Provident Fund Claims Filed After Approval Of Resolution Plan By Committee Of Creditors Cannot Be Admitted By Resolution Professional: NCLAT

Brief Facts:

On 06.12.2021,M/s Nirmal Lifestyle Realty Pvt. Ltd. (Corporate Debtor) was admitted to the Corporate Insolvency Resolution Process (“CIRP” in short).

On 21.06.2022, Employee Provident Fund Organisation (EPFO/Appellant) filed a claim of Rs 7,49,48,021 in respect of Provident Fund (“PF” in short) contributions due from M/s Ralliwolf Ltd. The claim of the Appellant was admitted by the RP on 28.06.2022 and Appellant was categorised as Operational Creditor.

On 08.06.2023, the Appellant filed an additional claim of Rs. 34.31 crore for the period 2002–2023, which was rejected by Resolution Professional (RP) on 05.07.2023. A request for reconsideration was made on 13.07.2023, along with I.A. No. 4898 of 2023 before the Adjudicating Authority. The I.A. was dismissed on 14.06.2024.

Against the above order, the present appeal has been filed.

Contentions:

The Appellant submitted that PF contributions cannot be set aside by an approved Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (Code) in view of overriding provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MP Act). No approved Resolution Plan can lawfully exclude PF dues, which are legally protected and remain outside the purview of insolvency proceedings.

It was further submitted that Since CoC's approval of a Resolution Plan does not constitute final acceptance, the RP should have admitted the additional claim of the Appellant being legitimate claims.

Per contra, the Respondent submitted that once the Resolution Plan has been approved by the CoC, no new claims including statutory dues can be allowed. Once the plan is approved by CoC, it is binding on all stakeholders, including government bodies and statutory authorities, in accordance with Section 31 of the Code.

It was also submitted that Such claims cannot be entertained when they lack a legal foundation and are filed at an advanced stage of the CIRP.

Observations:

The Tribunal noted that the Corporate Debtor was admitted into CIRP on 06.12.2021, with the 90-day claim submission period ending on 06.03.2022. The Appellant's additional claims were delayed by about one year and three months.

It further noted that even from the public announcement deadline of 03.01.2022, there was a delay of 521 days. Furthermore, nearly nine months had passed since the CoC approved the resolution plan. Thus, the delay in filing additional claims by the Appellant is clearly established.

The Tribunal further opined that it does not appeal to reason that it could have taken two years from the date of passing of the order by the Industrial Court to compute the additional claims. The Adjudicating Authority in its impugned order has therefore rightly observed that there was sufficient time for Appellant to pass an order under EPF Act when the Industrial Court order had passed its orders in 2019 while CIRP was initiated in 2021.

Based on the above, the Tribunal held that the Appellant cannot take advantage of their own laxity in not filing their claims on time to derail the insolvency resolution process.

It further said that after the lapse of an extended period of 90 days of the insolvency commencement date, the RP is neither obliged to accept any claim nor does he have the discretion to admit claim after the extended period.

The Tribunal further held that there is no dispute with the facts that the additional claims made by the Appellant were placed before the RP by the Appellant after approval of the resolution plan by the CoC. In terms of the Ghanashyam Mishra judgment, the additional claim not being part of the resolution plan stood extinguished and therefore no proceedings could be continued in respect of such claims as allowing such belated additional claims would come in the way of the SRA in reviving the operations of the Corporate Debtor on a clean slate.

The Supreme Court of India in M/s RP Infrastructure Ltd. vs Mukul Kumar & Anr. held that after the resolution plan is approved by the CoC but pending before the Adjudicating Authority, no new claims can be thrust upon the resolution applicant.

The Tribunal also noted that the Supreme Court in Maharashtra State Cooperative Bank Ltd. v. APFC (2010) held that statutory obligations must be fulfilled during insolvency proceedings. However, while emphasizing the importance of these obligations, the Court did not waive the requirement of filing such claims within the prescribed time.

Accordingly, the present appeal was dismissed.

Case Title: REGIONAL PROVIDENT FUND COMMISSIONER Versus MR. JAYESH SANGHAJKA

Case Number: Company Appeal (AT) (Insolvency) No. 2100 of 2024

Judgment Date: 04/04/2025

For Appellant : Mr. Kanhaiya Singhal, Mr. Prasanna, Mr. Ajay Kumar, Ms. Ankita Makan, Ms. Aaditya Saraaf, Mr. Pulkit Jolly and Mr. Parul Sharma, Advocates.

For Respondent : Mr. Arvind Nayar, Sr. Advocate with Ms. Tishampati Sen, Ms. Riddhi Sancheti, Mr. Anurag Anand, Mr. Mukul Kulhari and Ms. Tarni Aggarwal, Advocates for SRA.

Mr. Kunal Tandon, Sr. Advocate with Mr. Gaurav Suryavanshi, Ms. Natashs Singh, Advocates RP.

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