EPFO Cannot Raise Fresh Provident Fund Dues Based on Assessments Conducted During Moratorium: NCLAT New Delhi
Mohd Malik Chauhan
16 Jan 2026 4:03 PM IST
The National Company Law Appellate Tribunal (NCLAT) New Delhi has held that no assessment proceedings can be initiated or continued during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC) and no claim based on such assessment can be enforced against the Successful Resolution Applicant (SRA) after approval of the Resolution Plan.
Section 14 of the IBC introduces a moratorium that halts legal actions against a corporate debtor once insolvency proceedings begin.
A bench comprising Justice Mohd. Faiz Alam Khan and Mr. Indevar Pandey (Technical Member) held that “..no assessment proceedings can be continued by the EPFO after the initiation of moratorium under section 14(1) of the Code and further no claim on the basis of assessment carried out during the moratorium period can be pressed by the EPFO.”
Background:
The Corporate Insolvency Resolution Process (CIRP) of Goa Invescast Ltd. commenced on 04 July 2019. During CIRP, EPFO initially filed a claim of ₹17.90 lakhs, which was subsequently revised and ultimately consolidated at ₹63.15 lakhs, representing provident fund dues along with interest up to the CIRP commencement date.
This amount was duly admitted by the Resolution Professional and incorporated in the Resolution Plan and paid by the SRA after approval of the plan. Despite this, EPFO initiated assessment proceedings during the subsistence of moratorium and issued notices and summons demanding an additional of Rs 62.09 for the period prior to CIRP commencement.
The SRA filed an application under section 60(5) before the NCLT seeking quashing of the notices and restraining EPFO from coercive recovery. The NCLT partly allowed the application restraining EPFO from coercive recovery actions but it declined to quash the notices and refused refund of amounts already paid.
Both the SRA and EPFO had challenged the impugned order before the Appellate Tribunal.
The SRA contended that EPFO could not lawfully initiate or continue any proceedings during subsistence of the moratorium under section 14 of the IBC and that claims based on assessments conducted during moratorium could not be enforced. Per contra, EPFO argued that provident fund dues enjoy statutory priority under section 11(2) of the EPF Act and that assessment and quantification during moratorium are not prohibited under section 14 of the IBC.
Findings:
The Tribunal observed that section 14 of the IBC imposes a complete bar on initiation or continuation of any proceedings during moratorium including proceedings by statutory authorities such as EPFO.
It observed:
“...the moratorium encompasses a very sweeping definition and bars both initiation and continuation of any pending suit or proceedings against the CD. The proceeding may be before any court of law, Tribunal, Arbitration Penal or other authority. The proceedings before EPFO would fall in the category of “proceedings before other authority”. The language of the Section 14 (1) (a) therefore clearly indicates a bar against initiation of proceedings by the EPFO Authorities during the moratorium period.”
Referring to its earlier decisions in EPFO v. Jaykumar Pesumal Arlani, CA Pankaj Shah v. EPFO, it reiterated that the expression "proceedings" has a wide and expansive scope and EPFO proceedings fall within the prohibition. Therefore any assessment during moratorium is non est in law.
It observed that “the judgment of this Appellate Tribunal in CA Pankaj Shah (supra) reiterated the decision of this Tribunal in Pesumal Arlani (supra) holding clearly that after initiation of the CIRP, no assessment proceedings can be initiated or continued against the Corporate Debtor so as to fasten any pecuniary liability upon it.”
The Appellate Tribunal further observed that claims not filed during CIRP and not forming part of the approved Resolution Plan stand irrevocably extinguished.
“The assessment proceedings under Sections 7A, 7Q and 14B, which formed the basis of the subsequent demands, were initiated and culminated during the moratorium period, and the consequential demands were sought to be raised after approval of the Resolution Plan…Such determinations of EPFO claims and subsequent demand of Rs. 62,09,154/- on 06.04.2021, during the subsistence of moratorium period, which is sought to be enforced against the Successful Resolution Applicant after approval of the Resolution Plan, are clearly hit by the moratorium and cannot form the basis of any enforceable claim against the SRA”, the Tribunal held.
Rejecting EPFO's priority argument, the Tribunal held that while the provident fund does enjoy priority but such priority cannot override the moratorium under section 14 of the IBC.
It further noted that judgments dealing with liquidation proceedings are not applicable to CIRP where a strict statutory freeze operates. Based on the above, it held that EPFO cannot enforce claims based on assessments conducted during moratorium.
Accordingly, the appeal of the SRA was allowed to the extent of setting aside EPFO's additional demands due to bar under section 14.
Case Title: In the Matter of: Consortium led by Syonira Invecast Pvt. Ltd v. Employees' Provident Fund Organisation & Anr.
Case Number: Company Appeal (AT) (Ins.) No. 2319 of 2024
Citation: 2026 LLBiz NCLAT 9
Judgment Date: 09/01/2026
For Appellant: Kaushal Gautam, Snehpreet Kaur, Vanshika Singh and Hemant Dalal, Advocates.
For Respondents: Anjali Sharma and Gaikhunalung, Advocates.