Approved resolution plan under IBC Section 30(2) bars fresh claims for pre-approval periods, water authority must limit demands to post-approval dues HC held that once a resolution plan is approved under IBC Section 30(2), it binds all creditors and no fresh claims can be raised for periods covered by ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Approved resolution plan under IBC Section 30(2) bars fresh claims for pre-approval periods, water authority must limit demands to post-approval dues
HC held that once a resolution plan is approved under IBC Section 30(2), it binds all creditors and no fresh claims can be raised for periods covered by the plan. Following SC precedent in Essar Steel case, the court ruled that allowing post-approval claims would create uncertainty for resolution applicants. The water authority's demand for outstanding dues covering the pre-approval period (December 2009 to November 2017) was unsustainable. Authorities were directed to revise demands limiting them to post-approval period and issue show cause notice before finalizing any dues.
Issues: Challenge to demand notice for outstanding water tax dues and related notices raising a demand of Rs.1.98 crores. Interpretation of Insolvency and Bankruptcy Code, 2016 (IBC) regulations regarding submission of claims. Validity of demand notice issued after approval of resolution plan under IBC.
Analysis: The petitioners challenged a demand notice for water tax dues and related notices demanding Rs.1.98 crores. The Board for Industrial and Financial Reconstruction (BIFR) admitted a petition for financial rehabilitation filed by the petitioners. Subsequently, a creditor filed an application under the Insolvency and Bankruptcy Code, 2016 (IBC) due to default in repayment. The Interim Resolution Professional (IRP) invited claims, and it was noted that the Opposite Party failed to submit a claim in the proper form as required by IBC Regulations.
After the resolution application of the petitioner's promoter was approved, the Opposite Party addressed a letter to reconcile arrears of water tax dues. Despite objections raised by the petitioner, a demand notice was issued for a significant sum covering a period from December 2009 to March 2019. The respondents admitted that the claim for water tax due until January 2017 was submitted to the IRP but not in the proper form as required.
The Court referred to the settled legal position that once a resolution plan is approved under IBC, it is binding on all stakeholders, and fresh claims for the same period are impermissible. Citing Supreme Court judgments, the Court emphasized that successful resolution applicants should not face surprise claims outside the approved resolution plan. In this case, demands for the period covered by the resolution plan approval were deemed unsustainable in law.
The Court directed the respondents to revise their demand limiting it to the period after the approval of the resolution plan and verify the petitioner's claim of paying water tax dues from January 2019 onwards. The petitioner was given the opportunity to respond to any revised demand, with the option to seek remedies if aggrieved. The writ petition was disposed of accordingly.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
AI OCR ✕
of 
TaxTMI 
TaxTMI 
