A Bench of Justices Manoj Misra and Vijay Bishnoi has held that while crystallised provident fund dues are excluded from the liquidation or resolution estate under Section 36(4)(iii) of the IBC, interest under Section 7Q and damages under Section 14B of the EPF Act that were not determined and finalised before commencement of CIRP are contingent liabilities — meaning a resolution plan may lawfully exclude them, or account for them only by a lump-sum provision left to the Committee of Creditors' own discretion.
EPFO's appeal against the NCLAT's approval of a resolution plan structured on this basis was dismissed, with the Court declining to treat undetermined interest and damages claims as carrying the same absolute protection the Act gives to actually crystallised PF dues.
The ruling gives resolution applicants and the Committee of Creditors meaningfully greater certainty when valuing statutory dues during CIRP, while limiting EPFO's ability to raise open-ended, undetermined interest and damages claims against a corporate debtor after a resolution plan has already taken effect.