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Judgment
O R D E R
The present application has been filed by the Regional Provident Fund Commissioner- II, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the National Company Law Tribunal Rules, 2016, with the following prayers: -
(a)To Allow the claim under 7-A, 14-B and 7-Q of the EPF & MP Act, 1952 of the Applicant, being an amount of Rs.3,15,17,942/-(Rupees 3 crore Fifteen Lakhs Seventeen Thousand Nine Hundred and Forty-Two Only) as per the Letter dated 22/08/2025 filed by the Applicant to the 2nd Respondent Resolution Professional, and the claim be considered as priority over other dues of the Corporate Debtor and delay if any be condoned;
(b)Direct the Resolution Professional herein to consider the claim of the Applicant in priority as per the provision of IBC and EPF & MP Act, 1952;
(c)To set Aside Annexure A 3 communication of the 2nd Respondent dated 23/08/2025 issued to the Applicant, be called
(d)To condone the delay in filing claim before the 2nd Respondent.
(e)Such other and further reliefs as this Hon'ble Court deem fit and proper;
Brief facts of the case
The Applicant is a statutory authority constituted under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The Respondent No.1 is the Corporate Debtor, presently undergoing Corporate Insolvency Resolution Process, and is an establishment covered under the EPF & MP Act bearing Establishment Code No. TH/VSH/22306/A. In terms of Sections 6, 6A and 6C of the EPF & MP Act read with Paragraph 38 of the Employees’ Provident Fund Scheme, 1952, Paragraph 3 of the Employees’ Pension Scheme, 1995, and Paragraph 8(1) of the Employees’ Deposit Linked Insurance Scheme, 1976, the employer is statutorily mandated to remit provident fund, pension and insurance contributions within the prescribed time. Any delay or default in remittance attracts statutory liability for payment of interest and damages in accordance with the provisions of the Act and the Schemes framed thereunder.
The Applicant stated that the CIRP proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016, were initiated against the Corporate Debtor/ Respondent No.1 in respect of debt and default qua one Ayyappan Nair Raghavan Pillai. This Adjudicating Authority, vide Order dated 27.09.2024, passed in CP(IBC)/22/KOB/2024, admitted the Corporate Debtor into the CIRP and appointed an Interim Resolution Professional, pursuant to which the Respondent No.2 was subsequently appointed as the Resolution Professional.
It is stated that the Applicant became aware of the CIRP proceedings belatedly and, upon such knowledge, filed a comprehensive claim before the Respondent no.2/Resolution Professional on 22.08.2024 for a sum of Rs. 3,15,17,942/-(Rupees Three Crore Fifteen Lakh Seventeen Thousand Nine Hundred and Forty-Two only) towards statutory contributions payable to employees, including dues under Sections 14B and 7Q of the EPF & MP Act.
It is stated that on 23.08.2025, the Respondent No.2/Resolution Professional rejected the Applicant’s claim on the grounds that it was not filed in the prescribed form under the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations, that it was filed with a delay of 329 days from the commencement of CIRP beyond the stipulated period, and that it was submitted after receipt of the resolution plan when the process of receipt, verification and collation of claims had already concluded, as communicated vide email dated 23.08.2025.
It is further stated that the rejection of the claim was without proper application of mind, as the claim pertains to statutory dues of workmen towards provident fund, pension and gratuity, which are required to be released on priority and, in terms of Section 36(4) of the Insolvency and Bankruptcy Code, 2016, constitute third-party assets excluded from the liquidation estate of the Corporate Debtor, as held by the Hon’ble NCLAT in Sikandar Singh Jamwal vs. Vinay Talwar and by the Hon’ble Supreme Court in Sunil Kumar Jain vs. Suresh Bhatt.
It is stated that in Regional Provident Fund Commissioner, EPFO v. Satyendra Prasad Khoraniya (RP, Indore Bench), it was held that if an employer defaults in depositing statutory contributions and retains the amount, such retained amount constitutes a trust liability payable to the EPFO, and there is no bar to assessing such dues even during the moratorium period, which are payable by the RP and/or SRA and are includible in the resolution plan. Further, in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni & Anr., the Hon’ble Supreme Court held that the form in which a claim is submitted under the CIRP Regulations, 2016 is directory and not mandatory, and what is essential is that the claim is submitted with proof. The Court observed that even if a claim is submitted in a form different from that advised by the RP, it cannot be disregarded provided it is supported by proof, and the RP is required to verify the claim and prepare a list of creditors accordingly.
