Moratorium in CIRP bars EPFO assessment proceedings and defeats claims based on prohibited assessments or late filings

Moratorium under Section 14(1) of the Insolvency and Bankruptcy Code bars continuation of EPFO assessment proceedings during CIRP, because such proceedings can crystallise fresh liabilities against the corporate debtor. A claim founded on an assessment undertaken in breach of that moratorium is not admissible in the insolvency process. Claims lodged only after approval of the resolution plan by the Committee of Creditors are also too late to be entertained. The note therefore records that assessment proceedings could not continue, the related claims could not be pressed in CIRP, and belated claims after plan approval were rejected.

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Issues: (i) Whether, after imposition of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016, the Employees' Provident Fund authorities could continue assessment proceedings under Sections 7A, 14B and 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. (ii) Whether a claim based on an assessment made during the moratorium period could be admitted in the corporate insolvency resolution process. (iii) Whether claims filed after approval of the resolution plan by the Committee of Creditors could be admitted in the corporate insolvency resolution process.

Issue (i): Whether, after imposition of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016, the Employees' Provident Fund authorities could continue assessment proceedings under Sections 7A, 14B and 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

Analysis: Section 14(1) creates a statutory freeze on the continuation of proceedings against the corporate debtor during the insolvency resolution process. The expression "proceedings" is wide enough to include assessment proceedings that may create new liabilities or affect the assets of the corporate debtor. The Tribunal distinguished authorities that dealt with winding-up proceedings under the Companies Act, 1956, and held that the broader language of Section 14 controlled the situation during CIRP. The decision on customs dues in the later Supreme Court authority was read as permitting only assessment within limits, but not as authorising continuation of EPFO assessment proceedings during moratorium.

Conclusion: No assessment proceedings can be continued by the EPFO after initiation of moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016.

Issue (ii): Whether a claim based on an assessment made during the moratorium period could be admitted in the corporate insolvency resolution process.

Analysis: Once the assessment itself is undertaken or completed in breach of the moratorium, the resulting claim cannot be pressed in CIRP. The Tribunal held that a claim founded on a proceeding prohibited by Section 14(1) cannot be admitted, since doing so would undermine the statutory discipline of the insolvency process. The claim must therefore fail independently of the amount quantified.

Conclusion: No claim founded on an assessment carried during the moratorium period can be pressed in the corporate insolvency resolution process.

Issue (iii): Whether claims filed after approval of the resolution plan by the Committee of Creditors could be admitted in the corporate insolvency resolution process.

Analysis: The claims in both matters were lodged only after the Committee of Creditors had already approved the resolution plan. At that stage, the insolvency process had progressed beyond the point at which fresh claims could ordinarily be entertained. The Tribunal applied the principle that belated claims cannot be introduced after approval of the resolution plan, particularly where the underlying assessment itself was hit by moratorium.

Conclusion: Claims filed after approval of the resolution plan by the Committee of Creditors could not be admitted in the corporate insolvency resolution process.

Final Conclusion: The impugned rejection orders were upheld and the appeals failed, with no interference warranted in the decision of the Adjudicating Authority.

Ratio Decidendi: During CIRP, the moratorium under Section 14(1) bars continuation of assessment proceedings that create or crystallise liabilities against the corporate debtor, and a claim founded on such prohibited assessment, or lodged after approval of the resolution plan, is not admissible in CIRP.

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