Provident fund dues are not assets of corporate debtor. Provident fund dues cannot be subjected to distribution under the waterfall mechanism of Section 53 of the IBC.
Courts have clarified that provident funds dues are not assets of corporate debtor and must be paid in full. The provident fund dues are not part of liquidation estate and cannot be paid as per waterfall mechanism of Section 53 of the IBC. See, for example, Regional Provident Fund Commissioner v Ashish Chhawchharia, Resolution Professional for Jet Airways (India) Ltd, NCLAT New Delhi, Company Appeal (AT) Ins No. 787/2022.