Authority: Supreme Court of India (Civil Appellate Jurisdiction)

Order Date: 28 July 2026

Case Overview

  • Parties: Employees Provident Fund Organisation (Appellant) vs. Rachna Jhunjhunwala & Anr. (Respondents).
  • Civil Appeal No.: 9768/2026, Diary No.: 18254/2026.
  • Background: The corporate debtor (CD) was admitted to the Corporate Insolvency Resolution Process (CIRP) on 01‑05‑2023. EPFO submitted a claim of Rs 22,49,956 comprising:
  • Rs 73,120 for PF dues under Section 7A;
  • Rs 9,32,805 for interest under Section 7Q;
  • Rs 12,44,031 for damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
  • The Committee of Creditors (COC) approved a resolution plan with 100 % voting share, which was accepted by the Adjudicating Authority on 17‑05‑2024.
  • The resolution plan proposed payment of Rs 73,120 only towards PF dues, excluding the interest and damages components.
  • EPFO appealed, arguing that PF dues are excluded from the liquidation estate under IBC Section 36(4)(a)(iii) and therefore could not be reduced.
  • The respondent argued that the interest and damages claims had not been crystallized before CIRP commencement, and the plan complied with statutory requirements.
  • NCLAT held that the interest and damages claims were initiated on 10‑05‑2023, after CIRP began, and thus were not protected under Section 36(4)(a)(iii); it declined to interfere with the plan.
  • The Supreme Court heard counsel for the appellant, who reiterated the same arguments presented before NCLAT.
  • The Court referenced Tata Steel Ltd. v. Varsha & Anr., 2026 SCC OnLine SC 1349 and Essar Steel (India) Ltd. Committee of Creditors v. Satish Kumar Gupta, (2020) 8 SCC 531, emphasizing the “clean‑slate” principle that unresolved claims must not jeopardise the resolution applicant.
  • The Court observed that while PF dues are excluded from the liquidation estate, interest and damages not determined before CIRP constitute contingent liabilities. It held that the COC may provide a lump‑sum for such contingencies, but failure to do so does not violate the IBC, given the need for fixed timelines.
  • The resolution plan did provide for PF dues; it did not address uncrystallized interest and damages, but the Court found no blatant statutory violation.

Final Outcome

  • The Supreme Court condoned the delay in refiling the appeal.
  • The appeal is dismissed, affirming the Adjudicating Authority’s order approving the resolution plan.
  • Any pending applications, if any, are ordered to stand disposed of.

Topics: Insolvency, Employees Provident Fund, Resolution Plan