NCLAT New Delhi: EPFO Cannot Claim Pre-CIRP Dues Based On Assessment Made During Moratorium
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Rakesh Kumar Jain (Judicial Member) and Mr. Naresh Salecha (Technical Member), held that Employees Provident Fund Organisation (EPFO) dues pertaining to the pre-CIRP period cannot be claimed based on assessments made after the imposition of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016.
Background
The appeal was filed by the Regional Provident Fund Commissioner-II (RPFC-II) challenging the order dated 03.07.2024 passed by the National Company Law Tribunal (NCLT), Ahmedabad Bench, which had dismissed the EPFO’s application seeking to set aside the communication issued by the Resolution Professional rejecting its claim. The corporate debtor, Bloom Dekor Ltd., was admitted into Corporate Insolvency Resolution Process (CIRP) on 11.10.2023, and Ms. Vineeta Maheshwari was appointed as the Interim Resolution Professional, later confirmed as the Resolution Professional. The Resolution Professional had duly intimated the EPFO on 19.10.2023 about the initiation of CIRP and the imposition of the moratorium.
Despite this, the appellant initiated proceedings under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and issued summons to the corporate debtor on 20.10.2023. On 23.10.2023, the competent authority passed an order under Sections 7Q and 14B of the Act, assessing an amount of ₹53,338 for the period between 01.07.2022 and 30.09.2023 — a period prior to the initiation of CIRP. The claim based on this assessment was submitted to the Resolution Professional on 25.10.2023 but was rejected through a communication dated 15.01.2024. Aggrieved, the EPFO approached the NCLT, which dismissed its application, leading to the present appeal before the NCLAT.
Contentions of the Appellant
The appellant did not dispute that the assessment was made after the CIRP had begun but contended that it pertained to a period before CIRP initiation. It was argued that dues assessed for the pre-CIRP period should still be admissible even if the assessment took place later. To support its case, the appellant relied on Tourism Finance Corporation of India Ltd. v. Rainbow Papers Ltd. & Ors., Company Appeal (AT) (Insolvency) No. 354 of 2019, and Truvisory Insolvency Professionals Pvt. Ltd. (IPE) v. Employees' Provident Fund Organisation, Company Appeal (AT) (Insolvency) No. 580 of 2023.
Contentions of the Respondent
The respondent, represented by the Resolution Professional, argued that once the CIRP was admitted and the moratorium under Section 14 was declared, any assessment made thereafter under Sections 7Q and 14B of the EPF Act was impermissible. Relying on the ruling in CA Pankaj Shah v. Employees Provident Fund Organisation & Anr., Company Appeal (AT) (Insolvency) No. 17 of 2025, it was submitted that the moratorium prohibits such assessments or demands against the corporate debtor.
Observations of the NCLAT
The Tribunal noted that the essential facts were undisputed — the corporate debtor entered CIRP on 11.10.2023, and the assessment under Sections 7Q and 14B was initiated and completed after this date. The only issue for consideration was whether such assessment could be made after the moratorium had come into force.
The Bench referred to its earlier decision in CA Pankaj Shah (supra), where it had categorically held that no assessment can be carried out after the commencement of the moratorium under Section 14 of the Insolvency and Bankruptcy Code. The NCLAT quoted 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.” It observed that even though the assessment in this case pertained to a period before CIRP, the act of initiating and concluding such proceedings post-moratorium was impermissible. Hence, the EPFO could not base its claim on such an assessment.
The NCLAT held that the NCLT, Ahmedabad, committed no error in rejecting the EPFO’s application, as the assessment was made after the CIRP commencement and during the moratorium. Accordingly, the appeal was dismissed for lack of merit, and the Tribunal directed that both parties shall bear their own costs.
Appearance
For Appellant: Mr. Sanket Gupta, Advocate.
For Respondent: Mr. Himanshu Satija, Mr. Harsh Saxena & Mr. Anshul Rao, Advocates.
Cause Title: The Regional Provident Fund Commissioner-II V. Vineeta Maheshwari, Resolution Professional of Bloom Dekor Ltd.
Case No: Comp. App. (AT) (Ins) No. 1618 of 2024 & I.A. No. 5915 of 2024
Coram: Justice Rakesh Kumar Jain (Judicial Member), Mr. Naresh Salecha (Technical Member)
