TaxTMI 
TaxTMI 
2026 (3) TMI 756
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....onal Company Law Tribunal, New Delhi Bench-V) in I.A. No. 470/2024 in C.P. (IB) No. 1683/ND/2018. By the impugned order, the Adjudicating Authority has allowed the I.A. No. 470 of 2024 filed by Employees Provident Fund Organisation ("EPFO" in short) allowing their claim of Rs. 1,78,18,960/- as assessed under Sections 7A, 14B & 7Q of the EPF Act. Aggrieved by the impugned order, Company Appeal No. 701 of 2025 has been preferred by the Resolution Professional and Company Appeal No. 793 of 2025 has been filed by the Committee of Creditors ("CoC" in short) 2. Coming to the brief factual matrix of the case at hand, it is noticed that the Corporate Debtor-Vas Data Services Pvt. Ltd. had been admitted into CIRP on 09.04.2019 following which moratorium had come into play. The Interim Resolution Professional had made a public announcement on 27.04.2019 inviting claims from all stakeholders and the Respondent-EPFO had received intimation of the insolvency of the Corporate Debtor on 25.06.2019. The Respondent had intimated the Resolution Professional ("RP" in short) on 13.01.2020 regarding an enquiry having been initiated against the Corporate Debtor under the relevant provisions of EPF & ....
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.... this Tribunal in EPFO Vs Jaykumar Pesumal Arlani in CA(AT)(Ins) No. 1062 of 2024 wherein it was held that after initiation of moratorium under Section 14(1) of IBC, no assessment proceedings can be continued by the EPFO and no claim on the basis of assessment made during the moratorium period can be pressed in CIRP. It was also pointed out that the Adjudicating Authority while allowing the claims of the EPFO basis assessment proceedings drawn up during the moratorium period had conspicuously missed the point that the Corporate Debtor was still under CIRP and not reached the stage of liquidation. The Ld Counsel also contended that the Adjudicating Authority has wrongly made adverse remarks against the RP in the conduct of the CIRP proceedings by holding that the RP had held back details of the pending suit filed by EPFO under Section 7A of the EPF & MP Act which amounted to a violation of Regulation 36(2)(h) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 ("CIRP Regulations" in short). In any case no claim was put forth by EPFO relating to provident fund during preparation of the Information Memorandum by the RP. It was also asserted that these a....
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....kmen and employees are entitled to receive the amount of Provident Fund and Gratuity in full since they do not form part of the Liquidation Estate under Section 36(4)(b)(iii) of the IBC which decision was upheld by the Hon'ble Supreme Court in Jalan Fritsch Consortium Vs Regional Provident Fund Commissioner 2023 SCC OnLine SC106. 7. It was also asserted that though the RP was aware of the ongoing Section 7A proceedings under the EPF & MP Act before the commencement of CIRP, yet it omitted to disclose this fact in the Information Memorandum. This failure to disclose pertinent information by the RP constituted a breach of CIRP Regulation 36(2)(h) which mandates the RP to provide details of all litigation/investigation/proceeding initiated by the government/statutory authorities. In support of their contention, reliance was placed on the judgment of the Hon'ble Supreme Court in Essar Steel Vs Satish Kumar Gupta (2019) 20 SCC 273 wherein the Hon'ble Apex Court had emphasised that the RP must ensure complete transparency in disclosing all pending proceedings to the CoC and the Adjudicating Authority. 8. We have duly considered the arguments advanced by the Learned Counsel for all ....
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....judicating Authority vide impugned order had rightly allowed IA No. 470 of 2024 preferred by the Respondent and directed the RP to finalise the claim of the EPFO as a pre-condition for approval of the plan. 12. The moot question whether assessment proceedings could have been pursued by the EPFO under Sections 7A, 14B and 7Q of the EPF & MP Act after imposition of moratorium under Section 14 of the IBC has already been well settled by this Tribunal in Jaykumar Pesumal Arlani judgment supra wherein exactly this question was framed and answered. In fact this judgement also dwelled upon the question as to whether claims based on assessment proceedings during subsistence of moratorium can be admitted in CIRP. 13. At this stage we may turn our attention to the Jaykumar Pesumal Arlani judgment supra wherein this Tribunal had clearly posed identical issues for its consideration at para 9 of the judgment and returned its findings at paras 23 and 24 thereof. The relevant extracts of this judgment are as reproduced below: "9. From the submissions of learned Counsel for the parties, following issues arise for consideration: (1) Whether after imposition of moratorium und....
