The tribunal, however, said that an adjudicating authority has the power to intervene if an approved resolution plan breached any provisions of the IBC.
It cited the case of Jet Airways, where the NCLAT and the Supreme Court had directed the airlines to pay the PF and gratuity dues in full to its employees.
“Having regard to the ratio of judgement in the Jet Aircraft Maintenance Engineers Welfare Association’ (Supra) of this Tribunal, upheld by the Hon’ble Apex Court, this Tribunal is of the earnest view that ‘PF’ and ‘Gratuity’ is to be paid in full as per the provisions of EPF and NP Act, 1952 and payment of Gratuity Act, 1972,” the Tribunal said. “In the aforenoted Judgement, it is clearly observed that provident fund dues are not subject to distribution under Section 53(1) of the Code; that these dues cannot be treated as ‘Secured Debt’ and that part payment of dues by the SRA is unjustified keeping in view Section 14B of Employees Provident Fund and Miscellaneous Provisions Act, 1952. Since admittedly, the amounts paid are only 35.13% having treated them as ‘Secured Creditors’, we are of the considered view that indeed there was a violation of the provisions of Section 30(2) of the Code, with respect to the payment of ‘PF’ and ‘Gratuity’ only,” it said.
Thus, the NCLAT held that workmen and employees are entitled for payment of full amount of provident fund and gratuity till the date of commencement of the insolvency, and that such amount has to be paid by the successful resolution applicant consequent to approval of the resolution plan.
Advocates KR Jinan, Abhilash Nediyalil Abraham, appeared for the appellant workers and employees.
Advocates PV Vinod and PV Dinesh appeared for the Resolution Professional.
Senior Counsel Arvindh Pandian Shivshankar, and advocates R Panicker and Sirshti Thukral appeared for the Resolution Applicant, Kerala Industrial Infrastructure Development Corporation.
Source: Barandbench
