Resolution plan approval extinguishes excluded employee claims and bars continuation of pending industrial dispute proceedings.

Approval of a resolution plan under the Insolvency and Bankruptcy Code extinguishes employee and workmen claims not included in the plan, and such excluded liabilities cannot be pursued against the successful resolution applicant. Applying the overriding effect of the Code and the clean slate principle, the Bombay High Court noted that the plan expressly wrote off claims outside the approved scheme, so pending industrial reference proceedings and the employee's claim for reinstatement and related dues could not continue. The excluded claims and the pending dispute therefore did not survive after plan approval.

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Issues: Whether, after approval of the resolution plan under the Insolvency and Bankruptcy Code, 2016, pending industrial dispute proceedings and the employee's claim for reinstatement and related dues could continue against the successful resolution applicant.

Analysis: The resolution plan expressly provided that employee and workmen claims not forming part of the approved plan would stand written off and permanently extinguished. The Court applied the settled position that once a resolution plan is approved under Section 31(1) of the Insolvency and Bankruptcy Code, 2016, all claims not included in the plan cease to survive and no person can continue proceedings in respect of such claims. The Court relied on the overriding effect of the Code and the clean slate principle to hold that a successful resolution applicant cannot be burdened with undecided or excluded liabilities of the erstwhile management. On that basis, the pending industrial reference could not be adjudicated further and the claim for reinstatement also could not be entertained.

Conclusion: The industrial dispute proceedings and the employee's claims did not survive after approval of the resolution plan and could not be continued against the petitioner.

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