Pre-CIRP mine closure costs must be resolved under insolvency law, and no personal liability follows without a valid trust basis.

Pre-CIRP annual mine closure cost was held not to be trust money in the absence of a separate trust account or documentary proof of trust creation, so the claim had to be dealt with within the insolvency resolution process under the Insolvency and Bankruptcy Code. The Code's overriding effect displaced inconsistent contractual or statutory claims seeking recovery outside the insolvency framework. The direction fastening personal liability on the resolution professional for any deviation in disposal of mined coal was also set aside because it depended on the rejected premise that the amount lay outside the corporate debtor's estate, though the resolution professional remains bound to act in accordance with the Code and its rules.

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Issues: (i) Whether the annual mine closure cost due for the pre-CIRP period could be treated as money held in trust and kept outside the insolvency resolution process; (ii) whether the direction making the resolution professional personally liable for any deviation in disposal of mined coal was sustainable.

Issue (i): Whether the annual mine closure cost due for the pre-CIRP period could be treated as money held in trust and kept outside the insolvency resolution process.

Analysis: The dispute turned on the character of the annual mine closure cost and the effect of the insolvency regime after commencement of corporate insolvency resolution process. The Escrow Agreement provided for deposit of the annual mine closure cost, periodic release of part of the amount, and refund of the balance to the lessee on compliance with closure obligations. In the absence of any separate trust account or documentary material showing creation of a trust, the amount could not be treated as trust money. The Court also held that pre-CIRP dues cannot be recovered dehors the Insolvency and Bankruptcy Code, and that the statutory framework requires such claims to be dealt with through the resolution process. The Code's overriding effect prevails over inconsistent provisions in the other enactments relied upon by the respondents.

Conclusion: The pre-CIRP annual mine closure cost could not be kept outside the insolvency resolution process, and the contrary finding was set aside.

Issue (ii): Whether the direction making the resolution professional personally liable for any deviation in disposal of mined coal was sustainable.

Analysis: The personal liability direction was attached to the impugned finding that the annual mine closure cost was to be kept aside as money not belonging to the corporate debtor. Once that premise was rejected, the basis for fastening personal responsibility on the resolution professional also disappeared. The Court, however, clarified that the resolution professional must act in conformity with the Insolvency and Bankruptcy Code and the rules framed thereunder.

Conclusion: The direction fastening personal liability on the resolution professional was expunged.

Final Conclusion: The appeal succeeded, the impugned directions treating the pre-CIRP annual mine closure cost as the corporate debtor's estate were removed, and the resolution professional was relieved of the personal-liability direction.

Ratio Decidendi: In the absence of a legally created trust or first charge, pre-CIRP obligations of a corporate debtor must be addressed within the insolvency resolution framework, and inconsistent statutory or contractual claims cannot be enforced outside the Code's moratorium and distribution scheme.

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