EPF First Charge vs SARFAESI Section 26E Priority: Commentary on Jalgaon District Central Coop. Bank Ltd. v. State of Maharashtra, 2025 INSC 1335

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1. Introduction

The Supreme Court’s decision in Jalgaon District Central Coop. Bank Ltd. v. State of Maharashtra (2025 INSC 1335, decided on 20 November 2025) is a significant ruling at the intersection of banking law, social welfare legislation, and insolvency-related priorities.

At its core, the case addresses a conflict between:

• The statutory first charge created in favour of employees’ provident fund (EPF) dues under Section 11(2) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF&MP Act); and
• The statutory priority given to secured creditors (such as banks) under the newly introduced Section 26E of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

The principal question was whether, after the 2020 insertion of Section 26E into the SARFAESI Act (granting registered secured creditors priority over “all other debts and all revenues, taxes, cesses and other rates”), a bank’s registered security interest could take precedence over:

1. Provident fund dues of the employees of a defunct sugar factory; and
2. Unpaid wages and other workmen’s dues.

The Court’s answer is nuanced:

• EPF dues enjoy a statutory first charge on the assets of the establishment and therefore prevail over the bank’s Section 26E priority.
• Workmen’s dues (wages and related claims), in the absence of a statutory first charge, do not outrank the secured creditor’s claim once the EPF dues have been paid.

This commentary explains the factual background, the issues, the Court’s reasoning, the precedents relied upon, and the broader legal implications of the judgment.

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2. Factual Background

2.1 The Parties

• Appellant: Jalgaon District Central Cooperative Bank Ltd. – a cooperative bank which had extended financial assistance to a sugar manufacturing cooperative society and held a mortgage and hypothecation over its assets.
• Respondents:
  • State of Maharashtra and its authorities;
  • The workmen and their union; and
  • The sugar cooperative society (the borrower/mortgagor) and its members.

2.2 Transaction and Default

The borrower, a cooperative sugar factory, had:

• Mortgaged its immovable properties (factory land, buildings, etc.) and
• Hypothecated its stock-in-trade (sugar bags and other assets)

in favour of the appellant-bank, securing substantial loans. Over time, the factory incurred heavy losses and stopped operations in 2000.

Key chronological events:

1. 2001 – The bank filed a dispute (No. 459 of 2000) before the Co-operative Court. A Receiver was appointed on 11.01.2001. The Co-operative Court eventually allowed the bank’s claim to recover about Rs. 30.24 crores.
2. 2002 – The Sugar Commissioner appointed a liquidator for the sugar society.
3. 2006 – The bank invoked the SARFAESI Act. It issued a notice under Section 13(2) and took possession of the secured assets under Section 13(4). For a year, another company ran the factory on lease, but operations again became unsustainable, and the assets reverted to the bank.

2.3 Workmen’s and EPF Claims

The workers:

• Approached the liquidator to claim their dues (wages and other entitlements);
• In 2007, filed complaints before the Industrial Court under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 (MRTU & PULP Act), claiming unpaid wages (e.g., March 1998–December 1999) and alleging unfair labour practices.

The Industrial Court dismissed these complaints as time-barred, noting that no application for condonation of delay had been filed.

The workers challenged that dismissal in a writ petition before the Bombay High Court. A Single Judge (Annexure R-3 in the record) did not remand the matter to the Industrial Court; instead, the workmen were permitted to approach the liquidator, who was directed to examine their claims and quantify the dues.

In parallel, EPF dues had accumulated and remained unpaid.

2.4 High Court’s Common Judgment and Directions

When the bank initiated sale of the secured assets under SARFAESI, multiple writ petitions were filed:

• By the workmen and their union (for wages and EPF dues);
• By a Director of the bank (challenging aspects of the auction);
• By the society and its members.

The Division Bench of the Bombay High Court, strongly relying on United Bank of India v. Satyawati Tondon (2010) 8 SCC 110, emphasized the need to exhaust statutory remedies under SARFAESI instead of invoking writ jurisdiction. Yet, while largely declining to interfere with SARFAESI proceedings, it issued the following critical directions (para 26 of the impugned judgment):

(i) The bank may proceed with the sale in accordance with the law.

