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Issues: (i) Whether provident fund contribution on salary directed to be paid for the lay-off period, held to be illegal by the Industrial Tribunal, formed part of the admitted claim in winding up. (ii) Whether provident fund dues enjoyed first charge under section 11 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 so as to prevail over section 529A of the Companies Act, 1956, or whether such dues were payable only pari passu with secured creditors as workmen's dues under section 529A.
Issue (i): Whether provident fund contribution on salary directed to be paid for the lay-off period, held to be illegal by the Industrial Tribunal, formed part of the admitted claim in winding up.
Analysis: The salary awarded for the lay-off period related back to the period before winding up and represented wages payable for that period. Since provident fund contribution is attracted on wages, the fact that the tribunal's award came later did not alter the character of the amount as wages earned during the relevant period. The contribution ought to have been deducted and remitted when the wages became payable.
Conclusion: The provident fund contribution on the lay-off salary had to be included in the admitted claim of the employees.
Issue (ii): Whether provident fund dues enjoyed first charge under section 11 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 so as to prevail over section 529A of the Companies Act, 1956, or whether such dues were payable only pari passu with secured creditors as workmen's dues under section 529A.
Analysis: Section 529A contains a non obstante clause giving overriding priority to workmen's dues and the pari passu debt of secured creditors in winding up. Section 11 of the provident fund statute could not displace that later and specific winding-up priority under the Companies Act. Provident fund amounts due to workmen were treated as part of workmen's dues under section 529(3)(b)(iv), and a beneficial construction was required. Accordingly, provident fund claims were to be recognised within section 529A and not as a superior first charge outside it.
Conclusion: Section 11 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 did not override section 529A of the Companies Act, 1956, and provident fund dues ranked only pari passu as workmen's dues.
Final Conclusion: The claim for provident fund contribution on the lay-off wages was admitted, but the asserted priority over secured creditors was rejected, and the provident fund dues were confined to the statutory pari passu regime under section 529A.
Ratio Decidendi: In winding up, provident fund dues payable to workmen are included within workmen's dues under section 529A of the Companies Act, 1956, and section 11 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 does not confer a priority overriding the non obstante clause of section 529A.
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