NCLAT Upholds ₹5,000 EPFO Allocation In CIRP of Metistech Fabrication Against ₹18.33 Lakh Claim

The National Company Law Appellate Tribunal (NCLAT) at New Delhi has upheld a resolution plan that allocated only Rs 5,000 towards provident fund dues claimed by the Employees' Provident Fund Organisation. The tribunal held that the bulk of the EPFO's demand was unenforceable, as it was assessed after insolvency proceedings had already begun.

A bench of Judicial Member Justice N. Seshasayee and Technical Member Arun Baroka dismissed the EPFO's appeal against the resolution plan approved for Metistech Fabrication Private Limited, an Odisha based company. The tribunal said Section 14 of the Insolvency and Bankruptcy Code bars any fresh assessment or recovery action once a moratorium comes into force.

“When the claim on the basis of assessment, which has been made subsequent to initiation of the moratorium, is hit by Section 14, sub-section (1) of the IBC, we are of the view that no such claim can be admitted in the CIRP,” the bench held.

The insolvency process for Metistech Fabrication commenced on November 1, 2023. Soon after, the resolution professional informed the EPFO about the initiation of proceedings and the moratorium. In December 2023, the EPFO submitted a claim of Rs 50,676, though not in the prescribed format, stating that the principal dues would be communicated later. Following an inquiry by its enforcement officer, the EPFO revised the claim to Rs 8.12 lakh and later to Rs 18.33 lakh, including interest and damages.

In the meantime, Subhlaxmi Investment Advisory Private Limited submitted a resolution plan with a total value of Rs 45 lakh. Of this, Rs 25.05 lakh was earmarked for payments to creditors. The plan set aside Rs 5,000 towards EPFO dues and included a contingency clause stating that any future statutory liability would be paid only within the overall cap of Rs 25.05 lakh. The committee of creditors approved the plan unanimously, and it was later cleared by the NCLT, Cuttack Bench.

Before the appellate tribunal, the EPFO argued that provident fund dues are employees' money held in trust by the employer and must be paid in full, without any haircut. The resolution professional and the successful resolution applicant opposed this, pointing out that the company's books did not show any deduction of provident fund contributions from employees' salaries. They also stressed that the EPFO's liability was crystallized only through an assessment carried out during the moratorium.

Agreeing with them, the tribunal noted that there was no record to show provident fund amounts had been deducted and withheld. “There is no record to suggest that the Provident Fund was deducted contemporaneously by the Corporate Debtor,” it said.

Since the assessment itself was barred, the tribunal held that the Rs 5,000 allocation was a matter of the committee of creditors' commercial wisdom, which courts cannot interfere with. The appeal was dismissed.

Case Title: Employees Provident Fund Organisation v. Subhlaxmi Investment Advisory Pvt. Ltd. and Anr.

Citation: 2026 LLBiz NCLAT 7

Case Number: Company Appeal (AT) (Insolvency) No. 794 of 2025

For Appellant: Advocate Gaurav Verma

For Respondent: Advocate Aditi Sharma