Clean slate resolution plans extinguish pre-approval statutory dues and bar fresh demands against the successful applicant.

Approved resolution plans under the Insolvency and Bankruptcy Code operate on a clean slate and bind all stakeholders, including ? No, avoid non-English. Governmental authorities are bound once the plan attains finality. Pre-approval statutory dues and other claims not forming part of the plan stand extinguished and cannot be enforced afresh against the successful resolution applicant for the pre-plan period. Demands relating to mining compensation, dead rent, surface rent, royalty, stamp duty and registration charges were therefore unsustainable to the extent they covered the period before plan approval, while revision of demands for the post-effective-date period remained permissible in accordance with law.

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Issues: Whether statutory demands raised against the corporate debtor for periods prior to approval of the resolution plan survived after approval of the plan under the Insolvency and Bankruptcy Code, 2016, and whether the impugned demands could be sustained to that extent.

Analysis: The approved resolution plan had attained finality and was binding on all stakeholders, including governmental authorities, once approved under the insolvency framework. The plan was required to be implemented on a clean slate basis so that the successful resolution applicant was not burdened with undisclosed or post-facto claims for liabilities arising prior to the plan effective date. Demands relating to compensation under the mining law, dead rent, surface rent, royalty, stamp duty and registration charges, to the extent they covered the period before approval of the resolution plan, were held to be covered by the extinguishment principle flowing from the statutory scheme and the settled law that such pre-plan claims cannot be revived outside the plan.

Conclusion: The pre-plan portions of the impugned demands were unsustainable and liable to be set aside. The authorities were permitted to revise the demands only for the period after the plan effective date in accordance with law.

Ratio Decidendi: Once a resolution plan is approved and attains finality, all claims and statutory dues not forming part of the plan and relating to the period prior to approval stand extinguished, and no fresh demand can be enforced against the successful resolution applicant for that pre-approval period.

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