NCLT Bengaluru Rules Post-Approval Claims, Including Moratorium Period Claims, Are Not Allowed Under IBC

NCLT Bengaluru Rules Post-Approval Claims, Including Moratorium Period Claims, Are Not Allowed Under IBC

The National Company Law Tribunal (NCLT) Bengaluru Bench, comprising K. Biswal (Judicial Member) and Manoj Kumar Dubey (Technical Member), has ruled that claims submitted after the approval of a resolution plan, including those related to the moratorium period, are not permissible under the Insolvency and Bankruptcy Code (IBC).

The case involved an application filed by the Employee's Provident Fund Organization (EPFO) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016. The EPFO sought to condone a 370-day delay in filing claims for Provident Fund dues of the corporate debtor (CD) before the Resolution Professional (RP). The delay was attributed to the CD's failure to provide necessary records, hindering the timely calculation of dues. The EPFO also requested that the RP consider its claim under Section 36(4)(a)(iii) and prioritize the payment of statutory PF dues as per Section 11 of the EPF & MP Act, 1952.

The NCLT admitted the petition, and a public announcement was made by the RP inviting claims, with a deadline set for May 6, 2022. The RP was appointed on August 3, 2022. The corporate debtor defaulted on paying PF contributions and related dues for eligible employees, leading to statutory payment evasion. On July 10, 2023, the EPFO demanded payment of statutory dues amounting to $3,84,08,033/-. However, the RP rejected this claim via email, citing non-compliance with the 90-day filing requirement.

The delay was reportedly due to the RP not directly informing the EPFO about the initiation of CIRP, and the new RP’s appointment was only communicated after the deadline. The EPFO encountered difficulties obtaining records from the RP and the establishment, causing further delays. After a report noted discrepancies in employee wages and PF contributions, the EPFO recalculated the dues, including interest and penalties, and resubmitted the claim on July 10, 2023. The RP requested additional time to gather information but later informed that the dues had been finalized by the Committee of Creditors (CoC).

The EPFO argued that the establishment evaded PF contributions by not generating Universal Account Numbers (UAN) for numerous employees.

The NCLT noted that the EPFO’s claim was submitted on July 10, 2023, which was significantly delayed by 370 days from the extended deadline of July 6, 2022. The public notice had specified that claims should be filed by May 6, 2022. The CoC approved the resolution plan during their 11th meeting on June 7, 2023, and an application for adjudication was filed with the Tribunal on June 9, 2023. Furthermore, the EPFO was aware of the CIRP proceedings, as indicated by its communication with the RP regarding the necessary documents.

The NCLT highlighted that some employees lacked Unique Identification Numbers (UIN) due to missing Know Your Customer (KYC) documents, and some employees had left the company, making the claim erroneous. While dues payable to employees are protected under Section 36(4)(a)(iii) of the IBC, this protection does not extend to penalties and interest under Sections 7Q and 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

The NCLT held that belated claims submitted after the approval of the Resolution Plan, including those related to the moratorium period, are not permissible under the IBC. The bench emphasized that allowing such claims at a later stage would disrupt the CIRP process.

The NCLT referred to the Supreme Court’s decision in RPS Infrastructure Ltd. v. Mukul Kumar, which held that the CIRP must proceed without unnecessary delays. The Supreme Court ruled that reopening claims post-Resolution Plan approval could prolong the process and disrupt its purpose. The NCLT also cited the NCLAT's order in The Regional Provident Fund Commissioner v. M/s. Adept Technology Private Limited and the NCLT Ahmedabad's decision in The Assistant Provident Fund Commissioner v. Jaykumar Pesumal Arlani, both supporting the rejection of belated claims post-Resolution Plan approval.

Consequently, the NCLT held that the application was not maintainable and dismissed it.