(ii) The sale proceeds shall be deposited in a separate account i.e. "No Lien Account" in the bank. Unpaid wages and other legal dues of the workers shall be paid from this account once the dues are quantified by a competent court.

(iii) The provident fund dues shall be deposited with the Provident Fund authorities, immediately on the sale of the property and before applying the proceeds to any other debt, including the banks claim.

(iv) All other contentions raised by the petitioners in the present petitions may be agitated by them before the Debt Recovery Tribunal under Section 17 of the Securitization Act.

The bank challenged these directions before the Supreme Court, focusing particularly on clauses (ii) and (iii), to the extent they subordinated the bank’s SARFAESI priority to workmen’s and PF dues.

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3. Issues Before the Supreme Court

The Supreme Court was called upon to decide, inter alia:

1. Whether a secured creditor (the bank), having registered its security interest with the Central Registry under Section 23 of the SARFAESI Act, acquires an overriding priority under Section 26E over:
   • (a) Workmen’s wage and other employment-related dues; and
   • (b) Provident fund contributions and associated statutory liabilities under the EPF&MP Act.
2. Whether the statutory “first charge” under Section 11(2) of the EPF&MP Act prevails over the later-introduced Section 26E priority of secured creditors under the SARFAESI Act.
3. What is the correct order of distribution of sale proceeds of the secured assets once they are sold by the bank under SARFAESI.
4. Procedural question: what recourse, if any, remained for workmen whose wage claims had been dismissed by the Industrial Court for delay and who had been directed by the High Court to approach the liquidator?

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4. Summary of the Judgment

4.1 Core Holding on Priority

The Supreme Court, speaking through K. Vinod Chandran, J. (with B.R. Gavai, CJI concurring), held:

1. EPF dues:
   • Section 11(2) of the EPF&MP Act creates a statutory first charge on the assets of the establishment for all amounts due (including contributions, interest, and damages).
   • This first charge overrides the SARFAESI Act’s priority provisions, including Section 26E and Section 35.
   • Therefore, EPF dues must be satisfied first out of the sale proceeds of the secured assets.
2. Bank’s secured debt:
   • After the satisfaction of EPF dues, the registered secured creditor (the bank), by virtue of Section 26E of the SARFAESI Act, has priority over all other debts, including workmen’s wages, taxes, and other statutory dues without a first charge.
3. Workmen’s wage and other dues (other than PF):
   • These claims do not enjoy a statutory first charge under the legal regime governing this establishment (a cooperative sugar factory governed by state law and SARFAESI, not by the Companies Act’s Section 529A regime).
   • Therefore, workmen’s dues cannot be recovered in priority to the bank’s claim if the sale proceeds are exhausted by EPF dues and the secured debt.

4.2 Order of Application of Sale Proceeds

The Court clearly laid down the order in which the sale proceeds of the secured assets must be applied:

1. First: To satisfy all dues under the EPF&MP Act (Section 11(2)) – including:
   • Employer’s and employees’ contributions;
   • Interest under Section 7Q;
   • Damages/penalty under Section 14B;
   • Any other sums treated as “amounts due” under the Act.
2. Second: To satisfy the secured debt of the appellant-bank, enjoying priority under Section 26E of SARFAESI.
3. Third (if any surplus remains): To pay workmen’s wages and other dues, subject to quantification by the competent authority under the MRTU & PULP Act.

4.3 Relief and Directions

On this basis, the Supreme Court:

• Partly set aside the Bombay High Court’s judgment and directions.
• Permitted the bank to proceed with the auction (if not already concluded).
• Directed that:
  • EPF dues must first be paid from the auction proceeds;
  • The remaining amount, if any, should be applied to the bank’s secured debt;
  • Only if a surplus remains after both are satisfied, may workmen’s wage claims be paid.
• Gave liberty to the workmen to approach the appropriate authority under the MRTU & PULP Act for determination of their wage dues:
  • Such proceedings are to be considered de hors (ignoring) the earlier dismissal on the ground of delay.
  • The delay itself is not to operate as a bar, i.e., the authority must consider the claims on merits.

