Resolution plan finality extinguishes excluded pre-CIRP claims, but independent statutory tenancy proceedings may still continue.

Once a resolution plan is approved under the Insolvency and Bankruptcy Code, pre-CIRP statutory dues and recovery claims that were neither lodged in the CIRP nor included in the approved plan stand extinguished and cannot be pursued thereafter. The article also notes that proceedings under the Maharashtra Tenancy and Agricultural Land Act, 1948, based on alleged breach of purchase conditions, are not treated as recovery actions for insolvency purposes and are not barred merely because the corporate debtor is under CIRP or has obtained resolution plan approval. The result is that insolvency finality protects against excluded pre-CIRP claims, but independent statutory enforcement proceedings may still continue.

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Issues: (i) Whether statutory demands and recovery proceedings relating to pre-CIRP dues, not forming part of the approved resolution plan and not lodged in the CIRP, survive after approval of the resolution plan; (ii) Whether proceedings initiated under the Maharashtra Tenancy and Agricultural Land Act, 1948 for alleged breach of purchase conditions could be quashed on the ground of insolvency moratorium and resolution plan approval.

Issue (i): Whether statutory demands and recovery proceedings relating to pre-CIRP dues, not forming part of the approved resolution plan and not lodged in the CIRP, survive after approval of the resolution plan.

Analysis: Once a resolution plan is approved under Section 31 of the Insolvency and Bankruptcy Code, 2016, the claims covered by the plan attain finality and all other claims, including statutory dues not included in the plan, stand extinguished. The record showed that the concerned authorities had not filed claims in the CIRP and were seeking to raise or continue demands for periods predating insolvency commencement. Such claims could not be pressed after approval of the resolution plan.

Conclusion: The issue is answered in favour of the Appellant and against continuation of the pre-CIRP demands.

Issue (ii): Whether proceedings initiated under the Maharashtra Tenancy and Agricultural Land Act, 1948 for alleged breach of purchase conditions could be quashed on the ground of insolvency moratorium and resolution plan approval.

Analysis: The tenancy proceedings were not recovery proceedings for a financial or operational debt but were actions alleging breach of statutory conditions attached to land purchase. The proceedings were initiated and continued on a different legal footing, and the dispute was held to be governed by the principle that such regulatory or statutory action is not absorbed into the insolvency process merely because the corporate debtor is under CIRP or because a resolution plan has been approved.

Conclusion: The issue is answered against the Appellant and the tenancy proceedings were held to be maintainable.

Final Conclusion: The appeals relating to pre-CIRP statutory dues were allowed, while the challenge to the tenancy proceedings was rejected, leaving the result partly in favour of the Appellant.

Ratio Decidendi: After approval of a resolution plan, claims not forming part of the plan and not lodged in the CIRP stand extinguished, but proceedings enforcing independent statutory or regulatory obligations are not barred merely by insolvency resolution.

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