It is further stated that this Adjudicating Authority, in V-Con Integrated Solutions Pvt. Ltd. v. Acharya Techno Solutions Pvt. Ltd. held that claims of EPF are statutory dues and need not be submitted in Form G before the Liquidator, with EPFO having priority of charge under Section 11 of the EPF & MP Act, 1952. Further, the Hon’ble NCLAT, Chennai, in Central Board of Trustees EPF v. Liquidator, M/s Bunt Solar India Pvt. Ltd. held that the EPF Act is a special legislation and dues payable to employees cannot be treated as part of the Corporate Debtor’s assets. The Hon’ble NCLAT, New Delhi, in Jet Airways Maintenance Engineering v. Ashish Chawchharia (RP) (2022, 861, NCLAT) and Civil Appeal No. 407 of 2023, held that provident fund dues are statutory third-party dues, and non-payment thereof constitutes a violation of Section 30(2)(e) of the IBC, while non-recognition of EPFO’s first charge under Section 11(2) of the EPF Act also amounts to a violation of Section 30(2)(e) of the IBC, a position affirmed by the Hon’ble Supreme Court.
The Applicant stated that under Section 36(4)(a)(i) of the IBC, assets held in trust for any third party, including EPFO dues, are excluded from the assets of the Corporate Debtor, and as per Section 17B of the EPF & MP Act, 1952, any liability so determined shall be borne by the Successful Resolution Applicant. Section 11(2) of the EPF & MP Act, 1952, contains a non-obstante clause declaring that any amount due from an employer, whether employees’ contribution or employer’s contribution, shall constitute a first charge on the assets of the establishment and be paid in priority to all other debts, thereby providing a dual safeguard for recovery of provident fund arrears. A reading of the legislative scheme shows that provident fund, pension, and gratuity dues are statutory dues owed to workers and must be protected at all stages of resolution, forming an intrinsic part of their rights under Article 21 of the Constitution, and are not to be included in the liquidation estate. Therefore, the conduct of the Respondent No.2 in withholding payment of dues statutorily owed to the Applicant is unjust and perverse.
The Respondent No.2/Resolution Professional filed its reply on 26.10.2025 and stated that this Adjudicating Authority, vide order dated 27.09.2024 in CP(IBC)/22/KOB/2024, initiated the CIRP of the Corporate Debtor.
The Respondent stated that following the order of this Adjudicating Authority dated 27.09.2024 in CP(IBC)/22/KOB/2024, the Respondent No.2, in accordance with Regulation 6(1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, made a public announcement inviting claims on 29.09.2024, and on 30.09.2024 took possession and control of all assets of the Corporate Debtor at its Registered and Principal Office in Thiruvananthapuram. This Adjudicating Authority appointed the Respondent No.2 as the Resolution Professional of the Corporate Debtor on 10.12.2024. It is further stated that this Adjudicating Authority declared a moratorium under Section 14 of the IBC, 2016, in respect of the Respondent No.1/Corporate Debtor vide order dated 27.09.2024 in CP(IBC)/22/KOB/2024.
It is stated that the Respondent No.1/Corporate Debtor operates a 54-bed hospital at Trivandrum. Following the public announcement, the Respondent No.2 informed the Applicant about the initiation of the CIRP and forwarded a copy of the order dated 27.09.2024 in CP(IBC)/22/KOB/2024. Despite this, the Applicant did not file any claim with the Respondent No.2/RP. During the CIRP, on 02.01.2025 and 16.01.2025, the Applicant conducted inspections at the Corporate Debtor’s premises and subsequently, on 20.02.2025, emailed the 2nd Respondent/RP, enclosing the inspection report and a due statement assessing EPF dues amounting to Rs. 1,36,07,838/- for the period from July 2014 to December 2024.
The Respondent stated that in accordance with the provisions of the IBC, 2016 and the applicable regulations, the Respondent No.2/RP received 8 EOIs on the published Form G and subsequently issued the RFRP and Information Memorandum to prospective resolution applicants, mentioning the EPF claim therein. The Respondent No.2/RP received four Resolution Plans, which were placed before the 11th CoC meeting on 11.08.2025 and the 12th CoC meeting on 20.08.2025 for consideration. Meanwhile, the Applicant sent a notice for a hearing on 20.08.2025, to which the RP appeared via video conference and explained that Section 14 Moratorium was in effect, preventing any adjudication during the Moratorium period, and that the inspection conducted by the Applicant on 02.01.2025 and 16.01.2025, along with the due statement prepared showing Rs. 1,36,07,838/- for the period July 2014 to December 2024, violated the Moratorium as it included the CIRP period from 27.09.2024 to 31.12.2024.
