Resolution plan binding effect under insolvency law defeated an unsubmitted suit claim and established a substantial defence.

Approval of a resolution plan under the Insolvency and Bankruptcy Code bound all stakeholders under Section 31(1), and a suit claim not shown to have been included in the plan, with no claim lodged in the insolvency process, could not be maintained after approval. In Chapter XIIIA proceedings, that binding effect constituted a substantial defence for the defendant. The court therefore refused the decree sought by the plaintiffs and dismissed the application.

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Issues: Whether the plaintiffs were entitled to a final judgment and decree in the suit after approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016, and whether the defendant had a substantial defence warranting refusal of relief under Chapter XIIIA of the Original Side Rules.

Analysis: The approval of the resolution plan in insolvency proceedings was treated as binding on all stakeholders under Section 31(1) of the Insolvency and Bankruptcy Code, 2016. The claim asserted in the suit was not shown to have been included in the resolution plan, and no claim had been lodged in the insolvency process. On that basis, the court held that the plaintiffs could not maintain a valid claim against the defendant after approval of the plan. In proceedings under Chapter XIIIA, the defendant was found to have a substantial defence founded on the binding effect of the approved resolution plan.

Conclusion: The plaintiffs were not entitled to the decree sought, and the application was dismissed.

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