Clean slate principle under insolvency law bars enforcement of pre-CIRP claims outside an approved resolution plan.

Once a resolution plan is approved under the Insolvency and Bankruptcy Code, claims covered by the plan bind all stakeholders, while claims not included in the plan stand extinguished. The successful resolution applicant acquires the corporate debtor on a fresh slate, so pre-CIRP liabilities not reflected in the approved plan cannot later be enforced. On these facts, demand and assessment notices relating to periods before the CIRP and outside the resolution plan were not sustainable and were set aside.

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Issues: Whether demand and assessment notices raising claims that arose prior to initiation of the CIRP and were not part of the approved resolution plan could be enforced against the successful resolution applicant.

Analysis: Once a resolution plan is approved under the Insolvency and Bankruptcy Code, 2016, the claims covered by the plan become binding and all claims not forming part of the plan stand extinguished. The successful resolution applicant takes over the corporate debtor on a fresh slate, and prior liabilities that were not factored into the approved plan cannot be recovered later. The impugned demands here related to periods anterior to the CIRP and fell within the class of pre-resolution claims barred by the clean slate principle.

Conclusion: The impugned pre-CIRP demand notices could not be sustained and were liable to be set aside in favour of the assessee.

Ratio Decidendi: After approval of a resolution plan, any claim not included in the plan stands extinguished and cannot be enforced against the corporate debtor or the successful resolution applicant for a pre-approval period.

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