The Respondent further stated that on 22.08.2025, the Respondent No.2 received an email from the Applicant enclosing a letter along with calculation statements showing contribution and administrative charges from 06/2014 to 12/2024 as Rs. 1,36,08,783/-, penal damages of Rs. 1,79,08,784/- and interest of Rs. 375/-, directing payment of Rs. 3,15,17,942/- towards Provident Fund. Upon verification of the email, the letter, and attachments, the Respondent No.2, on 23.08.2025, sent a reply informing the Applicant that the claim was not filed in any prescribed form under the IBC, 2016 and CIRP Regulations, was submitted with a delay of 329 days from the commencement of CIRP beyond the stipulated period, and was submitted only after receipt of the Resolution Plan when the process of receipt, verification, and collation of claims had already concluded, and therefore, in terms of the IBC and regulations, the claim could not be admitted in the ongoing CIRP.
It is further stated that in the 16th CoC meeting held on 15.09.2025, the sole Financial Creditor, Dhanlaxmi Bank, holding 100% voting rights, in exercise of its commercial wisdom, approved the Resolution Plan submitted by Dr. M. Ayyappan. The CoC authorized the Respondent No.2/Resolution Professional to file an application under Section 30(6) of the IBC, 2016, for approval of the Resolution Plan, which has been filed before this Tribunal as IA(IBC)(PLAN)/6/KOB/2025 in CP(IBC)/22/KOB/2024 and is pending. The amount claimed by the Applicant exceeds the liquidation value of the Corporate Debtor.
It is stated that this Adjudicating Authority, vide order dated 27.09.2024 in CP(IBC)/22/KOB/2024, initiated the CIRP of the Corporate Debtor and declared a Moratorium under Section 14 of the IBC, 2016. The Applicant conducted inspections at the Corporate Debtor’s premises on 02.01.2025 and 16.01.2025 during the CIRP period and issued an inspection report on 20.02.2025, assessing EPF dues of Rs. 1,36,07,838/- for the period July 2014 to December 2024. On 20.08.2025, the Applicant revised the due amount to Rs. 3,15,17,942/-, including contributions, administrative charges, penal damages, and interest. It is stated that no determination or claim by the Applicant/EPFO could be made after initiation of CIRP, and the demand based on inspections and assessments conducted post-CIRP is not enforceable. The Hon’ble NCLAT, Principal Bench, New Delhi, in Pankaj Shah v. Employees Provident Fund Organization (CA (Insolvency) No. 17 of 2025, dated 03.09.2025), has similarly held that such demands made during the Moratorium are not enforceable.
Analysis and Findings
This Adjudicating Authority have heard both sides and also gone through the material available on record. Before proceeding further, it would be beneficial to have look on the following judgements.
Recently, the Hon’ble NCLAT, Principal Bench, in its order dated 30.06.2025 passed in CA Pankaj Shah v. Employee Provident Fund Organisation (EPFO) and Anr., (2025) ibclaw.in 699 NCLAT, has made certain observations which are directly relevant and applicable to the facts and circumstances of the present case. The relevant portions of the said order passed by the Hon’ble NCLAT are reproduced hereinbelow:
9.After considering the submission of the parties, this Tribunal came to the conclusion that after initiation of the CIRP, assessment proceedings cannot be continued. In paragraphs 23 & 24, following was laid down:-
"23.In the present case, admittedly assessment has been completed after initiation of the moratorium. We, thus, are of the view that once order of liquidation is passed, moratorium under Section 14 comes to an end and moratorium under Section 33(5), which is differently worded, comes into play. Under Section 33(5), the expression used are "suit or other legal proceeding", which occurs in Section 446 of sub-section (1) noticed above. Thus, bar is only against suit or legal proceeding and there is no bar against assessment proceeding to be conducted by statutory Authorities, including the EPFO. Thus, after the liquidation, it is open for EPFO to carry on the assessment. Section 33(5), cannot be held to apply on assessment proceedings. However, while looking to the expression used in Section 14(1), assessment proceedings before the EPFO, cannot be continued after initiation of CIRP.
24.In view of the aforesaid, we answer Question Nos. (1) and (2) in following manner:
(1)We hold that after initiation of moratorium under Section 14, sub-section (1), no assessment proceedings can be continued by the EPFO. If after an order of liquidation is passed, Section 33, sub- section(5), does not prohibit initiation or continuation of assessment proceedings.
(2)No claim on the basis of assessment carried during the moratorium period, which is prohibited under Section 14(1) can be pressed in the CIRP."
