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EPF dues have priority over secured creditors’ debt: SC

 

 In a landmark judgment, the Supreme Court has ruled that from now on, recovery of employees' provident fund (EPF) dues from a company under liquidation would get priority over repaying loans to secured creditors.

A bench of Justices G S Singhvi and H L Dattu said though Parliament, while inserting Section 529A in the Companies Act in 1985, did not declare workmen's dues as first charge, given the provisions of EPF Act, it could not be interpreted that secured creditors would get priority over provident fund obligations of the employer.

However, the apex court bench clarified that other dues of employees cannot get precedence over debt of secured creditors once the employees' provident fund commitments are met.

Source:TOI

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