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5. Detailed Legal Analysis

5.1 Statutory Framework

5.1.1 SARFAESI Act, 2002

• Section 13 – Empowers secured creditors to enforce security interest without court intervention, upon default and after issuing a 13(2) notice.
• Section 17 – Provides for an appeal-like remedy to the borrower or any aggrieved person before the Debt Recovery Tribunal (DRT) against measures taken under Section 13(4).
• Section 35 – Overriding clause:

  “The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law.”

• Chapter IV & IV-A (Central Registry) – Provide for the registration of security interests with the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI).
  • Section 23 – Mandates filing particulars of every securitisation or security creation with the Central Registry.
• Section 26E (inserted with effect from 24.01.2020) – Priority to secured creditors:

  “Notwithstanding anything contained in any other law for the time being in force, after the registration of security interest, the debts due to any secured creditor shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the Central Government or State Government or local authority.”

The appellant-bank had registered its security interest with the Central Registry (Asset ID Search Report, Annexure A-40), thus satisfying the precondition for Section 26E priority.

5.1.2 EPF&MP Act, 1952

• Section 7A – Provides for determination of amounts due from employers under the Act.
• Section 7Q – Mandates payment of interest for delayed remittance of dues.
• Section 14B – Authorises levy of damages (penalty) for default in payment of contributions.
• Section 11(1) & (2) – Priority and first charge:
  • Section 11(1) – Dues under the Act are to be paid in priority to all other debts in the distribution of:
    • Property of an insolvent; or
    • Assets of a company in winding up.
  • Section 11(2) – The crucial clause:

    “Without prejudice to the provisions of sub-section (1), if any amount is due from an employer, whether in respect of the employee's contribution (deducted from the wages of the employee) or the employer's contribution, the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts.”

This provision, introduced by the 1973 amendment, is the fulcrum of the EPF authorities’ argument for priority over the bank’s security.

5.2 Precedents Cited and Their Influence

5.2.1 Maharashtra State Cooperative Bank Ltd. v. Assistant Provident Fund Commissioner (2009) 10 SCC 123

This judgment is central to the present case. There, sugar bags pledged to a cooperative bank were sought to be attached and sold to realise EPF dues. The bank argued that its pledge/mortgage had priority over EPF dues.

The Supreme Court held:

• EPF&MP Act is a social welfare legislation grounded in Articles 38 and 43 of the Constitution, aimed at providing social security to workers.
• Section 11(2) creates a statutory first charge on the assets of the establishment in favour of EPF dues.
• The expression “any amount due from an employer” in Section 11(2) must be read broadly to include:
  • Contributions (employer and employee);
  • Interest under Section 7Q;
  • Damages/penalty under Section 14B; and
  • Other related sums.
• This first charge overrides all other debts, secured or unsecured.

The present Court relies heavily on this interpretation (especially para 67 of that judgment) to conclude that EPF dues enjoy a qualitatively superior right compared with a secured creditor’s interest.

5.2.2 Punjab National Bank & Ors. v. Union of India & Ors. (2022) 7 SCC 260

The appellant-bank placed strong reliance on this decision. The case involved a conflict between:

• Central excise dues under the Central Excise Act, 1944; and
• Secured creditors seeking to enforce their security under SARFAESI.

The Supreme Court held:

• At the time the mortgage/hypothecation was created, the Central Excise Act did not contain a provision granting a statutory first charge to excise dues.
• Even after the introduction of Section 11E (creating a first charge for excise dues), it was expressly made subject to SARFAESI.
• Therefore, SARFAESI (notably Sections 13 and 35) prevailed, and the secured creditors’ claims had priority over excise dues.

