LexGHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY versus EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS.
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A B C D E F G H 737 [2021] 13 S.C.R. 737 737 GHANASHYAM MISHRA AND SONS PRIVATE LIMITED THROUGH THE AUTHORIZED SIGNATORY v. EDELWEISS ASSET RECONSTRUCTION COMPANY LIMITED THROUGH THE DIRECTOR & ORS. (Civil Appeal No. 8129 of 2019) APRIL 13, 2021 [R. F. NARIMAN, B. R. GAVAI AND HRISHIKESH ROY, JJ.] Insolvency and Bankruptcy Code, 2016 s. 31 – Approval of resolution plan – Corporate Insolvency Resolution Process – Resolution plan – Extent and scope of, after approval – Held: Once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of s. 31, the claims as provided in the resolution plan shall stand frozen and would be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders – 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 would be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan – Dominant purposes of the I&B Code is, revival of the Corporate Debtor and to make it a running concern – Legislative intent behind this is, to freeze all the claims so that the resolution applicant starts on a clean slate and is not flung with any surprise claims – Insolvency and Bankruptcy board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – rr. 13 and 14. s. 31 – Amendment to s. 31 by s. 7 of Act 26 of 2019 – Nature of, clarificatory/declaratory or substantive in nature – Held: 2019 Amendment to s. 31 of the Code is clarificatory and declaratory in nature and thus, would be effective from the date on which I&B Code came into effect. s. 31 – Approval of resolution plan by the Adjudicating Authority – Entitlement of creditor including the Central Government, A B C D E F G H 738 SUPREME COURT REPORTS [2021] 13 S.C.R. State Government or any local authority, to initiate any proceedings for recovery of any of the dues from the Corporate Debtor, which are not a part of the Resolution Plan approved by the adjudicating authority – Held: All the dues including the statutory 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 u/ s. 31 could be continued. Allowing the appeals and the writ petition, the Court HELD: 1. Once a resolution plan is duly approved by the Adjudicating Authority under sub-section (1) of Section 31 of the Insolvency and Bankruptcy Code, 2016, 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 other stakeholders. 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; that 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; and consequently all the dues including the statutory 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. [Para 95] [805-D-H; 806-A] 2.1 It could thus be seen, that one of the dominant objects of Insolvency and Bankruptcy Code, 2016 is to see to it, that an attempt has to be made to revive the Corporate Debtor and make it a running concern. For that, a resolution applicant has to prepare a resolution plan on the basis of the Information Memorandum. The Information Memorandum, which is required to be prepared A B C D E F G H 739 in accordance with Section 29 of I&B Code along with Regulation 36 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, is requ
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