IN COMPANY PETITION NO. 8 OF 1990 (Regional Provident Fund Commissioner, Nagpur v. OL) WITH CAO 233/2010 IN COMPANY PETITION NO. 11 OF 1990 (Regional

Shri Sundaram, learned counsel for the applicant - department and Shri De, learned counsel for the respondent. The Provident Fund department is before this Court in both matters challenging the communication dated 14.10.2008 in cases of M/s. Maharashtra Asbestos Pvt. Ltd., in liquidation and dated 18.06.2008 in M/s. Niranjan Ayurved Bhavan Ltd., (in liquidation). By both these communications, Official Liquidator has informed the Department that their claim cannot be considered under Section 529-A of the Companies Act, 1956, and it falls under Section 530 thereof. Shri Sundaram, has relied upon the provisions of Section 529, 529-A and 530 to urge that the claim could not have been treated as claim of Provident Fund department as it is in fact claim of workers. He has also relies upon the provisions of Section 11(2) of the Employees Provident Fund and 2 Miscellaneous Provisions Act, 1952 (hereinafter referred to as Provident Fund Act) and states that overriding effect has been given to the provisions of said Act and hence recovery of those dues should also receive similar treatment.

By relying upon the judgment of the Hon'ble Apex Court in the case of Maharashtra State Cooperative Bank vs. Provident Fund Commissioner, reported at 2009 (1) SCC 123, he contends that an identical provision was construed by the Hon'ble Apex Court and the precedence given to Provident Fund recovery has been equated with and brought at par with Section 529-A of the Companies Act. Shri De, learned counsel for the Official Liquidator, in reply, states that Section 529-A speaks of workmen's dues and debts due to secured creditors to certain extent. As said provision of Section 529-A has been added to the statute book in 1985, by the analogy utilized in judgment relied upon by Shri Sundaram, Section 529-A has to supersede and override Section 11(2) of the Provident Fund Act. He points out that Section 11(2) exists since 1973. According to him, claim of the applicant can at the most fall under Section 530(1)(a) or then at the most 530(1)(f) and the decision communicated by the Official Liquidator on 18.06.2008 and 14.10.2008 respectively is, therefore, proper.

With the assistance of both counsel, I have perused the relevant provisions. The phrase “workmen's dues” used in Section 529-A(1)(a) of the Companies Act, 3 finds mention also in Section 529(3). Sub-section (3) defines “workmen” and “workmen's dues” for the purposes of Section 529, 529-A and 530. Sub-section (3)(b) defines workmen's dues and its clause (iv) includes all sums due to any workman from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the workmen, maintained by the company. Shri De, learned counsel has invited attention to Section 418 of the Companies Act at this stage. Here, it is not the case of the applicant department that provident fund is maintained by the company in liquidation. Still the definition of workmen's dues gives an idea that PF dues are to be treated as dues of workman. In the face of this definition, the Legislature has in Section 530(1)(f) stipulated that all sums due to any employee from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the employees maintained by the company is included in winding up as preferential payment subject to provisions of Section 529-A. In other words, workmen's dues are split into two by Legislature itself in Section 529-A and

In Section 530, the provident fund dues payable out of provident fund maintained by the company are, therefore, placed at lower pedestal than other dues in Section 529-A(1)(a) of the Companies Act. Thus, in this situation, it is difficult for this Court to accept that merely because Company has not 4 maintained its provident fund and the amounts were being contributed to the fund of department, the provident fund dues need to be included in Section 529- A(1)(a). I, therefore, do not find anything wrong with impugned communications. The Company Applications are, therefore, rejected. No order as to costs. *GS. JUDGE