In the present case, the Court distinguishes Punjab National Bank on two key grounds:

1. Textual difference: Section 11E of the Central Excise Act was expressly subject to SARFAESI, whereas Section 11(2) of the EPF&MP Act contains its own non obstante clause and creates a first charge without being made subject to SARFAESI.
2. Nature of the right: In Punjab National Bank, at the critical time, there was no statutory first charge for excise dues. Here, the EPF statute confers a clear first charge on assets.

Consequently, Punjab National Bank supports the bank’s priority over workmen’s wages and other dues (which have, at best, a statutory priority but no first charge), but not over EPF dues protected by Section 11(2).

5.2.3 Central Bank of India v. State of Kerala (2009) 4 SCC 94

A three-Judge Bench examined whether state sales tax enactments creating a first charge on a dealer’s property were inconsistent with the SARFAESI Act and the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act).

The Court held:

• SARFAESI and RDDBFI do not themselves create a first charge in favour of banks; they merely provide expedited and preferential modes of enforcement of existing security interests.
• State sales tax laws that create a first charge on the property of the dealer are not inconsistent with SARFAESI or RDDBFI; hence, they are valid and effective.

In the present case, this reasoning is carried forward and refined:

• Section 26E of SARFAESI introduces priority for secured creditors but still does not by itself create a first charge on property.
• Therefore, where another statute (here, EPF&MP Act) creates a first charge with a non obstante clause, that first charge prevails over the SARFAESI priority.

5.2.4 Employees Provident Fund Commissioner v. Official Liquidator (2011) 10 SCC 727

This case addressed the relationship between:

• Section 11(2) of the EPF&MP Act (EPF first charge); and
• Section 529A of the Companies Act, 1956 (priority of workmen’s dues and debts owed to secured creditors in the winding up of a company).

The Court held:

• The non obstante clause in Section 11(2) of the EPF Act is not subordinate to the one in Section 529A of the Companies Act.
• The phrase “all other debts” in Section 11(2) includes debts due even to secured creditors.
• Section 529A does not create a first charge; it only regulates priority inter se between workmen and secured creditors in winding up, treating them on a par.

This precedent strengthened the conclusion that a statutory first charge with a non obstante clause (EPF) is superior to a later priority provision that lacks such a charge (SARFAESI Section 26E).

5.2.5 Cases on Sales Tax First Charge vs Secured Creditors

• State Bank of Bikaner & Jaipur v. National Iron & Steel Rolling Corporation (1995) 2 SCC 19;
• State of M.P. v. State Bank of Indore (2002) 10 SCC 441.

These decisions held that statutory provisions creating a first charge in favour of sales tax authorities override prior mortgages held by banks. The reasoning was that:

• “Charge” is a broader concept encompassing mortgage;
• A statutory first charge on property attaches to the entire property, not merely to the equity of redemption, and thus outranks contractual mortgages.

These authorities are used by the Court to underline the potency of a statutory first charge as against all forms of security interests.

5.2.6 Union of India v. SICOM Ltd. (2009) 2 SCC 121

This case concerned the common law doctrine of priority of Crown debts (government dues) versus secured debts under the State Financial Corporations Act, 1951 (SFC Act).

The Court held:

• While Crown debts enjoy priority in common law (saved by Article 372 of the Constitution),
• Where a statute (like the SFC Act or EPF Act) grants a statutory first charge or overriding effect, that statutory regime prevails over Crown debts, especially when Crown debts are unsecured.

This reasoning supports the present Court’s approach that statutory first charges prevail over competing priority claims rooted either in common law (Crown debts) or non-obstante-based statutory priority (SARFAESI Section 26E).

5.2.7 Recovery Officer & Asst. PF Commissioner v. Kerala Financial Corporation (2002) 3 LLJ 643 (Kerala High Court)

A Division Bench of the Kerala High Court examined Section 46B of the State Financial Corporations Act (an overriding clause) versus Section 11(2) of the EPF&MP Act.

It held that:

• EPF Section 11(2), introduced later in time, containing a non obstante clause and providing a first charge, overrides the SFC Act’s non obstante clause.