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....um period. It is an undisputed fact that the EPFO in the present case had passed the assessment order under EPF & MP Act on 21.11.2023 which clearly fell during the moratorium period. Since there is no dispute over the fact that the assessment orders were passed by the EPFO after commencement of CIRP and not during liquidation, the assessment order and the claims arising therefrom is clearly unenforceable during the subsistence of moratorium. 15. We are also guided by an earlier precedent set by this Tribunal in Harry Dhaul Vs. Regional Provident Fund Commissioner-II in CA(AT)(Ins) No. 1691 of 2024 wherein this Tribunal has also reiterated that a demand made by the EPFO after initiation of moratorium is not enforceable in view of the statutory provisions of Section 14(1) of the IBC. It is pertinent to add here that this Tribunal in the above judgment had arrived at this finding after considering the judgments of the Hon'ble Supreme Court in Rajendra K. Bhutta Vs Maharashtra Housing and Area Development Authority (2020) 13 SCC 208 and this Tribunal in Jaykumar Pesumal Arlani judgment supra. The relevant excerpts of the above judgment read as follows: "16. Having noted th....
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....h 9 which are as follows:-" "9. From the submissions of learned Counsel for the parties, following issues arise for consideration: (1) Whether after imposition of moratorium under Section 14 of the IBC, assessment proceedings can be carried on by the EPFO under Section 7A, 14B and 7Q of the EPF & MP Act, 1952. (2) Whether any claim on the basis of assessment, subsequent to imposition of moratorium, can be admitted in the CIRP. (3) Whether claims, which were filed by the Appellant(s), subsequent to the approval of Resolution Plan by the CoC, could have been admitted in the CIRP." 8. While answering Question Nos.1 and 2, this Tribunal has relied on the judgment of the Hon'ble Supreme Court in "(2020) 13 SCC 208 - Rejendra K. Bhutta vs. Maharashtra Housing and Area Development and Anr". In paragraphs 11, 12 & 13, following was laid down: "11. The Hon'ble Supreme Court had occasion to consider effect and consequence of imposition of moratorium. The Hon'ble Supreme Court in (2020) 13 SCC 208 - Rejendra K. Bhutta vs. Maharashtra Housing and Area Development and Anr. held that after the imposition of moratorium, a statutory freeze take....
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.... concern during this time, thus maximising value for all stakeholders. The idea is that it facilitates the continued operation of the business of the corporate debtor to allow it breathing space to organise its affairs so that a new management may ultimately take over and bring the corporate debtor out of financial sickness, thus benefitting all stakeholders, which would include workmen of the corporate debtor. Also, the judgment of this Court in Swiss Ribbons (P) Ltd. v. Union of India [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] states the raison d'être for Section 14 in para 28 as follows: (SCC p. 55) "28. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters/those who are in management. Thus, the resolution process is not adver....
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....ter 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, subsection (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 whic....
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.... approved by the CoC but pending before the Adjudicating Authority, no new claims can be entertained. It may be relevant to advert attention to the judgment of the Hon'ble Supreme Court in M/s RP Infrastructure Ltd. vs Mukul Kumar & Anr. in Civil Appeal No. 5590 of 2021 which is as extracted below: "19. The second question is whether the delay in the filing of the claim by the Appellant ought to have been condoned by the Respondent No. 1. The IBC is time bound process. There are, of course, certain circumstances in which the time can be increased. The question is whether the present case would fall within those parameters. The delay on the part of the Appellant is of 287 days. The Appellant is a commercial entity. That they were litigating against the corporate debtor is an undoubted fact. We believe that the Appellant ought to have been vigilant enough in the aforesaid circumstances to find out whether the corporate debtor was undergoing CIRP. The Appellant has been deficient on this aspect. The result, of course, is that the Appellant to an extent has been left high and dry. 21. The mere fact that the Adjudicating Authority has yet not approved the plan does not....