Effect of Approved Resolution Plan under IBC on Extinguishment of Claims and Abatement of Proceedings; Appeal Closed

An approved resolution plan under the IBC extinguishes claims not incorporated in the plan, and prevents initiation or continuation of proceedings or appeals in respect of such claims; the plan is binding on creditors and statutory authorities, resulting in abatement of existing statutory proceedings and appeals. The conclusion follows the precedent relied upon that approval under Section 31 operates to preclude separate claims outside the plan, so proceedings before other forums must cease and the pending appeal is closed as a consequence.

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Issues: Whether, upon approval of a resolution plan by the Adjudicating Authority under Section 31(1) of the Insolvency and Bankruptcy Code, 2016, the present appeals/proceedings raising demands can be continued or must be abated.

Analysis: The decision applies Section 31(1) of the Insolvency and Bankruptcy Code, 2016 and the ruling in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (Supreme Court) which holds that once a resolution plan is approved by the Adjudicating Authority, claims not included in the resolution plan stand frozen or extinguished and no proceedings in respect of such claims may be initiated or continued. The 2019 amendment to Section 31 is treated as clarificatory and declaratory, and the principle that statutory dues not part of an approved resolution plan cannot be pursued is applied to the present appeals.

Conclusion: The appeals cannot be continued after the approval of the resolution plan and therefore stand abated/closed; the appeals are disposed of accordingly.

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