No Conflict Between Section 17B of The PF Act and IBC: NCLAT

[18 March 2022] The NCLAT, Principal Bench consisting of Justice Ashok Bhushan, Chairperson and Dr. Ashok Kumar Mishra, Technical Member in the case of Sikander Singh Jamuwal v. Vinay Talwar held that there is no conflict between the provisions of Section 17B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and the Insolvency and Bankruptcy Code, 2016 and directed the Resolution Applicant to pay PF dues to the employees.
The Tribunal analysed Section 31(1), Section 30(2), Section 36(4)(a)(iii) and Section 238 of the IBC and held that the resolution plan does not contravene any provisions of the existing law and the Resolution Professional/ Adjudicating Authority(AA) is required to look at the compliance of law for the time being force.
When read with Section 17B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, it is made amply clear that the Resolution Applicant is required to pay the contribution and other sums due from the employer as per the provisions of the PF Act. It is the duty of the Resolution Professional/AA to see that the law is being complied with, and it is not a question of the commercial wisdom of the Committee of Creditors.
The Tribunal held that since there is no conflict between the provisions of the PF Act and the IBC, the question of applicability of Section 238 does not arise. Tribunal relied on the judgment of the NCLAT in Tourism Finance Corporation of India Ltd. v. Rainbow Papers Ltd. & Ors. in this regard. It was also held that provident fund dues are not considered to be assets of the Corporate Debtor, as has been clarified by the provisions of Section 36(4)(a)(iii) of the IBC.