Pre-resolution tax claims extinguished after resolution plan approval, and recovery notice could not survive under the Insolvency Code.

Approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 binds the corporate debtor and all creditors, including statutory authorities, in respect of pre-resolution dues. Because the tax demands and recovery communication related to periods long before the plan attained finality, they constituted pre-resolution claims and stood extinguished once the plan was approved. Section 238 gave the Code overriding effect over inconsistent laws, so the tax department could not enforce earlier assessment-based dues after approval. The recovery notice was therefore invalid and the writ petitions were allowed.

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Issues: Whether a recovery notice issued by the tax department for demands relating to periods prior to approval of the resolution plan could survive after approval of the corporate insolvency resolution plan under the Insolvency and Bankruptcy Code, 2016.

Analysis: The approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 binds the corporate debtor and all its creditors, including governmental authorities and statutory creditors, in respect of dues arising under any law. Section 238 gives the Code overriding effect in case of inconsistency with other laws. The impugned tax demands and the recovery communication related to assessment years much prior to the date on which the resolution plan attained finality, and therefore fell within the category of pre-resolution claims. Once the resolution plan was approved, such claims stood extinguished and no recovery could be pursued on their basis.

Conclusion: The recovery notice was invalid and liable to be quashed, as the pre-resolution tax dues could not be enforced after approval of the resolution plan.

Final Conclusion: The writ petitions were allowed and the tax recovery action based on earlier assessment orders was set aside.

Ratio Decidendi: Upon approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016, all pre-resolution claims of statutory creditors stand extinguished and cannot be enforced contrary to the binding effect of the approved plan and the Code's overriding provision.

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