The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal, Judicial Member and Ms. Shreesha Merla, Technical Member was recently hearing an appeal and held that both provident fund and gratuity fund should be paid in full under the EPF and NP Act, 1952, and the Payment of Gratuity Act, 1972 under the Corprate Insolvency Resolution Process (CIRP).
In the present case, the National Company Law Appellate Tribunal (NCLAT) verdicted a judgment in response to an appeal filed by the Appellant. The appeal was against an order passed by the National Company Law Tribunal (NCLT), Kochi Bench, which had approved the Resolution Professional's (RP) application. The RP had approved the Appellant's claim at a rate of 35.13% and classified them as "Operational Creditors" without obtaining approval from the Adjudicating Authority, citing precedent set by previous tribunal and Supreme Court judgments.
The Appellant initially filed a Claim Petition under Form F for Rs. 23,74,92,674/- before the Interim Resolution Professional (IRP) on 26/02/2020. A revised claim was filed for Rs.30,46,31,880/- on 21/10/2020, which was also admitted by the RP. The Appellant argued that the Employees' Provident Fund Organization (EPFO) should be paid priority over other claims and that EPFO dues are excluded from the liquidation estate under Section 36(4)(a)(iii) of the Insolvency and Bankruptcy Code (IBC). However, the RP informed them that they were entitled to only 35.13% of the admitted claim amount.
The NCLAT referred to a previous judgment in the case of 'Jet Aircraft Maintenance Engineers Welfare Association v. Ashish Chhawchharia, Resolution Professional of Jet Airways (India) Ltd. & Ors.', which held that provident fund dues are to be paid in full. The NCLAT also cited a Supreme Court judgment in the case of 'Sunil Kumar Jain v. Sundaresh Bhatt', which supported the Appellant's claim. The NCLAT held that both provident fund and gratuity fund should be paid in full under the EPF and NP Act, 1952, and the Payment of Gratuity Act, 1972.
Based on these principles, the NCLAT allowed the appeal and directed the inclusion of the provident fund and gratuity fund amounts in the Resolution Plan. No costs were awarded, and any pending interlocutory applications were closed.
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