In a recent ruling, the National Company Law Tribunal (NCLT) Ahmedabad Bench, led by Mrs. Chitra Hankare (Judicial Member) and Dr. Velamur G Venkata Chalapathy (Technical Member), clarified the status of dues owed to the Employees State Insurance Corporation (ESIC) under the Insolvency and Bankruptcy Code (IBC). The NCLT determined that ESIC dues do not hold an equivalent standing to the dues of Provident Fund, Pension Fund, or Gratuity Fund under the IBC.
Differential Treatment of ESIC Dues:
The NCLT’s decision emphasized that the dues owed to ESIC do not fall within the category of ‘workmen dues’ at the same level as Provident Fund, Pension Fund, or Gratuity Fund. This implies a distinct classification for ESIC dues in the context of insolvency proceedings.
Implications for Liquidation Estate:
Importantly, the ruling clarified that ESIC dues are neither treated at par with other statutory dues nor are they excluded from the liquidation estate. This distinction underscores the unique position of ESIC dues in comparison to other financial obligations, providing clarity on their treatment within the insolvency framework.
The NCLT’s nuanced interpretation of ESIC dues in relation to other financial obligations sheds light on the prioritization and categorization of dues within the IBC framework, ensuring a clearer understanding of the hierarchy of payments during insolvency proceedings.
