TaxTMI 
TaxTMI 
2026 (2) TMI 189
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....in CP (IB) No. 14/CB/2021. The main reason for appeal is that while approving the Resolution Plan against the claim of Rs. 18,35,528/- towards FP dues, provisions of only Rs. 5,000/- mainly on the grounds that no claim was submitted by EPFO. 4. To appreciate the Appellant's case, we look into the chronology of events, which is discussed hereinafter: o CIRP of the Corporate Debtor (M/s Metistech Fabrication Private Limited was initiated on 01.11.2023. Thereafter, on 03.11.2023, RP published Form A to invite the claims from creditors. RP also sent intimation to the Appellant - EPFO on 21.11.2023 regarding initiation of CIR Proceedings and clearly conveyed about moratorium under Section 14 of the Code. o In response to above communication from RP, EPFO (Regional PF Commissioner) on 22.12.2023 filed its claim of Rs. 50,676/- in a letter form but not in proper format and claimed that their dues are neither financial debt nor operational debt and conveyed that these dues pertains only to damages, interest and short remittances by the establishment and as regards principal, they will be conveyed in due course. o RP requested EPFO on 22.12.2023 itself to submi....
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....t and the Employees' Provident Funds Scheme, 1952 is as quoted by Justice V.R .Krishna Iyer in Organo Chemicals Industries v. Union of India reported in 1979 AIR 1803 is "to create a financial reservoir for the distribution of benefits to employees and workmen which is filled by the employer by deducting from the employees' salaries and also by contributing its own equal share and duly making over the gross sums to the Fund. If the employer neglects to remit or diverts the moneys for alien purposes the Fund gets dry and the retiree employees are denied the meagre support when they need it the most. This prospect of destitution demoralizes the working class and frustrates the hopes of the community itself". The provident fund dues are hard-earned money of the, which are deducted from their salaries but not deposited by the employer with the EPFO and the accrued interest thereon is not the asset of the Corporate Debtor but truly the assets of the employees in custody of the Corporate Debtor. As per Section 36(4)(a)(iii) of the Code, the entire employees provident fund dues are not the assets of the Corporate Debtor and are not subject to distribution as per Section 53(1) of the Code ....
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....ot be a situation wherein: (a) EPFO cannot even continue with assessment proceedings during CIRP, (b) EPFO cannot continue with assessment after approval of Plan and claim from SRA later and (c) cannot even file claim based on its official records without proceedings with assessment. The claim cannot be rejected merely because it was based on Enquiry Officer Report which does not amount to "assessment" as per Section 7A of the EPF Act. 11. The arguments presented herein by the Appellant are against the scheme of the Code. We note that in this case assessment and claim by EPFO was made after initiation of CIRP and during the period of moratorium. Thus, it not mandatory for the RP to consider the same. RP also gets support from the judgment of this Appellate Tribunal in the matter of EPFO vs Jaykumar Pesumal Arlani Company Appeal (AT) (Insolvency) No.1062 of 2024 wherein it is held that after initiation of CIRP and imposition of moratorium under section 14 of IBC, no assessment proceedings can be initiated or continued by EPFO under section 7A, 7Q, 14B of EPF & MP Act and no claim based on such assessment can be admitted in CIRP. The said ratio is further affirmed in CA Pankaj Sha....
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....esolution applicant who successfully take over the business of the corporate debtor. All claims must be submitted to and decided by the resolution professional so that a prospective resolution applicant knows exactly what has to be paid in order that it may then take over and run the business of the corporate debtor. This the successful resolution applicant does on a fresh slate..." We find that it surely supports the case of the SRA and also the RP. 15. Respondent-RP also relies on the following judgements: a) Ghyanshyam Mishra & Sons v. Edelweiss Asset Reconstruction Co. Ltd., (2021 SCC OnLine SC 313), which upholds the "Clean Slate" theory under the Insolvency and Bankruptcy Code, 2016. As follows in para 86: "86. the plan conforms to the requirements as are provided in subsection (2) of Section 30 of the I&B Code. Onley thereafter, the Adjudicating Authority can grant its approval to the plan. It is at this stage, that the plan becomes binding on Corporate Debtor, its employees, members, creditors, guarantors and other stakeholders involved in the resolution Plan. The legislative intent behind this is, to freeze all the claims so that the resolution appl....
