2024 (12) TMI 1698 - SCH - IBC

Resolution plan binding on stakeholders; quashing of postapproval demand notice and termination of consequential proceedings.

Resolution plans under the I&B Code bind the corporate debtor, creditors and other stakeholders and extinguish claims not included in the approved plan; ... Resolution plan binding on corporate debtor, creditors and other stakeholders - extinguishment of claims not part of approved resolution plan - clarificatory and retrospective nature of the 2019 amendment to Section 31 - I&B Code prevailing over inconsistent laws (Section 238) - operational debt and operational creditor within I&B Code - duties and role of the resolution professional in collating claims - quashing of demand notice issued post-approval of resolution plan - HELD THAT:- The record reveals that the aforesaid order passed by the adjudicating authority was challenged by way of a statutory appeal before the Appellate Authority. We are informed that the appeal is pending before the appellate authority as on date. The petitioners herein that is the successful resolution applicants are here before this Court, as a demand notice came to be issued to it dated 18.11.2020. As the corporate debtor has been taken over by the petitioners herein, the respondent issued the demand notice to them which has been made the subject matter of challenge in this petition. However, keeping in mind the position of law, as on date, the petitioners need not answer the reservations expressed by the learned ASG on the correctness of the judgment rendered in Ghanshyam Mishra [2021 (4) TMI 613 - SUPREME COURT] The impugned notice dated 18.11.2020 issued by the respondent no. 2 herein is quashed. All other consequential proceedings also stand terminated. Petition stands disposed of. Issues: (i) Whether statutory demands or recovery proceedings in respect of dues/claims accruing prior to the date of approval of a resolution plan, which are not part of the approved resolution plan, can be continued or enforced against the corporate debtor or the successful resolution applicant.Analysis: The decision applies the legal framework of the Insolvency and Bankruptcy Code, 2016, in particular the binding effect of an approved resolution plan under Section 31, the duties and disclosure obligations under Sections 29 and 30, the concepts of 'operational creditor' and 'other stakeholders' under Sections 3(10) and 5(20)/5(21), and the overriding effect of the IBC under Section 238. It also relies on the Court's holding in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. that claims not part of an approved resolution plan stand frozen and are extinguished on approval. Applying these principles to the present facts, the demand notice dated 18.11.2020 issued in respect of penalties and statutory dues accruing prior to approval of the resolution plan concerns liabilities that were not included in the approved resolution plan and therefore cannot be enforced against the corporate debtor or its successful resolution applicants.Conclusion: The demand notice dated 18.11.2020 and all consequential recovery proceedings insofar as they seek to recover dues accruing prior to the date of approval of the resolution plan and not included in the plan are quashed and terminated; the petition is allowed.