NCLT Kochi Rejects EPFO's ₹59.46 Lakh Claim Against Peejay Agro Foods Over Uncrystallised Dues

The National Company Law Tribunal (NCLT), Kochi, on 15 October dismissed the appeal filed by the Regional Provident Fund Commissioner against the rejection of the Employees' Provident Fund Organisation (EPFO)'s Rs. 59.46 lakh claim in the liquidation of Peejay Agro Foods Private Limited.

A Bench comprising Judicial Member Vinay Goel and Technical Member Ravichandran Ramasamy held that the EPFO cannot pursue a provident fund claim in liquidation without a final determination of the dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. They observed:

“In the absence of any such assessment or final orders, the claim against the Corporate Debtor was not admissible.”

The establishment was covered under the EPF Act from April 2011, when it operated as a partnership firm. It was incorporated as a private limited company in April 2013. The EPFO stated that contributions were remitted until May 2018 and that the establishment ceased operations in 2020.

After the company entered the Corporate Insolvency Resolution Process (CIRP) in May 2025, the Tribunal ordered its liquidation. The EPFO initially submitted a claim of Rs. 97.55 lakh towards provident fund contributions, damages and interest, which it subsequently revised to Rs. 59.46 lakh.

The liquidator rejected the claim due to the absence of assessment orders under Sections 7A, 14B and 7Q of the EPF Act and insufficient evidence that the partnership firm's liabilities had devolved upon the corporate debtor.

Challenging the rejection, the EPFO argued that provident fund dues enjoy statutory protection under Section 36(4)(a)(iii) of the Insolvency and Bankruptcy Code, 2016.

The liquidator argued that the private limited company was a separate legal entity and had not been formed through the conversion of the partnership firm. The liquidator also contended that the claim relied on provisional calculations without any assessment under Sections 7A, 14B or 7Q of the EPF Act.

Examining the EPFO's letter to the liquidator, the Tribunal noted that no proceedings had been initiated and no orders had been passed against the corporate debtor under Sections 7A, 14B or 7Q of the EPF Act.

Relying on the NCLAT's ruling in Employees' Provident Fund Organisation (EPFO) v. Rachna Jhunjhunwala, it observed that interest and damages under Sections 7Q and 14B of the EPF Act, which had not been determined before the commencement of CIRP, could not be treated as crystallised dues payable under an approved resolution plan. It stated:

“In the present case, the claim of the Appellant under Sections 7A, 7Q and 14B of the EPF Act was neither assessed nor adjudicated by the competent authority before the commencement of CIRP or liquidation. The claim was based merely on notional calculations and assumptions, without any determination or crystallisation of liability.”

Further, the Bench noted that the EPFO had produced no evidence that the partnership firm had been converted into, acquired by, or merged with the private limited company after 2013. It held:

“If there was any such merger or acquisition by the Private Limited Company, why did the appellant department allow the establishment to continue with its registration in its previous status as a partnership concern? Further, as per the provisions of the EPF Act, they have every right to inspect the establishments periodically, and they have every right to call for any records or registers of inspection by the department.”

The Tribunal also noted that the EPFO had produced no inspection records establishing irregularities or misuse of the partnership firm's registration number to remit contributions under the EPF Act.

Accordingly, the NCLT dismissed the appeal, upholding the rejection of the EPFO's Rs. 59.46 lakh claim.

For Appellant: Advocate Sajeev Kumar K Gopal

For Respondent: Advocate Vinod P.V