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....dues. We don't find such arguments to be convincing as the IM notes the claims of EPFO even though not filed in proper format and SRA also makes provision which is endorsed by CoC and approved by AA. Perusal of the records reveal that even though the RP had advised the Appellant to file the claim in appropriate format, the Appellant had not filed them in those formats. Despite that Resolution Professional had included the claims in the Information Memorandum and the SRA has also provided for some amount for the EPFO. 19. The Appellant has also relied upon the judgment of Hon'ble High Court of Bombay (Nagpur Bench), Dalmia Cement (Bharat) Limited and Ors. Vs. The Central Board of Trustees, Employees Provident Fund Organization, Writ Petition No. 693 of 2022 decided on 29.04.2025. The relevant para is extracted as below: "... 21. It would thus be apparent that since the employers provident fund contribution cannot be included in the definition of 'assets', in view of explanation (a) to Sec. 18(1) of the IB Code, there would be no obligation upon the provident fund department to lodge a claim for the dues, in that regard with the IRP and get such claim verified so....
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....e Limited & Ors. CA (AT) (Ins) No. 937 of 2022 and relies on the following ratio: ".... 8. The amount u/s 7A of Rs. 2, 42, 70,538/- having been admitted as the Provident fund Dues, it was obligatory on the part of the Resolution Professional/Resolution Applicant to include the entire payment as per the law laid down by this Tribunal in Jet Airways." 23. We find that facts and circumstances of the case are different as in this case the amount was not filed formally and therefore not admitted. The citation, therefore, may not be of any assistance as in the cited case the claim was admitted basis the orders of the Adjudicating Authority. 24. Appellant has also relied upon the High Court of Patna in M/s Shiva Agro Industries Pvt. Ltd. Vs The Employees Provident Fund Organization and Others CWJC No. 16250 of 2025 on the following paras: "... 14. Apparently, the petitioner has not complied with its statutory duty to deduct employees share from their salary and to deposit the same in the provident fund. If the petitioner failed to discharge its statutory duties, it cannot be permitted to take the benefits of its own fault. 15. It is true ....
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....rt directed the benefits only with respect to those employees who are identifiable and whose entitlement was proved on evidence. So far as the facts of the present case are concerned, the petitioner itself never came forward to place on record the documents or took any such plea of non-availability of the documents, therefore, the said judgment of the Apex Court will not cut any ice to help the petitioner in the facts of the present case." [Emphasis supplied] 27. The above judgement deals with the applicability of Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The resolution professional has not questioned the inapplicability of the Act, therefore there is no relevance of the above judgement in the present case. 28. To canvass support the Respondent - RP relies on CA Pankaj Shah vs. Employees Provident Fund Organisation & Anr. Company Appeal (AT) Insolvency) No. 17 of 2025, para 10 extracted as below: "... 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 ....
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....temporaneously by the CD and as no such record existed with the CD. An assessment was made later on by the EPFO basis which a demand has been made and such an assessment is not allowed under the moratorium existing. We have clearly noted the legal position that when the claim on the basis of assessment, which has been made subsequent to initiation of moratorium, is hit by Section 14, sub-section (1) of the IBC, we are of the view that no such claim can be admitted in the CIRP. Therefore, in the facts and circumstances of the case, we find that the Appeal filed by the Appellant does not merit intervention for setting aside the impugned order dated 28.03.2025. 32. We uphold the orders of the Adjudicating Authority, which is extracted as below: "26. In view of the above discussion, the Resolution Plan submitted by Subhalaxmi Investment Advisory Pvt Ltd as approved by the CoC under Section 30(4) of the Code is hereby authorised for a total Pian Value of Rs. 45,05,000/- Forty Five Lakhs and Five Thousand Rupees) that includes Estimated CIRP Cost of Rs. 20 Lakhs, Rs 24.50 Lakhs as Liability towards Secured Financial Creditor Rs. 50,000/- towards dues of Operational Creditors ....