Uncrystallized provident fund interest and damages need not be included in an approved insolvency resolution plan.

Unadjudicated interest and damages under provident fund law that remain undetermined and non-final when the corporate insolvency resolution process begins are contingent, uncrystallized liabilities. Although provident fund dues may be excluded from the liquidation estate, a resolution plan need not include such uncrystallized interest and damages. The Committee of Creditors may make a lump-sum provision in its commercial wisdom, but omission does not itself breach the Insolvency and Bankruptcy Code. Resolution applicants are entitled to certainty over assumed liabilities, and a Committee-approved plan may be rejected only on the limited statutory grounds governing plan approval.

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Issues: Whether unadjudicated interest and damages under the provident fund law, not determined before commencement of the corporate insolvency resolution process, must be provided for in an approved resolution plan.

Analysis: Provident fund dues may stand excluded from the liquidation estate under Section 36(4)(a)(iii) of the Insolvency and Bankruptcy Code, 2016. However, interest and damages under Sections 7Q and 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, which had neither been determined nor become final before commencement of the corporate insolvency resolution process, are contingent and uncrystallized liabilities. A resolution plan may make a lump-sum provision for such liabilities in the commercial wisdom of the Committee of Creditors, but absence of such provision does not by itself violate the Insolvency and Bankruptcy Code, 2016. The resolution applicant is entitled to certainty regarding liabilities assumed under the plan, and approval of a Committee-approved plan may be declined only on the limited grounds under Section 30(2) of that Code.

Conclusion: Uncrystallized claims for interest and damages need not be included in the approved resolution plan; exclusion of those claims was valid and the issue is decided against the appellant.

Ratio Decidendi: Unadjudicated statutory interest and damages that remain uncrystallized on the commencement date of the corporate insolvency resolution process are contingent liabilities, and their omission from a Committee-approved resolution plan does not contravene the Insolvency and Bankruptcy Code, 2016.

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