Resolution plan approval extinguishes pre-CIRP tax claims not included in the plan, barring continued recovery action.

Approval of a resolution plan under the Insolvency and Bankruptcy Code binds the corporate debtor and all stakeholders, including governmental authorities, and extinguishes claims not included in the approved plan. Pre-CIRP tax demands and related recovery action based on dues and excess credit allegations could not survive once the plan was approved, because the relevant liabilities were not preserved in the plan. The assessment order, recovery notices and lien were therefore quashed and set aside, and further proceedings to recover those claims were barred.

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Issues: Whether tax demands and recovery actions arising from pre-CIRP liabilities survive after approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016.

Analysis: Once a resolution plan is approved by the Adjudicating Authority, the claims covered by the plan stand frozen and bind the corporate debtor and all stakeholders, including governmental authorities. Any claim not forming part of the approved resolution plan stands extinguished, and no person can initiate or continue proceedings for such claims. Applying that principle, the assessment order and the subsequent recovery notices and lien, all founded on pre-CIRP dues and excess credit allegations, could not survive after approval of the resolution plan.

Conclusion: The impugned assessment order and subsequent notices were quashed and set aside; the petition was allowed.

Final Conclusion: Pre-CIRP tax claims not included in an approved resolution plan cannot be pursued after approval of the plan, and consequential recovery measures against the corporate debtor cannot be sustained.

Ratio Decidendi: Approval of a resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 extinguishes all claims not forming part of the approved plan and bars further proceedings to recover such claims.

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