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On the date of approval of resolution plan by the Adjudicating Authority, under the IBC, all such claims, which are not a part of resolution plan, shall stand extinguished - Supreme Court   Apr 13, 2021

In landmark ruling, interpreting the scope of Section 31 if the I&BC, the Supreme Court of India held as follows:

"(i) That once a resolution plan is duly approved by   the   Adjudicating   Authority  under   sub-section   (1)   of   Section   31,   the   claims   as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor   and   its  employees,   members, creditors,  including   the   Central Government, any State Government or any local   authority, guarantors and   otherstakeholders.   On the date of approval of resolution   plan   by  the   Adjudicating Authority, all such claims, which are not a part   of   resolution   plan,  shall   stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;


(ii) 2019 amendment to Section 31 of the I&B Code   is   clarificatory   and declaratory   in nature and therefore will be effective from the date on which I&B Code has come into effect;


(iii) Consequently   all   the   dues  including   thestatutory   dues   owed   to   the   Central Government, any State Government or any local authority, if not part of the resolution plan,   shall   stand   extinguished   and   no proceedings in respect of such dues for the period   prior   to   the   date   on   which   the Adjudicating   Authority  grants   its approval under Section 31 could be continued."



Copy of the judgement is attached   

 

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