2024 (10) TMI 1183 - HC - IBC

Extinguishment of claims upon approval of the Resolution Plan - amount arising out of termination of the Agreement due to non-renewal of the PBG - 'clean state' principles - whether the respondent was liable for the alleged dues, thereby ascertaining its eligibility to participate in the coal mine auctions? - HELD THAT - Once the claim was returned to the appellant to be re-filed, it did not take any action in pursuance thereto. Thus, there did not exist any claim to be processed by the Resolution Professional to be placed before the Committee of Creditors and thereafter, before the NCLT for approval of the Resolution Plan. Notwithstanding that, undeniably, the Resolution Plan was approved by the NCLT on 20th March, 2023 and the second claim of the appellant in respect of Rs. 9.21 crores was calculated and disbursed to it by the successful Resolution Applicant. Despite having notice of all the above events and facts, the appellant neither objected nor challenged the Resolution Plan at any time till date. Besides, it is trite that once the Resolution Plan is formally approved by the NCLT, any other remaining claims etc. would be deemed to have extinguished. This has been succinctly but authoritatively laid down by the Supreme Court in Ghanashyam Mishra 2021 (4) TMI 613 - SUPREME COURT . The appellant appears to have let the claim get extinguished without a protest or demur. Merely because the waiver was not allowed by the NCLT while approving the Resolution Plan would not, ipso facto, resurrect the right of claim. In the opinion of this Court, the right of the appellant to the claim is clearly extinguished post approval of Resolution Plan. To that extent, the reliance on Greater Noida Industrial Development Authority 2024 (2) TMI 681 - SUPREME COURT (LB) would not enure to the benefit of the appellant. In that case, the aggrieved person had infact challenged the Resolution Plan itself whereas, in the present case, the appellant let the claim get extinguished by its own apathy. In the case of Greater Noida Industrial Development Authority, the Supreme Court was considering a dispute similar to the one in the present case, except, in that case, the aggrieved person therein challenged the Resolution Plan itself and the Supreme Court held that the form in which the claim was submitted with the Resolution Professional is inconsequential so long as a proper claim is laid. It further held that what needed to be considered respecting such claim is, whether it deserved to form part of the Resolution Plan. In the present case, though the appellant did submit the claim at hand, yet did not re-submit the same after it was returned. There are no reason, much less any cogent reason to interfere with the impugned order passed by the learned Single Judge. Resultantly, the present appeal is dismissed without any order as to costs.

Issues Involved:

1. Whether the claims of the appellant were extinguished upon approval of the Resolution Plan?
2. Whether the respondent can be held liable for past dues post-CIRP under the principle of a "clean slate"?
3. Whether the appellant's claim was still alive and actionable after the Resolution Plan approval?
4. Applicability of the "clean slate" principle and its impact on the eligibility of the respondent to participate in coal mine auctions.

Issue-wise Detailed Analysis:

1. Extinguishment of Claims Upon Approval of the Resolution Plan:

The core issue was whether the claims of the appellant were extinguished after the approval of the Resolution Plan by the NCLT. The court noted that the appellant's claim for Rs. 92.25 crores was submitted as a 'Financial Creditor' but was returned by the Resolution Professional with advice to file it in the appropriate form. The appellant did not re-submit the claim, leading to its exclusion from the Resolution Plan. The court emphasized that once the Resolution Plan is approved, all claims not included are deemed extinguished, as per the Supreme Court's ruling in Ghanashyam Mishra & Sons Private Limited vs. Edelweiss Asset Reconstruction Co. Ltd. & Ors. The court found no evidence of steps taken by the appellant to resurrect its claim post-approval, thus affirming its extinguishment.

2. Liability for Past Dues Post-CIRP:

The respondent argued that post-CIRP, it should not be held liable for past dues, which were addressed in the Resolution Plan. The court supported the respondent's position, citing the principle of a "clean slate" established in Ghanashyam Mishra, which allows the Corporate Debtor to continue as an "ongoing concern" without past liabilities. The court found that the appellant's claims, not forming part of the approved Resolution Plan, were legally extinguished, and thus, the respondent could not be disqualified from participating in coal mine auctions based on these claims.

3. Status of the Appellant's Claim Post-Resolution Plan Approval:

The appellant contended that its claim was still alive and actionable, as the NCLT did not waive it during the Resolution Plan approval. However, the court highlighted that the appellant did not challenge the Resolution Plan or take any steps to assert its claim after its approval. The court concluded that the appellant's inaction led to the claim's extinguishment, and the mere non-waiver by the NCLT did not resurrect the claim.

4. Applicability of the "Clean Slate" Principle:

The court reiterated the "clean slate" principle, which allows the Resolution Applicant to start afresh without surprise claims. This principle ensures the Corporate Debtor's revival as a going concern, free from past liabilities. The court found no reason to interfere with the learned Single Judge's order, which applied this principle to allow the respondent's participation in future coal mine auctions. The court dismissed the appeal, affirming that the appellant's claims were extinguished and the respondent was entitled to a clean slate.

Conclusion:

The court dismissed the appeal, affirming that the appellant's claims were extinguished upon the Resolution Plan's approval, and the respondent was entitled to proceed on a "clean slate" basis. The court found no cogent reason to interfere with the learned Single Judge's order, thus allowing the respondent's participation in coal mine auctions without the burden of past liabilities.

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