Section 11 of The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948
The amount due in respect of any contribution or bonus under a scheme framed under this Act or any charges incurred in respect of the administration of any such scheme, shall, where the liability therefore has accrued before the persons liable has been adjudicated insolvent or, in the case of a company ordered to be wound up, before the date of such order, be deemed to be included among the debts which, under section 49 of the Presidency-towns Insolvency Act, 1909 (3 of 1909), or under section 61 of the Provincial Insolvency Act, 1920 (5 of 1920), or under section 230 of the 1[Companies Act, 1956 (1 of 1956),] are to be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of a company being wound up, as the case may be.
Summary
- If a person operating a coal mine goes bankrupt (insolvent) or a mining company is officially ordered to close down (wound up), their unpaid scheme contributions, bonuses, and administrative charges become priority debts.
- These specific dues must be paid out of the insolvent person's property or the closed company's assets before ordinary general debts are settled.
- This priority status only applies if the liability to pay the money arose before the person was officially declared insolvent or before the company winding-up order was issued.
Practical examples
FAQ
1. What happens if a coal mining company goes bankrupt before paying its provident fund contributions?
The unpaid contributions are treated as priority debts and must be paid out of the company's assets before other general debts.
2. Does this rule apply to unpaid bonuses as well?
Yes, unpaid bonuses and scheme administration charges are also given priority payment.
3. Are all past debts covered by this priority?
The priority covers liabilities that accrued before the date the person was adjudicated insolvent or the company was ordered to be wound up.
Test yourself
Q1.Under Section 11 of The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, how are unpaid provident fund contributions treated when a company is ordered to be wound up?
Q2.According to Section 11 of The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, a debt must have accrued before a specific event to get priority payment. What is this event for an individual employer?
Q3.Under Section 11 of The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, which specific payments are granted priority status over other debts?
Q4.Which of the following laws is NOT explicitly referenced in Section 11 of The Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, regarding the distribution of property for priority debts?