Repeated Filing Of Applications U/S 42 Of IBC Violates Principle Of Res Judicata, Amounts To Abuse Of Law: NCLAT Chennai

Background

The Employees' Provident Fund Organisation (EPFO) filed a Company Appeal before the National Company Law Appellate Tribunal (NCLAT), Chennai against the Resolution Professional of M/s Neueon Towers Limited and the Successful Resolution Applicant (SRA).

The dispute arose from the EPFO's claims regarding outstanding provident fund dues against the Corporate Debtor, and EPFO had filed a similar claim under Section 42 of the IBC code in IA Nos 42/2021 and 236/2021, seeking the acceptance of the claims and penal interest. These applications were partly allowed with the court directing the RP and CoC to admit only the employer's contribution towards the provident fund and denying any claim towards penal interest.

Despite the issues being already adjudicated by the court, the EPFO filed a fresh application seeking acceptance of claims. The Tribunal rejected the applications citing that such repetitive filing of applications violated the principle of res judicata and amounted to abuse of process of law. The Tribunal also noted that no cause of action arises as the SRA had already provided towards the EPF dues.

NCLAT Judgement

The NCLAT dismissed the appeal filed by the EPFO against the RP stating that EPFO being a statutory body had to act fairly and should not abuse the process of law. It was also noted that previously two separate applications were filed before the Tribunal which were already adjudicated and decide by the Tribunal, directing the RP and CoC to admit only the employer's contribution towards the provident fund and denying any claim towards penal interest.

Despite this the statutory body filed an application for seeking claims which the Tribunal held to be barred by the doctrine of Res Judicata.

The Court emphasized that allowing EPFO to file simultaneous applications would amount to abuse of process of law. It also criticised the authority for not citing the previously adjudicated issues. The Tribunal concluded by stating that the appeal lacked merit and dismissed it without dealing with the issue of recalculation as it had already been decided earlier.

Case Title: Employees' Provident Fund Organization v/s Dr. Madurai Sundaram Sankar

Case Number: Company Appeal (AT) (CH) (Ins) No. 193/2025

Tribunal: National Company Law Appellate Tribunal, Chennai

Coram: Justice Sharad Kumar Sharma (Member (Judicial) and Jatindranath Swain (Member (Technical)

For Appellant: Mr. MS Viswanathan, Advocate

Date of Judgement: 22.04.2025

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