NCLAT Upholds Rejection of Belated Provident Fund Claims Post-CoC Approval, Reinforces Finality of IBC Resolution Plan
- REEDLAW
- Oct 15
- 4 min read
REEDLAW Legal News Network reports: In a pivotal ruling, the National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, reaffirmed that no belated statutory claims, including Provident Fund dues, can be entertained once a Resolution Plan has been approved by the Committee of Creditors (CoC) under the Insolvency and Bankruptcy Code, 2016. The Appellate Tribunal underscored that allowing such delayed claims would jeopardise the finality of the insolvency process and violate the clean slate principle laid down by the Supreme Court, thereby upholding the sanctity of approved Resolution Plans.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, while adjudicating a Company Appeal, held that once a Resolution Plan is duly approved by the Committee of Creditors under the IBC, no additional or belated claims—whether statutory or otherwise—can be entertained. The Tribunal observed that such post-approval claims would undermine the certainty and conclusiveness of the resolution process, directly contravening the clean slate principle established by the Supreme Court. Accordingly, the rejection of delayed Provident Fund claims by the Resolution Professional and the Adjudicating Authority was found to be legally sound and consistent with the objectives of the IBC.
The Appellant filed an appeal against the order of the Adjudicating Authority (National Company Law Tribunal, Mumbai Bench-III) that dismissed the application for admission of an additional claim in the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The original claim of Rs. 7.49 crore related to Provident Fund dues was admitted by the Resolution Professional (RP), and the Resolution Plan approved by the Committee of Creditors (CoC) provided for its full payment. Subsequently, the Appellant filed an additional claim of Rs. 34.31 crore after the CoC approval, which was rejected by the RP and the Adjudicating Authority.
The Appellant contended that Provident Fund dues are statutory obligations protected under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and cannot be compromised in insolvency proceedings under the Insolvency and Bankruptcy Code (IBC). It was submitted that the additional claim arose due to approval of wage claims and that the delay in filing was not deliberate. The Appellant relied on Supreme Court precedents establishing that such statutory dues fall outside the liquidation estate and must be settled.
On the other hand, the RP and Successful Resolution Applicant (SRA) argued that allowing additional claims after CoC approval undermines the finality of the Resolution Plan and the objective of time-bound insolvency resolution. The RP maintained that the claim was belated by over nine months from CoC approval and was rightly rejected under the CIRP Regulations that bar claims after the stipulated period. The Adjudicating Authority upheld this position, referencing Supreme Court rulings from Essar Steel and RP Infrastructure Ltd. that emphasise the ‘clean slate’ principle and prohibit reopening claims post-approval.
The Tribunal concluded that the Appellant’s additional claim, filed after the approval of the Resolution Plan, was time-barred and inadmissible. It affirmed that the Resolution Plan, once approved by the CoC, is binding on all stakeholders and freezes claims to prevent disruptive litigation. The rejection of the additional claim by the RP and the Adjudicating Authority was held to be proper, and the appeal was dismissed with no order as to costs.
This judgment underscores the finality of the Resolution Plan under the IBC, the binding effect of CoC approval, and the exclusion of belated additional claims, even statutory dues, filed after the prescribed timelines to ensure timely and effective insolvency resolution.
Mr. Kanhaiya Singhal, Mr. Prasanna, Mr. Ajay Kumar, Ms. Ankita Makan, Ms. Aaditya Saraaf, Mr. Pulkit Jolly and Mr. Parul Sharma, Advocates, represented the Appellant.
Mr. Arvind Nayar, Sr. Advocate, with Ms. Tishampati Sen, Ms. Riddhi Sancheti, Mr. Anurag Anand, Mr. Mukul Kulhari and Ms. Tarni Aggarwal, Advocates, appeared for the SRA.
Mr. Kunal Tandon, Sr. Advocate with Mr. Gaurav Suryavanshi and Ms. Natasha Singh, Advocates, appeared for the RP.
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