Approved resolution plan binds all stakeholders and preserves a clean slate, barring post-approval attachment reliefs sought by creditors.
A resolution applicant was not shown to be a related party merely because of participation in a joint venture; absent evidence of nexus or control, related-party ineligibility under the insolvency code was not attracted. The article also states that once a resolution plan is approved, it binds the corporate debtor, creditors and other stakeholders, and the post-approval regime operates on a clean slate. In that framework, claims must be dealt with within the resolution process, and section 32A protects the corporate debtor's assets from attachment for prior offences, subject to statutory conditions. Accordingly, the writ reliefs sought to compel banks or the RBI to intervene were declined.
Issues: (i) Whether the successful resolution applicant was a related party of the corporate debtor so as to attract the ineligibility under the insolvency code. (ii) Whether the banks or the Reserve Bank of India could be directed to pursue attachment of the corporate debtor's assets or otherwise intervene for the benefit of creditors after approval of the resolution plan.
Issue (i): Whether the successful resolution applicant was a related party of the corporate debtor so as to attract the ineligibility under the insolvency code.
Analysis: The challenge rested on the assertion that the successful resolution applicant's participation in a joint venture made it a related party of the corporate debtor. The Court held that this question had already been examined in insolvency proceedings and that the resolution applicant had disclosed the relevant background. On the materials referred to, no nexus or control was shown to establish related-party status within the meaning of the insolvency code.
Conclusion: The objection based on related-party ineligibility was rejected and was held against the petitioner.
Issue (ii): Whether the banks or the Reserve Bank of India could be directed to pursue attachment of the corporate debtor's assets or otherwise intervene for the benefit of creditors after approval of the resolution plan.
Analysis: The Court held that approval of a resolution plan under the insolvency code binds the corporate debtor, creditors and other stakeholders, and that claims are to be dealt with within that framework. It further held that, once the resolution plan is approved and management changes hands, the corporate debtor and its assets operate on a clean slate, and the immunity embodied in section 32A protects the corporate debtor's assets from attachment in relation to prior offences, subject to the statutory requirements. In that background, no mandamus could be issued to compel the respondent banks or the RBI to take the steps sought by the petitioner.
Conclusion: The requested writ reliefs were declined and the issue was decided against the petitioner.
Final Conclusion: The writ petition failed because the approved resolution plan remained binding and the post-approval regime under the insolvency code did not permit the petitioner to reopen settled insolvency consequences or seek the reliefs claimed.
Ratio Decidendi: Once a resolution plan is approved under the insolvency code, it binds all stakeholders and the corporate debtor proceeds on a clean slate, so prior claims and asset-protection disputes must yield to the statutory resolution framework.
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