Provident fund dues must be fully honoured in a resolution plan despite creditor commercial wisdom.

A resolution plan under the Insolvency and Bankruptcy Code cannot lawfully omit full provident fund dues, because approval under Section 31(1) remains subject to compliance with Section 30(2) and other statutory requirements. Provident fund amounts are excluded from the liquidation estate under Section 36(4)(a)(iii), and Section 17B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 makes the transferee liable for such dues up to the date of transfer. The tribunal treated payment of the admitted provident fund liability as a justiciable legal obligation, not a matter of commercial wisdom, and modified the resolution plan to direct full payment.

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Issues: Whether the resolution plan could be approved without providing for full provident fund dues and whether statutory provident fund liability had to be complied with notwithstanding the commercial decision of the committee of creditors.

Analysis: The resolution plan provided only a partial amount towards provident fund dues, while the statutory determination showed a higher admitted liability. The binding effect of an approved resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 is subject to compliance with the requirements of Section 30(2), including conformity with law. Provident fund amounts are excluded from the liquidation estate under Section 36(4)(a)(iii) of the Insolvency and Bankruptcy Code, 2016, and the specific obligation under Section 17B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 makes the transferee liable for such dues up to the date of transfer. The Court treated compliance with statutory provident fund dues as a justiciable legal requirement and not a matter governed by commercial wisdom. The challenge to the relative distribution between financial and operational creditors was not accepted for interference on merits.

Conclusion: The resolution plan was modified to direct payment of the full provident fund dues, and the appeal was partly allowed in favour of the appellant.

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