NCLAT: EPFO Claims Based On Post-CIRP Inspection And Assessment Orders Are Unenforceable
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson) and Mr. Barun Mitra (Technical Member), has held that claims raised by the Employees Provident Fund Organisation (EPFO) on the basis of inspections and assessment orders conducted after the commencement of the Corporate Insolvency Resolution Process (CIRP) are unenforceable and cannot be admitted.
The ruling came in a batch of three appeals arising from an order of the National Company Law Tribunal (NCLT), Indore Bench, which had disposed of applications filed both by the Resolution Professional (RP) and the EPFO concerning the dues claimed from M/s. Premshree Prime Properties Private Limited. The CIRP for the corporate debtor had commenced on February 17, 2023, with CA Pankaj Shah as the Resolution Professional.
The dispute arose when the EPFO initiated an inquiry under Section 7A of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, based on an inspection report dated May 10, 2023—subsequent to the commencement of the CIRP. Pursuant to this inspection, the EPFO passed an assessment order on September 25, 2023, determining a liability of over ₹1.37 crore against the corporate debtor, including amounts towards principal dues, interest under Section 7Q, and damages under Section 14B of the Act. The EPFO then sought to have this claim admitted during the CIRP.
The Resolution Professional objected to the claim, contending that the proceedings and demand orders passed during the moratorium period were void under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC). It was argued that no pecuniary liability could be fastened on the corporate debtor after the imposition of moratorium. The Adjudicating Authority, however, held that while recovery actions were barred, assessment proceedings could still continue during the moratorium.
On appeal, the NCLAT disagreed and relied on its earlier decision in Employees Provident Fund Organisation Regional Office v. Jaykumar Persumal Arlani, Resolution Professional of M/s Decent Laminates Pvt. Ltd., and Employees Provident Fund Organisation Regional Office v. Sanjay Kumar Lalit, Resolution Professional of Apollo Soyuz Electricals Pvt. Ltd., where it was held that once the moratorium is in effect, assessment or determination of dues cannot be carried on by statutory authorities like the EPFO.
The Tribunal also referred to the Supreme Court’s rulings in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority, (2020) 13 SCC 208, and P. Mohanraj v. Shah Brothers Ispat Pvt. Ltd., (2021) 6 SCC 258, observing that the moratorium is intended to provide a statutory freeze on all proceedings that could affect the assets of the corporate debtor, allowing the resolution process to proceed unhindered.
The Bench clarified that under Section 14 of the IBC, the term “proceedings” includes all proceedings that could impose a pecuniary liability on the corporate debtor. Hence, assessments or inspections initiated after the declaration of moratorium would be barred. It further emphasized that only after liquidation, under Section 33(5) of the IBC, could such assessments be resumed, as the moratorium provisions during liquidation differ in scope.
Applying these principles, the NCLAT held that the inspection conducted on May 10, 2023, and the subsequent assessment order dated September 25, 2023—both being post-CIRP events—were unenforceable. Consequently, the EPFO’s application seeking admission of its revised claim for ₹1.37 crore was rejected. “In view of the law as laid down by this Tribunal, the 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,” the Bench observed. Accordingly, the Tribunal allowed the appeal filed by the Resolution Professional, setting aside the NCLT Indore order and dismissing the appeals filed by the EPFO.
Cause Title: CA Pankaj Shah Versus Employee Provident Fund Organisation & Anr.
Case No: Company Appeal (AT) (Insolvency) No. 17 of 2025 & I.A. No. 77 of 2025
Coram: Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member)
