EPFO Employees Must Comply With IBC Timeline For Filing Claims; Default Officers Must Face Action : Supreme Court

The Supreme Court recently held that the Commissioner and employees of the Employees Provident Fund Organization (EPFO) must ensure that they comply with the timelines under the Insolvency and Bankruptcy Code, 2016. The Apex Court also stated that in case of failure to comply with the timelines, action must be taken against erring employees. 

"..we are of the view that the Commissioner and employees of the EPFO must take steps to ensure that there is compliance with the timelines provided under the Insolvency and Bankruptcy Code, 2016. Failure may have legal consequences. The employees of the EPFO must be aware of the consequences in order to ensure compliance. In case there is dereliction of duty, action should be taken against erring employees in accordance with law." A division bench of Justice Sanjiv Khanna and Justice SV Bhatti observed. 

The Apex Court was hearing an appeal filed by the EPFO against the order of the National Company Law Appellate Tribunal (NCLAT) which had dismissed its appeal challenging the rejection of its claim by the Adjudicating Authority and the Resolution Professional. The NCLAT had dismissed the appeal noting that there was an inordinate delay in filing of the claim by the EPFO.

“From the facts which has been brought on record it does appear that there was inordinate delay in filing the claim by the Appellant. The Application which was filed by the Appellant being I.A. No. 439 of 2023 came to be rejected by the Adjudicating Authority observing that Resolution Plan having been approved, no claim can survive.” the NCLAT had recorded in its order. 

The Apex Court refused to interfere with the order of the NCLAT stating that there was no good ground or reason to do so.

“..we are of the opinion that the impugned judgment does not, in any way, affect the rights of the EPFO to proceed in accordance with law, in view of Section 36(4)(a) (iii) of the IBC.” The Apex Court added.