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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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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.
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