Liquidator Can't Direct Claimant To Approach NCLT Without Accepting Or Rejecting Claim, Amounts To Serious Procedural Lapse: NCLT Kochi

The National Company Law Tribunal (NCLT), Kochi Bench of Shri Vinay Goel (Judicial Member) and Smt. Madhu Sinha (Technical Member) has held that once claims are filed before the Liquidator, the Liquidator is obligated under Section 40 of the IBC to either accept or reject them. The Liquidator cannot direct the claimant to approach the Adjudicating Authority without first applying his mind, as such conduct amounts to a serious procedural lapse. The present application has been filed under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (IBC) to seek modification of the stakeholders' list and include additional claims of the Regional Provident Fund Organisation (EPFO). It is prayed that the claims of the Applicant are excluded from the Liquidation Estate under section 36 of the IBC. The Applicant submitted that the Liquidator as an Employer was obligated to remit Provident Fund dues within 15 days at the end of each month but it failed to do so which compelled the Enforcement Officer to initiate inspection. This exercise led to delay in reporting the dues. Pf and Gratuity are statutory dues that are entitlements of the workers and considered third party assets, Therefore, they cannot be distributed under section 53 of the IBC. Per contra, the Respondent submitted that no proceedings or orders can be initiated or continued during the moratorium under sections 14 and 33(5) therefore the Applicant's reliance on assessments orders passed during the liquidation process is legally not sustainable. The Tribunal at the outset referred to the judgment of the NCLAT in Assistance Provident Fund Commissioner (Legal), EPFO Vs. Chandra Prakash Jain where it was held that any claim made subsequent to the liquidation commencement on the basis of assessments subsequent to the liquidation commencement date cannot be entertained and accordingly the decision of the liquidator who rejected the claim was upheld. It further observed that once a revised claim was filed by the Applicant, the Liquidator was bound to either reject or accept the claim under section 40 of the IBC with a reasoned or speaking order. Instead, the Applicant was directed to approach the Adjudicating Authority without first applying its mind. This conduct amounted to a serious procedural lapse. The Liquidator's lack of clarity in communication amounts to de-facto rejection of the Applicant's claims which is neither transparent nor legally sustainable. The Tribunal further observed that the revised claims were filed along with the original admitted claims for the pre-CIRP period which were admitted by the Liquidator. The remaining amount related to CIRP dues and additional pre-CIRP dues which included provisional damages and interest under section 7Q of the EPF Act based on the assessment orders passed after the commencement of the Liquidation Process. Since the proceedings under the EPF Act are quasi-judicial in nature, they are prohibited during CIRP or Liquidation process under sections 14 and 33(5) of the IBC respectively therefore any such assessments after commencement of liquidation is legally unsustainable. It concluded that “the remaining additional claim for Provisional Damages and Provisional Interest under Section 7Q pertaining to the period from March 2019 to December 2019 are otherwise not admissible and the same pertains to period after initiation of Corporate Insolvency Resolution Process.” Accordingly, the present application was dismissed. Case Title:REGIONAL COMMISSIONER, PROVIDENT FUND Versus CA MAHALINGAM SURESH KUMAR Case Number:IA(IBC)/57/KOB/2024 In IBA/240/KOB/2019 Judgment Date: 09/07/2025 Click Here To Read/Download The Order

Liquidator Can't Direct Claimant To Approach NCLT Without Accepting Or Rejecting Claim, Amounts To Serious Procedural Lapse: NCLT Kochi

Mohd Malik Chauhan

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