Whether approved insolvency resolution plan bars continuing labour and other claims against successful resolution applicant, proceedings terminated

Whether proceedings can continue against a successful resolution applicant after approval of a resolution plan: relying on SC precedent (Electrosteel; Essar Steel), the HC held that once a resolution plan is approved under s.31(1) of the IBC, all claims not incorporated in the plan are extinguished and no person may initiate or continue proceedings in respect of such claims; moratorium lifting does not revive excluded claims. Outcome: proceedings before the Industrial Tribunal/Labour Court were terminated, impugned orders quashed, and the petitions allowed because the approved resolution plan left no scope for payment or adjudication of the respondents' claims.

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Issues: (i) Whether proceedings before the Industrial Tribunal/Labour Court in respect of claims not included in an approved resolution plan can be continued after approval of the resolution plan by the NCLT and whether the successful resolution applicant (new management) is liable for such claims.

Analysis: The Court examined the effect of an NCLT-approved resolution plan and the IBC provisions relied upon by the petitioner, notably Sections 31, 32A and 238 of the Insolvency and Bankruptcy Code, 2016, together with the moratorium under Section 14. The Court referred to binding Supreme Court authority establishing that upon approval of a resolution plan claims which are not part of the approved plan stand extinguished and the resolution applicant takes the corporate debtor on a clean slate. The resolution plan clauses demonstrating express extinguishment of past claims against employees and the absence of any provision preserving the respondents' claims were considered. Applying the statutory scheme and precedents, the Court concluded that continuation or adjudication of claims not included in the resolution plan is barred and that the new management enjoys immunity from such liabilities and proceedings.

Conclusion: The Industrial Tribunal/Labour Court could not continue or adjudicate the respondents' claims which were not part of the approved resolution plan; the impugned orders continuing those proceedings are quashed and set aside, and the writ petitions filed by the petitioner are allowed.

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