EPFO can initiate assessment proceedings during liquidation: NCLAT on companies under IBC
insolvency appellate tribunal has held that there is no bar against assessment proceedings by statutory authorities, including the EPFO, once the liquidation process starts against any debt-ridden company under the IBC. However, it also clarified that once a debt-ridden company is protected under moratorium after the initiation of insolvency proceedings against it, the Employees' Provident Fund Organisation (EPFO) cannot continue such proceedings.
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While dismissing the two petitions filed by the EPFO, National Company Law Appellate Tribunal (NCLAT) said once a company is protected under moratorium as per the provisions of Section 14 (1) of the Insolvency & Bankruptcy Code (IBC), assessment proceedings for determination of quantum of dues cannot be continued.
«We hold that after initiation of moratorium under Section 14, sub-section (1), no assessment proceedings can be continued by the EPFO. If after an order of liquidation is passed, Section 33, sub-section(5), does not prohibit initiation or continuation of assessment proceedings,» said NCLAT.
It said no claim on the basis of assessment carried during the moratorium period, which is prohibited under Section 14(1), can be pressed in the Corporate Insolvency Resolution Process (CIRP).
However, it said once the order of liquidation is passed, the