The Supreme Court in Maharashtra State Cooperative Bank approved this reasoning. In the present case, this line of reasoning is extrapolated: even where SARFAESI is later in time, its priority without first charge cannot displace a pre-existing statutory first charge of EPF dues.

5.2.8 AP State Financial Corporation v. Official Liquidator (2000) 7 SCC 291

Here, the Court held that Section 29 of the SFC Act (enforcement powers) must be read as subservient to Sections 529 and 529A of the Companies Act, which were introduced later with a social purpose of protecting workmen’s dues.

This case exemplifies how later, socially beneficial legislation can recalibrate priority structures – a theme that surfaces again in the EPF context.

5.2.9 United Bank of India v. Satyawati Tondon (2010) 8 SCC 110

Although not central to the substantive priority issue, this precedent is the basis for the High Court’s reluctance to interfere in SARFAESI matters via writ petitions.

It emphasises:

• The availability of an efficacious alternative remedy under Section 17 SARFAESI;
• The need for High Courts to exercise self-restraint in writ jurisdiction against SARFAESI measures.

In the present judgment, the Supreme Court does not disturb the High Court’s general approach on SARFAESI remedies but corrects the substantive directions on priority that had been issued in writ jurisdiction.

5.2.10 Older Precedent on Crown Debts: Builders Supply Corporation v. Union of India (1965) 2 SCR 289

This decision acknowledged the traditional common law position giving priority to Crown debts. However, in the contemporary framework, such priority has been substantially limited by subsequent statutory regimes creating statutory charges or explicit statutory priorities. The present case reflects that modern view: Crown or statutory dues without a first charge are subordinate to secured creditors under SARFAESI Section 26E; but where a first charge exists (EPF), it prevails.

5.3 The Court’s Legal Reasoning

5.3.1 Distinguishing “Priority” from “First Charge”

A central conceptual pillar of the judgment is the careful distinction between:

• Statutory “Priority” of Payment – determining the order in which various debts are to be paid out of a common fund or from the proceeds of an asset;
• Statutory “First Charge” on Property – a legal encumbrance attaching directly to the property itself, which travels with the property and ranks ahead of all other interests unless expressly subordinated.

The Court notes:

• SARFAESI (Sections 13, 35, 26E) confers priority in enforcement and a preferential order of payment but does not create a first charge on the property.
• Section 11(2) of the EPF&MP Act explicitly declares EPF dues to be the first charge on the assets of the establishment, coupled with a non obstante clause overriding “any other law for the time being in force.”

On this basis, the Court holds that:

“There being a clear first charge created under the EPF&MP Act, it overrides the priority under Section 35 and Section 13 as also that conferred under Section 26-E since a priority cannot be equated with a first charge and cannot be given prevalence over the first charge statutorily created.” (para 27)

5.3.2 Reconciling Competing Non Obstante Clauses

The case involves two statutes each containing non obstante clauses:

• EPF&MP Act, Section 11(2) – “notwithstanding anything contained in any other law for the time being in force.”
• SARFAESI Act, Sections 35 & 26E – “notwithstanding anything contained in any other law for the time being in force.”

The Court articulates a two-step approach:

1. Where both enactments only confer priority (without creating a first charge):
   • The later statute in point of time will generally prevail, as its non obstante clause expresses the legislature’s latest intention (principle of lex posterior derogat priori).
2. Where one enactment confers a statutory first charge, while the other only gives priority (no first charge):
   • The first charge has a qualitatively higher status and prevails even over a later non obstante clause granting mere priority, unless the later statute explicitly overrides or displaces the earlier first charge.

EPF Section 11(2) falls in the second category; SARFAESI Section 26E falls in the first.

5.3.3 Social Welfare Character of EPF Legislation

Reaffirming earlier rulings, the Court stresses that the EPF&MP Act:

• Is a social welfare legislation intended to secure post-retirement and contingency benefits for workers.
• Is grounded in the Directive Principles of State Policy, particularly Articles 38 (social order based on justice) and 43 (living wage, decent standard of life, and social and cultural opportunities for workers).

