The National Company Law Tribunal's (NCLT) New Delhi bench has ruled that the dues of provident fund (PF), pension and gratuity do not form the part of liquidation estate of corporate debtors.
According to the NCLT, such dues cannot be included in the assets to be liquidated for settling the claims of creditors in accordance with Section 53 of the Insolvency and Bankruptcy Code (IBC), 2016.
The tribunal gave this ruling while hearing an application filed by the workmen demanding the release of their dues related to PF, pension and gratuity from the "waterfall mechanism" or the scheme for distributing the proceeds from the liquidation of assets of a corporate debtor in preferential order as mentioned in Section 53 of the IBC.
As per the Official Liquidator, the above mentioned dues do not come under the reach of "workmen's dues" as mentioned under Section 53 of the IBC.
But the NCLT has ruled that all sums due to any workman or employee from the PF, pension fund and gratuity fund were not included in the expression "liquidation estate assets".
"Once the sum due to any workman or employee from the provident fund, pension fund and gratuity fund are not constituting a part of the liquidation estate, we fail to understand as to how Section 53 could be invoked along with its explanation.
"According to Section 53, the proceeds from the sale of the liquidation assets are to be distributed in the manner specified therein .Therefore, the aforesaid amount of the workmen's dues cannot be a part of liquidation estate assets," it said in its verdict.
--IANS
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