Supreme Court Refuses To Interfere With NCLAT Order Rejecting EPFO Claim Made After Liquidation Commencement

The Supreme Court has recently dismissed an appeal filed by the Employees' Provident Fund Organisation, declining to interfere with a ruling of the National Company Law Appellate Tribunal on the treatment of claims in liquidation.

A Bench of Justices Sanjay Kumar and K. Vinod Chandran said it found “no good ground and reason” to interfere with the NCLAT judgment dated September 24, 2024.

The dispute arose from the liquidation of Khushi Foods Limited, which began on October 9, 2019.

During the liquidation process, the Assistant Provident Fund Commissioner sought an additional claim of ₹16.58 lakh towards interest and damages for the period between April 2016 and February 2018.

The statutory assessment orders, however, were passed later. The order under Section 7A was issued on March 10, 2021. The order under Section 7Q followed on April 21, 2021.

The liquidator rejected the additional claim on the ground that the assessments orders were passed after the commencement of liquidation.

The NCLAT upheld the liquidator's decision. It held that claims must be filed as of the liquidation commencement date and that any claim arising from an assessment made thereafter cannot be entertained.

The tribunal observed:

“When the claim has to be filed on the liquidation commencement date any claims subsequent including any on the basis of assessment subsequent to the liquidation commencement date cannot be given any credence by the liquidator and no error was committed by liquidator in not accepting the claim of damages and interest consequent to the assessment paying in the year 2021.”

The EPFO had argued that the interest liability was statutory and related to a pre-liquidation period. The tribunal rejected this contention, holding that the timing of quantification was determinative.

The top court dismissed the appeal without entering into the merits and declined to interfere with the NCLAT's reasoning.

For Appellants: Advocate K.V. Muthu Kumar (AOR) with Advocate Sarita Kanwar

For Respondents: Advocate Ravi Raghunath (AOR) with Advocate Namanjeet Singh Bhatia.