Consequently, its provisions must receive a purposive and beneficial interpretation, favouring the protection of workers’ rights over the purely commercial interests of creditors. This interpretive stance supports the robust enforcement of the EPF first charge.

5.3.4 Application to Workmen’s Wage Dues

In contrast, the Court notes that:

• The workmen’s wage claims, while deserving of sympathy, lack a statutory first charge under the legal framework applicable to this cooperative sugar factory.
• The protective regime of Sections 529 and 529A of the Companies Act, which might otherwise elevate workmen’s dues in a corporate winding-up scenario, is not directly applicable here.

Therefore:

• The bank’s registered security interest under SARFAESI Section 26E outranks workmen’s wage claims.
• Only after satisfying:
  1. EPF first charge; and
  2. Bank’s secured debt under Section 26E,
  can any remaining surplus be applied to workmen’s wages.

5.3.5 Treatment of Procedural History of Workmen’s Claims

The Court also addresses the somewhat unsatisfactory procedural history:

• Industrial Court had dismissed workmen’s complaints as time-barred, without a substantive adjudication on merits.
• The High Court had allowed them to approach the liquidator, who is now effectively displaced by the bank’s SARFAESI enforcement and sale.

To avoid miscarriage of justice:

• The Supreme Court allows the workmen to approach the appropriate authority under the MRTU & PULP Act.
• The authority must disregard the earlier dismissal for delay and decide afresh de hors the delay, i.e., ignoring limitation, to quantify dues on merits.

However, the Court is clear that this quantification will only be operationally meaningful if a surplus remains after satisfying EPF and the bank.

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6. Complex Concepts Simplified

6.1 “Secured Creditor” and “Security Interest”

• A secured creditor is a lender (like a bank) whose loan is protected by a security interest over specific property of the borrower (e.g., mortgage of land, hypothecation of stock).
• If the borrower defaults, the secured creditor can realise the secured asset to recover its dues.
• Under SARFAESI, secured creditors can enforce such security swiftly, without needing to first sue in court.

6.2 Mortgage vs Hypothecation

• Mortgage: A transfer of an interest in specific immovable property (e.g., land, buildings) to secure a debt.
• Hypothecation: A charge on movable goods (e.g., stock-in-trade, machinery) without transfer of possession; the borrower retains possession but the creditor has a security interest.

6.3 Non Obstante Clause

A non obstante clause is a legislative device that begins with “Notwithstanding anything contained in…”. It signals that:

• The provision containing it overrides any inconsistent provision in the named law(s);
• Courts must give effect to that provision even if another law appears to say something different.

However, when two different statutes both contain non obstante clauses, courts must reconcile them by:

• Looking at the subject matter and purpose of each statute;
• Considering which is later in time; and
• Examining whether one creates a first charge or a more fundamental right than the other.

6.4 First Charge vs Priority

• A first charge on assets (as in EPF Section 11(2)):
  • Attaches to the asset itself;
  • Ranks ahead of all other interests in the property;
  • Usually survives change of ownership unless statutorily discharged.
• Priority (as in SARFAESI Section 26E):
  • Determines in what order different creditors are paid from the sale proceeds of an asset;
  • Does not by itself create a proprietary interest that displaces pre-existing statutory charges unless clearly so intended.

6.5 Crown Debts

“Crown debts” is a traditional term (from common law) referring to sums owed to the sovereign, now the Government (e.g., taxes, duties). Historically, these enjoyed priority over private debts. However:

• Modern Indian law subordinates Crown debts to secured creditors and statutory first charges unless a statute clearly provides otherwise.

6.6 Central Registry and Section 26E SARFAESI

• The Central Registry (CERSAI) is a central database where secured creditors register details of security interests created in their favour.
• Section 26E gives priority only if the security interest is registered with this Registry.
• The appellant-bank had done so, hence it could legitimately invoke Section 26E in this case.

