Tribunal Emphasizes Strict Adherence to IBC Timelines, Dismisses EPFO's 400-Day Delayed Claim
In a notable decision, the National Company Law Tribunal (NCLT) Mumbai Bench, comprising Shri Anil Raj Chellan and Shri K.R. Saji Kumar, dismissed the Central Board of Trustees, Employees Provident Fund Organisation's (EPFO) bid to file a delayed claim in the insolvency proceedings of Sovika Aviation Services Private Limited. The Tribunal highlighted the importance of adhering to the timelines prescribed under the Insolvency and Bankruptcy Code (IBC), 2016, thus reinforcing the sanctity of the insolvency process.
The case revolved around EPFO's attempt to condone a 400-day delay in filing a claim for statutory dues amounting to Rs. 1,42,77,489 under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The EPFO's claim was submitted well beyond the stipulated deadline of September 13, 2023, having been filed on October 17, 2024, after the Committee of Creditors (CoC) had already approved the resolution plan for Sovika Aviation with a 100% majority vote on July 22, 2024.
The Tribunal, in its judgment, noted that the EPFO failed to provide sufficient reasons for the delay and did not demonstrate vigilance in submitting the claim despite being aware of the insolvency proceedings. The judgment emphasized that allowing such late claims would undermine the finality of the resolution process and the commercial wisdom of the CoC, which had already approved the resolution plan.
Citing previous rulings, the Tribunal reiterated that statutory claims, including those by the EPFO, cannot override the approved resolution plans once the CoC has exercised its commercial judgment. The judgment aligns with the Supreme Court's stance in similar cases, underscoring that claims must comply with the IBC timelines to maintain the integrity and certainty of the insolvency resolution process.
The Tribunal also dismissed EPFO's assertion that their belated claim should be entertained since the plan had not yet been approved by the Adjudicating Authority. It maintained that reopening resolved plans could lead to endless litigation, contrary to the IBC's objective of timely resolution.
In conclusion, the NCLT Mumbai Bench's decision in the case of "Central Board of Trustees, PFO v. Ashok Kumar Golechha" serves as a significant reminder of the necessity for creditors, including statutory bodies, to adhere to the timelines laid out in the IBC to ensure a swift and orderly insolvency resolution process.
Bottom line:-
Insolvency and Bankruptcy Code - Claims must be submitted within prescribed timelines - Late claims, even statutory ones, cannot disrupt the resolution process post-CoC approval.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 60(5), 14, 30(2)(e), CIRP Regulations 12, 13, Employees Provident Funds and Miscellaneous Provisions Act, 1952 Sections 7A, 7Q, 14B
