which the Provident Fund dues should be excluded from the meaning of liquidation assets]. Refuting it, M/s Kushal Limited (successful resolution applicant) stated that the approved resolution plan had duly taken care of all the statutory dues and the order passed by the Provident Fund authorities levying punitive damages and Section 7Q interest in the post-CIRP period is not permissible under the law. They further contended that the I & B Code provisions, by Section 238, have an overriding effect on Sections 7Q and 14B of the EPF & MP, 1952.

The appellate authority (NCLAT), in its order dated 19th December 2019,[3] rejected the contentions described above of the resolution applicant and observed that “as no provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 is in conflict with any of the provisions of the I & B Code, and, on the other hand, in terms of Section 36(4)(iii), the ‘provident fund’ and the ‘gratuity fund’ are not the assets of the corporate debtor, there being specific provisions, the application of Section 238 of the I & B Code does not arise.” The NCLAT further directed the successful resolution applicant to release the entire provident fund and interest/penal damages following the EPF & MP Act’s provisions, 1952 immediately.

M/s Kushal Limited challenged the order of the NCLAT in a Civil Appeal No.1920 of 2020 before the Supreme Court. After hearing, the Supreme Court refused to interfere with the order of the NCLAT. In other words, the order of the NCLAT directing that the entire provident fund dues, including the penal damages and interest elements, was affirmed by the apex court.

In the light of the above case laws, the Kochi bench of NCLT has ordered that the provident fund dues, being excluded from the meaning of the liquidation assets of the corporate debtor, and constituting statutory dues, should be paid in full and no claim in Form G is expected from the provident fund authorities. Any authentic source of information regarding the outstanding provident fund dues should prompt the Liquidator to pay the full dues without discretion.

A similar decision was made by the NCLAT previously also in an appeal filed by Moser Baer Karamchari Union. In that case, the Liquidator of Moser Baer India Limited, by email dated 5th December 2018, categorically denied the payment of the gratuity fund, provident fund and the pension fund preferentially. He included these dues for payment under Section 53 of the I & B Code under the waterfall mechanism.

Against the decision of the Liquidator, Moser Baer Karamachari Union filed Company Application No.19(PB)/2019 seeking that the gratuity fund, provident fund and the pension fund dues should be exempted from the waterfall mechanism envisaged under Section 53 of the I & B Code and to pay them these dues preferentially as these dues do not constitute part of the liquidation estate. The Adjudicating Authority (NCLT, Principal Bench) allowed the appeal in its order dated 19th March 2019. It held that these dues could not be part of Section 53 of the I & B Code. In that case, the State Bank of India, one of the secured creditors, challenged the NCLT’s order in the Company Appeal filed in the NCLAT. After hearing the matter, the NCLAT, in its order 19th August 2019[4], held that as all sums due to any workman or employees from the provident fund, the pension fund and the gratuity fund do not form part of the liquidation estate or the liquidation assets of the Corporate Debtor in terms of sub-section (4)(a)(iii) of Section 36 of the I & B Code, the question of distribution of the provident fund or the pension fund or the gratuity fund in the order of priority as prescribed under Section 53(1) of the I & B Code does not arise.

In a nutshell, as observed by the NCLT, Mumbai,[5] “as long as the dues are not treated as part of the liquidation estate, the provisions of IBC will not be applicable for the realisation of such dues from the asset of the Corporate Debtor. The intriguing aspect lying in this scenario is that though it is a due payable by the Corporate Debtor, the Provident Fund/Pension Fund and Gratuity Fund dues are treated as an asset of the workmen lying with the Corporate Debtor.” These judicial interpretations will serve as a legal instrument to ensure timely payment of the workers’ social security benefits as per their statutory entitlements without any curtailment.


[1] I.A./176/KOB/2020 in MA/05/KOB/2020 in TIBA/01/KOB/2019 (order dated 18-2-2021)

[2] Civil Appeal No.1920 of 2020 (decided on 20th May 2020)

[3] (2019) 463 NCLAT decided on 19th December 2019

[4] [2020] 206 NCLAT

[5] Asset Reconstruction Co. (India) Ltd. vs. Precision Fastners Ltd. [MA576 &752 of 2018 in CP No. (IB) – 1339(MB)/2017]

Disclaimer: The Opinions expressed in this article are that of the author(s). The facts and opinions expressed here do not reflect the views of IBC Laws ( The entire contents of this document have been prepared on the basis of the information existing at the time of the preparation. The author(s) and IBC Laws ( do not take responsibility of the same. Postings on this blog are for informational purposes only. Nothing herein shall be deemed or construed to constitute legal or investment advice. Discussions on, or arising out of this, blog between contributors and other persons shall not create any attorney-client relationship.