NCLT Indore: Regional Provident Fund Commissioner Prohibited From Taking Actions During Moratorium Under Section 14 Of IBC

Background Facts:

The Regional Provident Fund Commissioner-II in Indore had instructed the Liquidator to pay Rs. 1.37 crores for the provident fund owed by the Corporate Debtor within 15 days, as per an order dated August 14, 2023.

The Liquidator argued that they had already allowed the Provident Fund Department officers to inspect and inquire into the matter. After their inquiry, the Provident Fund Department demanded a payment of Rs. 3.98 crores. The Liquidator had advised the Provident Fund Department to formally file their claim, but no such claim has been submitted.

Furthermore, the Liquidator argued that the Provident Fund Department must evaluate the claim in accordance with the relevant Regulations under the Insolvency and Bankruptcy Code (IBC) before deciding to release funds from the liquidation estate for the Provident Fund. Instead of filing a formal claim, the Provident Fund Department has issued a payment directive as mentioned in their letter dated August 14, 2023. Additionally, they have initiated further actions through an email dated August 22, 2023, under Section 14B of the Provident Fund Act.

NCLT Verdict:

The NCLT Indore observed that during the Moratorium period under Section 14 of the Insolvency and Bankruptcy Code 2016, the Regional Provident Fund Commissioner-II, Indore, is prohibited from taking any enforcement actions against the Liquidator. This restriction will remain in place until further orders are issued.

The Tribunal issued a notice to the Regional Provident Fund Commissioner-II, Indore, and has instructed them to file their reply within the next two weeks and listed the matter for 20.10.2023.

Case Title: Shirani Automotive Pvt Ltd

Case No.: – IA/248(MP)2023 in CP(IB)/22(MP)2021

Counsel for the Liquidator: Mr. Rohit Dubey, Mr. Sandeep Pandey & PCS Mr. Sahive Alam Khan, Advocates

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