# In the matter of Truvisory Insolvency Professionals Pvt. Ltd. vs. Employees’ Provident Fund Organisation & Ors.

> NCLAT judgment dated 2024-09-11. Citation: TCN-2024-NCLAT-00198. This case involves an appeal against an order by the National Company Law Tribunal (NCLT),…

- **Court:** NCLAT
- **Order date:** 11 Sept 2024
- **Citation:** TCN-2024-NCLAT-00198
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/truvisory-insolvency-professionals-pvt-ltd-vs-employees-provident-fund-organisat-cae06626

## Summary

### Background

This case involves an appeal against an order by the National Company Law Tribunal (NCLT), Mumbai Bench, concerning the attachment of bank accounts of Bombay Rayon Fashions Limited (Corporate Debtor) by the Employees' Provident Fund Organisation (EPFO) for unpaid provident fund dues. The Corporate Debtor was undergoing Corporate Insolvency Resolution Process (CIRP) and later liquidation. The Resolution Professional (RP), later replaced by the Liquidator, sought de-attachment of the accounts to manage the Corporate Debtor as a going concern and to pay CIRP costs. The NCLT conditionally released the accounts but directed setting aside funds for PF contributions. The appeal challenges this order, arguing preferential treatment to EPFO and misinterpretation of laws.

## Facts

Bombay Rayon Fashions Limited (Corporate Debtor) is a company engaged in the production of textiles. On 07 June 2022, an insolvency petition was admitted against the Corporate Debtor, initiating CIRP. The Employees' Provident Fund Organisation (EPFO) issued attachment orders on the Corporate Debtor's bank accounts on 03 February 2022 and 06 June 2022 for failure to pay provident fund dues amounting to INR 10,15,484/- and INR 7,34,37,074/-, respectively. These attachment orders targeted current and savings accounts. The IRP requested the EPFO to de-attach the bank accounts to ensure the Corporate Debtor's continued operation and to pay CIRP costs. The EPFO refused, asserting its entitlement to satisfy its full claim during CIRP. The IRP filed a De-Attachment Application

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## Issues and analysis

### Issue 1: Whether the EPFO's attachment orders, issued before the commencement of CIRP, can continue during …

**Ratio:** The legal principle is that the priority of debts under Section 11 of the Employees'

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**Reasoning:** The court reasoned that the EPFO's claims pertain to a period prior to CIRP and

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**Interpretation:** The interpretation is that while the EPF Act provides for priority of payment

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**Application:** The court applied this principle to the specific facts by directing that the

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## Parties

- **Judges:** Rakesh Kuma…; Indevar P…
- **Appellants:** Truvisory…
- **Respondents:** Bombay Rayon…; Employees…

## Timeline

- **2022-02-03 — Attachment Order by…**: Employee Provident Fund Organisation (EPFO) Regional Office Kannur issued an attachment…
- **2022-06-06 — Attachment Order by…**: EPFO Regional Office, Yelahanka, Bangalore issued another attachment order on CD's bank…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 61(1) — Appeals and Appellate Authority](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-61)

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