Treatment of damages of EPFO u/s 14B of EPF & MP Act, 1952 imposed prior to initiation of CIRP and during moratorium u/s 14 of IBC and NCLT’s power to recommend Central Board to waive the damages – Regional Provident Fund Commissioner, Vatwa, Employees Provident Fund Organization Vs. Shri Manish Kumar Bhagat, RP of Perfect Boring Pvt. Ltd. – NCLAT New Delhi

In this important case, Hon’ble NCLAT held that: (i) The law is well settled that Provident Fund Dues ought to be paid in full. (ii) The challenge to assessment orders, made by EPFO in exercise of jurisdiction under 1952 Act cannot be subject matter of challenge in the proceedings under IBC. (iii) It is not necessary in this proceeding to issue any direction for payment of the damages as imposed subsequent to CIRP imposition of moratorium. (iv) When Insolvency Resolution Process has been initiated against a Corporate Debtor and Resolution plan has been approved under IBC, power of Central Board to reduce or waive the damages can be exercised with regard to the damages imposed under Section 14B. (v) NCLT/NCLAT in an appropriate case can make a recommendation as contemplated in paragraph 32B of Employees Provident Fund Scheme 1952, to the Central Board to waive the EPFO damages imposed u/s 14B.

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