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7. Impact and Future Implications

7.1 For Banks and Financial Institutions

• Banks must recognise that:
  • Even with Section 26E and registration under SARFAESI, their security is not absolute.
  • Statutory first charges (e.g., under EPF&MP Act, and potentially other welfare or tax statutes) may still outrank secured creditors.
• Lenders to labour-intensive industries (e.g., manufacturing, plantations, construction) must:
  • Conduct due diligence on potential and existing EPF exposures of borrowers;
  • Factor in the risk that a portion of realisation may be absorbed by EPF dues before their loans are repaid.
• In documentation and credit appraisal, banks may seek:
  • Representations and warranties from borrowers regarding timely EPF compliance;
  • Periodic certifications from EPF authorities or auditors;
  • Stronger covenants and monitoring around statutory dues payment.

7.2 For Employers and Management of Establishments

• Failure to deposit EPF dues can now directly compromise the security offered to lenders, making finance more costly or difficult to obtain.
• Employers must treat EPF compliance as a non-negotiable first priority, not only to avoid liability and penalties but also to maintain access to credit.
• Boards and management must understand that EPF dues are effectively super-priority obligations over their very assets.

7.3 For Workers and Trade Unions

• The judgment reaffirms that EPF benefits are heavily protected in law, enjoying a first charge even over banks and financial institutions.
• However, wage dues (outside the EPF framework) do not automatically enjoy such status and may still end up unpaid if assets are insufficient.
• Unions and workers may:
  • Press for timely PF remittances as a core demand in industrial relations;
  • Advocate legislative reforms to strengthen priority for wages in non-company contexts, if policymakers so choose.

7.4 For Insolvency and Priority Law Generally

This judgment contributes to a more coherent doctrine of priorities in Indian law:

• It clarifies that Section 26E SARFAESI does not create a first charge; it establishes priority among debts, subject to existing statutory first charges.
• It preserves and bolsters the jurisprudence that statutory first charges (especially in welfare statutes) are robust and difficult to displace unless Parliament speaks unmistakably.
• It reinforces a hierarchy of interests in many enforcement scenarios:
  1. Statutory first charges (e.g., EPF Section 11(2));
  2. Secured creditors’ priority under SARFAESI Section 26E (if registered);
  3. Other statutory dues, unsecured creditors, and residual claims (like wages, absent specific first charge).

7.5 Interface with Insolvency and Bankruptcy Code (IBC)

Although the IBC was not directly in issue, the reasoning here will likely influence debates on:

• The treatment of EPF dues in corporate insolvencies under the IBC;
• The interplay between sectoral or welfare statutes creating first charges and the IBC’s waterfall (Section 53);
• Whether and how far non obstante clauses in welfare statutes can survive and override the IBC’s framework, an issue already partly debated in other contexts.

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8. Conclusion

Jalgaon District Central Coop. Bank Ltd. v. State of Maharashtra establishes a clear and important rule of law:

Even after the introduction of Section 26E in the SARFAESI Act, giving registered secured creditors priority over all other debts, a statutory first charge created by Section 11(2) of the EPF&MP Act in favour of provident fund dues continues to prevail. EPF dues must be paid first from the realisation of assets; only thereafter does the SARFAESI priority for secured creditors operate, and workmen’s wage claims stand behind both unless supported by a separate statutory first charge.

The judgment:

• Reaffirms the constitutional and welfare character of the EPF&MP Act;
• Clarifies the doctrinal difference between “priority” and “first charge” and the practical consequences of that distinction;
• Harmonises recent amendments to SARFAESI (Section 26E) with longstanding worker-protective provisions in the EPF law;
• Offers a principled framework for resolving future conflicts between secured creditors’ rights and statutory welfare or tax claims.

At a broader level, the decision underscores that while credit markets and enforcement mechanisms such as SARFAESI are crucial for economic efficiency, they cannot eclipse hard-won statutory protections for workers’ social security—particularly where Parliament has chosen to elevate such dues to the status of a first charge on the very assets of the establishment.