Resolution plan approval extinguishes pre-approval tax claims and renders pending recovery disputes infructuous

Approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016 extinguished all pre-approval claims and liabilities covered by the plan, and the plan became binding on the corporate debtor and all stakeholders, including governmental authorities. As the tax dispute arose from the pre-approval period and the payment schedule under the plan had been completed, the pending appeal was treated as fully settled and no surviving lis remained for adjudication. The dispute was therefore rendered infructuous, and no further examination on the merits was required.

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Issues: Whether the appeal survived after approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016, and whether the pre-approval tax claim stood extinguished.

Analysis: The resolution plan had been approved by the National Company Law Tribunal and, on its terms, all claims and liabilities relating to the period prior to the approval date stood extinguished. The plan was stated to be binding on the corporate debtor and all stakeholders, including governmental authorities, in terms of the Insolvency and Bankruptcy Code, 2016. In view of the approval of the resolution plan and completion of the payment schedule, the dispute forming the subject matter of the appeal was treated as fully settled and no surviving lis remained for adjudication.

Conclusion: The appeal had ceased to survive and was liable to be dismissed.

Final Conclusion: Approval of the resolution plan rendered the pending tax dispute infructuous, with the result that no further adjudication on the merits was required.

Ratio Decidendi: Once a resolution plan is approved and becomes binding under the Insolvency and Bankruptcy Code, 2016, pre-approval claims covered by the plan stand extinguished and pending proceedings relating to such claims do not survive.

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