Provident Fund Dues Take Precedence Over Secured Creditor's Claim Under SARFAESI Act : Supreme Court

The Supreme Court considered whether a bank recovering dues under the SARFAESI Act must first clear provident fund arrears owed by the employer.

The Court observed that Section 11(2) of the EPF & MP Act, 1952, creates a statutory first charge over an establishment’s assets, giving provident fund dues priority over all other debts.

The Court held that even when a secured creditor proceeds under the SARFAESI Act, the sale proceeds must first satisfy provident fund dues, with the remaining amount applied to the bank’s claim.

[Jalgaon District Central Coop. Bank Ltd. v State of Maharashtra and Ors.]