2022 (1) TMI 108 - Tri - Insolvency and Bankruptcy

Liquidation proceedings - Priority of payment of dues - seeking direction to 2nd and 3rd Respondent to pay the Applicant his dues as per the proportion for employees and workmen as stated in the Resolution Plan - HELD THAT - It has been made abundantly clear that the Resolution Applicant can be made liable for the dues which are forming part of the Information Memorandum and once the Resolution Plan is approved by this Adjudicating Authority, 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. In the present case, the dues of the Applicant do not form part of the Information Memorandum as admitted claim and the RP has rejected the claim of the Applicant - Application dismissed.

Issues:
1. Application filed by an Operational Creditor seeking relief under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 for payment of dues.
2. Claim of an Employee/Workmen of the Corporate Debtor not paid post approval of Resolution Plan.
3. Admissibility of claims and liabilities post approval of Resolution Plan.
4. Interpretation of Section 31 of the Insolvency and Bankruptcy Code regarding binding nature of Resolution Plan on stakeholders.
5. Extinction of claims not part of the Resolution Plan post approval by the Adjudicating Authority.

Analysis:

1. The Application was filed by an Operational Creditor seeking relief under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 for payment of dues related to the Corporate Debtor. The Resolution Plan for the Corporate Debtor was approved, and the Applicant, an Employee/Workmen, filed a claim with the Resolution Professional. However, the claim was rejected post approval of the Resolution Plan.

2. The Applicant referred to Annexure 'A7' as proof of the claim, which was updated on the website by the Resolution Professional. Despite the publication of claims received, there was no evidence to show the claim's admission. The Information Memorandum indicated that the Applicant's claim was rejected in full, in line with the Supreme Court's interpretation of the Insolvency and Bankruptcy Code.

3. The Supreme Court's judgment highlighted the importance of the Resolution Plan being binding on all stakeholders post approval by the Adjudicating Authority. The Resolution Plan aims to freeze claims not included in it, ensuring the revival of the Corporate Debtor without surprise claims. The Resolution Applicant becomes liable for dues outlined in the Information Memorandum, and claims not part of the plan stand extinguished post approval.

4. In this case, the Applicant's dues were not part of the Information Memorandum as an admitted claim, leading to the rejection of the claim by the Resolution Professional. Following the Supreme Court's interpretation, the Application by the Applicant was dismissed, emphasizing the binding nature of the Resolution Plan on stakeholders and the extinguishment of claims not included in the approved plan.

5. The judgment clarified the statutory framework under the Insolvency and Bankruptcy Code, emphasizing the need for adherence to the Resolution Plan post approval to ensure the Corporate Debtor's revival and the protection of stakeholders' interests. The dismissal of the Applicant's claim highlighted the legal principles governing claims post approval of the Resolution Plan and the extinguishment of claims not encompassed in the approved plan.

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