When CD Didn’t Open Separate Account For PF, Even IRP/RP/Liquidator Cannot Provide For IT Except Under Sec. 53 Of IBC: NCLT Mumbai

The National Company Law Tribunal, Mumbai Bench, comprising of Shri. Anuradha Sanjay Bhatia, while adjudicating a petition filed in the matter of Rani Agro Private Limited v S & H Gears Private Limited, has held that if the Corporate Debtor had not opened a separate Bank Account for the `Provident Fund', then even IRP/RP/Liquidator cannot provide for it except under Section 53 of IBC. If even wrongly and in violation of the laws of the land, the company fails to establish such `Provident Fund’, in that event `Interim Resolution Professional/Resolution Professional/Liquidator’ is not expected to provide for same, except under Section 53 of the I & B Code, 2016.” Background Facts The Employees Provident Fund and Miscellaneous Provisions Act, 1952 was applicable to S & H Gears Private Limited. The following shall not be included in the liquidation estate assets and shall not be used for recovery in the liquidation- xxx all sums due to any workman or employee from the provident fund, the pension fund and the gratuity fund;” The Bench opined that the amount deducted for `Provident Fund’ entirely belongs to Employees and cannot be treated as an ‘Asset’ of the Corporate Debtor; and can’t be touched by an Interim Resolution Professional/Resolution Professional/Liquidator. If even wrongly and in violation of the laws of the land, the company fails to establish such `Provident Fund’, in that event `Interim Resolution Professional/Resolution Professional/Liquidator’ is not expected to provide for same, except under Section 53 of the I & B Code, 2016.” The Bench held that since the Corporate Debtor did not maintain a separate Provident Fund account, the current account in HDFC would have to be treated as per Section 53 of IBC.