10.The above judgment clearly indicates that after initiation of the CIRP, no assessment can be initiated or continued against the Corporate Debtor so as to pass any pecuniary liability on the Corporate Debtor. In the present case, the EPFO has made demand on the basis of an alleged inspection report dated 10.05.2023 and assessment order dated 25.09.2023 which both were subsequent to initiation of CIRP on 17.02.2023. When no demand can be made on the basis of any inspection or assessment, we do not find any ground to allow the application IA No.409 of 2024 which was filed by EPFO where direction was sought to allow the entire claim of Rs.1,37,17,837/-.
11.Insofar as the application filed by the Resolution Professional being IA No.5 of 2024, the prayer was to seek a declaration that demand made under Section 7A, 7Q & 14B are not enforceable against the Corporate Debtor. In view of the law as laid down by this Tribunal, Resolution Professional has made out a case for issuing a direction that the said demand was unenforceable which arose on the basis of assessment made during the Moratorium. We having taken the view that the demand made by the EPFO on the basis of inspection report dated 10.05.2023 and assessment dated 25.05.2023 was not enforceable and the prayer made by the EPFO in IA No.409 of 2024 was not acceptable. It is not necessary to consider other submissions raised by EPFO challenging the direction issued by Adjudicating Authority directing the EPFO to give name of the employees with determination. We are satisfied that the order of the Adjudicating Authority passed in IA No.5 of 2024 as well as IA No.409 of 2024 is unsustainable. We do not see any necessity to consider any other submissions raised by the parties.
Further, the Hon’ble NCLAT, Principal Bench in Employees' Provident Fund Organization Vs. Jaykumar Pesumal Arlani, Resolution Professional of M/s. Decent Laminates Pvt. Limited, Employees’ Provident Fund v. Jaykumar Pesumal Arlani (RP), (2025) ibclaw.in 10 NCLAT and Employees’ Provident Fund Organization vs. Sanjay Kumar Lalit, Resolution Professional of Apollo Soyuz Electricals P. Ltd. & Anr., Company Appeal (AT) (Insolvency) No.1065 of 2024 dealt with similar issues concerning assessments under Sections 7A, 14B, and 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, which have been completed after the initiation of moratorium period and whether claims made during such period can be admitted or not. The Hon’ble NCLAT considered the scope of Section 14 of IBC, 2016, in the light of various judgements of the Hon’ble Supreme Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority and Anr., (2020) ibclaw.in 27 SC, P. Mohanraj and Ors. v. Shah Brothers Ispat Pvt. Ltd., (2021) ibclaw.in 24 SC and Sundaresh Bhatt Liquidator of ABG Shipyard v. Central Board of Indirect Taxes and Customs, (2022) ibclaw.in 103 SC.
In this case, the Applicant department has filed a claim of Rs. 3,15,17,942/-(Rupees Three Crore Fifteen Lakh Seventeen Thousand Nine Hundred Forty-Two Only) before the Resolution Professional on 22.08.2025, which is after 329 days from the commencement of CIRP.
A detailed breakup of the claim made by the Applicant Department is reproduced below: -
In response to the claim of Rs. 3,15,17,942/-made by the Applicant department, the Resolution Professional, via email dated 23.08.2025, informed the Applicant department about the rejection of the claim. The relevant portion of the response given by the Resolution Professional is reproduced as under:
Upon verification, it has been observed that:
1.The claim has not been filed in any of the prescribed forms under the Insolvency and Bankruptcy Code, 2016 ("IBC") and the accompanying CIRP Regulations.
2.The claim has been filed with a delay of 329 days from the commencement of the CIRP, beyond the stipulated period for submission of claims.
3.The claim was submitted only after receipt of the Resolution Plan, whereas the process of receipt, verification and collation of claims had already concluded.
In view of the above, and in accordance with the provisions of the IBC, 2016 and the regulations framed thereunder, your claim cannot be admitted in the ongoing CIRP of the Corporate Debtor,
Further, it is evident from the records that the Applicant conducted inspections at the premises of the Corporate Debtor on 02.01.2025 and 16.01.2025, i.e., after commencement of the CIRP and during the subsistence of moratorium under Section 14 of the IBC. Pursuant to the said inspections, the Applicant issued an inspection report dated 20.02.2025, assessing EPF dues for the period July 2014 to December 2024. Thereafter, a further hearing was conducted on 20.08.2025, during which the Applicant revised the alleged dues and issued a communication dated 22.08.2025 demanding payment of Rs. 3,15,17,942/-.
