Lien on assets of the Company under labour laws:

1) Under the Code on Social Security, 2020 ,Section 19 provides for priority of payment of
contributions with respect to Provident fund, Pension scheme, Deposit linked insurance
scheme) over other debts.
“Notwithstanding anything contained in any other law for the time being in force, any
amount due under this Chapter shall be the charge on the assets of the establishment to
which it relates and shall be paid in priority in accordance with the provisions of the
Insolvency and Bankruptcy Code, 2016.”

Section 47 provides for priority of payments of contributions (ESI) over other debts.
“Notwithstanding anything contained in any other law for the time being in force, any
amount due under this Chapter shall be the charge on the assets of the establishment to
which it relates and shall be paid in priority in accordance with the provisions of the
Insolvency and Bankruptcy Code, 2016.”

Section 87(4) provides for payment of Employee’s Compensation in cases of insolvency

of employer.
“(4) There shall be deemed to be included among the debts which under the Insolvency
and Bankruptcy Code, 2016 or under the provisions of the Companies Act, 2013 are in
the distribution of the assets of an insolvent or in the distribution of the assets of a
company being wound up to be paid in priority to all other debts, the amount due in
respect of any compensation, the liability accrued before the date of the order of
adjudication of the insolvent or the date of the commencement of the winding up, as the
case may be, and the provisions of that Code and Act shall have effect accordingly”

Section 129 of the Code, provides for methods of recovery of the amounts due under the
code. Attachment and Sale of movable and immoveable property of the establishment or
employer is also one of the modes mentioned for recovery.
“129. (1) Any amount due from an employer or any other person in relation to an
establishment including any contribution or cess payable, charges, interest, damages, or
benefit or any other amount may, if the amount is in arrear, be recovered in the manner
specified in this section and sections 130 to 132.
(2) Where any amount is in arrear under this Code, the Authorised Officer, or the
competent authority, as the case may be, shall issue to the Recovery Officer referred to in
sub-section (4), a certificate electronically or otherwise, specifying the amount of arrears
and the Recovery Officer, on receipt of such certificate, shall proceed to recover the
amount specified therein from the establishment or, as the case may be, the employer by
one or more of the modes mentioned below, namely:— (a) attachment and sale of the
movable or immovable property of the establishment or, as the case may be, of the
employer; (b) arrest of the employer and his detention in prison; (c) appointing a
receiver for the management of the movable or immovable properties of the defaulter:
Provided that the attachment and sale of any property under this section shall first be
effected against the properties of the establishment and where such attachment and sale
is insufficient for recovering the whole of the amount or arrears specified in the
certificate, the Recovery Officer may move such proceeding against the property of the
employer for recovery of the whole or any part of such arrears..”
Analysis:
As per section 53 of IBC, workmen’s dues for the period of 24 months preceding
liquidation commencement date are to be paid in priority along with the secured
creditors. And next in line are the wages and any unpaid dues owed to employees other
than workmen for period of 12 months preceding the liquidation commencement date.
Thus the same is applicable to the abovementioned dues. They will be paid in priority,
along with the secured creditors.