Belated EPFO Claim Filed after 953 Days not Condonable: NCLAT Upholds Rejection by Liquidator [Read Order]

The Chennai Bench of National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal filed by the Regional Provident Fund Commissioner (RPFC) as an inordinate delay of 953 days in filing a claim cannot be condoned as per the codes of the Insolvency and Bankruptcy Code, 2016. Affirming an order passed by the liquidator, the NCLAT has said that "timelines are basic to insolvency regimes."

The appeal was a sequel to the liquidation process of Atlas Gold Townships (India) Pvt. Ltd. During the time of liquidation, the RPFC made an application for admission of its claim regarding provident funds due under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. This was despite the fact that the claim was made after 953 days from the stipulated time period under the provisions of the insolvency code and Regulations for Liquidations.

The liquidator rejected the claim on the grounds of gross delay, as public notices had been published to invite claims from all stakeholders. The RPFC, aggrieved by this rejection appealed to the Adjudicating Authority, which refused to intervene. The case was subsequently appealed at the National Company Law Tribunal Appellate Tribunal.

The appllant RPFC had relied on the grounds that the provident fund dues are statutory dues and as per priority under the EPF Act, no other dues shall prevail over these dues. It contended that the same cannot be overridden on technical points of limitation and that the Tribunal ought to have invoked its jurisdiction under Section 60(5) of the IBC to condone delay for reasons of justice.

The liquidator has contended that the IBC is a time-bound code and its timelines for all creditors, whether statutory authorities or otherwise, are uniform. It was also contended that there was notice of the liquidation proceeding by public announcements to the RPFC and it has failed to show sufficient cause for the delay in filing the claim.

The NCLAT affirmed this decision and held that timelines under the IBC cannot be diminished simply on the ground that it is a statutory claim. The Tribunal noted that Section 60(5) does not provide unfettered and equitable powers to condone gross delay, particularly at the stage of liquidation.

The two member bench comprising Justice SharadKumar Sharma [ Judicial Member] and Jatindranath Swain [ Technical Member] made the following significant observations that "Priority under other statutes does not override procedural discipline under the IBC”. It further noted that public announcement is sufficient notice to all stakeholders and the failure to act within the statutory period cannot be cured later by invoking equitable considerations.

NCLAT, finding no infirmity in the liquidator’s decision or the order of the Adjudicating Authority, dismissed the appeal and confirmed the rejection of the EPFO claim. The Tribunal reassessed that a legal framework regime demands certainty and finality and strict adherence to timelines, which even statutory authorities must keep.Accordingly, the appeal was dismissed.

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