Since the proceedings under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, are quasi-judicial in nature and not mere assessment proceedings, once the moratorium under Section 14 and Section 33(5) of the Insolvency and Bankruptcy Code, 2016, is initiated, it would affect and apply to such proceedings conducted during the moratorium period. Therefore, any proceedings that may have severe repercussions are prohibited during this period.
This Adjudicating Authority would like to refer to Section 14 of IBC, 2016, which describes the effect of the moratorium.
“Section 14: Moratorium (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:—
(a)the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b)...........”
(c)
Therefore, it is clear that Section 14(1)(a) of the Insolvency and Bankruptcy Code prohibits the institution of any suit or proceedings. Since the proceedings under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, are quasi-judicial in nature, they should not have been conducted after the commencement of the CIRP proceedings. Thus, the proceedings/assessment post the CIRP commencement date will be hit by the provisions of the Code, more particularly Section 14(1)(a).
Further in this case the Committee of Creditors, in its 16th meeting held on 15.09.2025, the sole Financial Creditor, holding 100% voting share, approved the Resolution Plan submitted by the Successful Resolution Applicant in exercise of its commercial wisdom. Pursuant to such approval, the Resolution Professional was duly authorized to file an application under Section 30(6) of the Insolvency and Bankruptcy Code, 2016, which is presently pending consideration before this Tribunal.
In this connection, this Adjudicating Authority would like to quote the relevant portion of the order of the Hon’ble NCLAT in Company Appeal (AT) (Insolvency) No. 128 of 2025 dated 07.03.2025:
15.It has also been held by the Hon’ble Supreme Court of India in M/s RP Infrastructure Ltd. vs Mukul Kumar & Anr. in Civil Appeal No. 5590 of 2021 that even after the resolution plan is approved by the CoC and is pending before the Adjudicating Authority, new claims cannot be imposed upon the resolution applicant. The relevant excerpts of the judgement reads as under:
“21.The mere fact that the Adjudicating Authority has yet not approved the plan does not imply that the plan can go back and forth, thereby making the CIRP an endless process. This would result in the reopening of the whole issue, particularly as there may be other similar person who may jump onto the bandwagon. As described above, in Essar Steel, the Court cautioned against allowing claims after the resolution plan has been accepted by the COC.
22.We have thus come to the conclusion that the NCLAT’s impugned judgment cannot be faulted to reopen the chapter at the behest of the appellant. We find it difficult to unleash the hydra-headed monster of undecided claims on the resolution applicant.”
16.We are therefore of the considered view that when the plan has already been approved by both the CoC and the Adjudicating Authority, it cannot be reopened now on the basis of claims being belatedly agitated by the Appellant who for no justifiable reasons had clearly dropped the guard of being vigilant in pursuing his claims within the time-lines laid down by IBC. Any indulgence shown by way of belated admittance of claim after the resolution plan is approved by the Adjudicating Authority, is also likely to jeopardise the CIRP Page 12 of 12 Company Appeal (AT) (Insolvency) Nos. 128, 129, 130 & 131 of 2025 since the resolution plan is already under implementation. The Adjudicating Authority has not committed any error in the given facts and circumstances in not acceding to the request of the Appellant for admission of their claims.
So, once the Resolution Plan stands approved by the Committee of Creditors, the CIRP reaches an advanced and irreversible stage where the Resolution Professional becomes functus officio with respect to admission or verification of fresh claims. At this stage, the Resolution Professional’s role is confined to placing the approved Resolution Plan before the Adjudicating Authority under Section 30(6) of the IBC. Reopening or entertaining new claims after approval of the Resolution Plan would disrupt the finality of the resolution process, undermine the commercial wisdom of the CoC, and defeat the timelines and objectives of the Code. Accordingly, no further claims can be admitted once the Resolution Plan has been duly approved by the CoC.
The Applicant has cited certain case laws in its pleadings. Such an attempt is against the cardinal and basic principles of drafting and pleadings, particularly when a litigant opts to quote only selective or favourable case laws by hiding the latest pronouncements that may be considered adverse to a particular litigant. Such a practice tarnishes the sanctity of pleadings. The Applicant, being a public institution, should be more careful and sensitive about this.
Having regard to the conspectus of facts of the present case and the judgments cited (supra) and issues discussed above, this Adjudicating Authority is of the considered view that the present application deserves to be dismissed and is accordingly dismissed.
The Registry is directed to send e-mail copies of this order forthwith to all the parties and their Learned Counsels for information and for taking necessary steps.
Let the certified copy of the order be issued upon compliance with requisite formalities.
File be consigned to records.