# In the matter of Central Board of Trustee vs. Shri Kumar Rajan & Ors. Company Appeal (AT) (CH) (Ins) No. 268-2021

> NCLAT judgment dated 2023-06-21. Citation: TCN-2023-NCLAT-00431. The case arises from an order dated 29/02/2021 passed by the National Company Law Tribunal…

- **Court:** NCLAT
- **Order date:** 21 Jun 2023
- **Citation:** TCN-2023-NCLAT-00431
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/central-board-of-trustee-vs-shri-kumar-rajan-ors-company-appeal-9c22d358

## Summary

### Background

The case arises from an order dated 29/02/2021 passed by the National Company Law Tribunal (NCLT), Kochi Bench, approving an application preferred by the Resolution Professional (RP). Subsequent to the approval of the Resolution Plan on 29/01/2021, the RP informed the Appellant via email on 09/02/2021 that their claim was admitted only to the extent of 35.13%. The Appellant contends that the RP classified them as 'Operational Creditors' without proper notice, based on a ratio established by the Tribunal in a previous case. The Appellant's initial claim was for Rs. 23,74,92,674, later revised to Rs. 30,46,31,880, but the RP only admitted 35.13% of the total claim.

## Facts

The Central Board of Trustees, representing the Employees' Provident Fund Organisation (EPFO), filed a claim in the corporate insolvency resolution process (CIRP) of Hindustan Newsprint Limited. Initially, the claim was for Rs. 23,74,92,674, later revised to Rs. 30,46,31,880. The Resolution Professional (RP) admitted only 35.13% of the claim, classifying the EPFO as an Operational Creditor. The EPFO argued that their dues should be prioritized under Section 11 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and should not be subject to the waterfall mechanism under Section 53 of the Insolvency and Bankruptcy Code (IBC). The NCLT approved the Resolution Plan, leading the EPFO to appeal to the NCLAT. The relevance of these facts lies in

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## Issues and analysis

### Issue 1: Whether the provident fund dues should be prioritized over other debts in the corporate insolvency …

**Ratio:** Section 11 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952,

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**Reasoning:** The Tribunal relied on the Supreme Court's judgment in 'Maharashtra State Cooperative

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**Interpretation:** Section 11 of the 1952 Act mandates that any amount due from an employer,

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**Application:** The Tribunal applied this ratio to the facts of the case, holding that the

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## Parties

- **Judges:** M. Venu…; Shreesha…
- **Appellants:** Central Board of…
- **Respondents:** Hindustan…; KumarR…

## Timeline

- **1952-01-01 — Employees' Provident Funds and Miscellaneous…**: Enactment of the Employees' Provident Funds…
- **2018-10-17 — Order for d…**: Order for damages under Section 14B of Employees' Provident Funds & Miscellaneous…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61 — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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