2022 (5) TMI 1139 - HC - Insolvency and Bankruptcy

Approval of Resolution plan - Abatement, extinguishment, discharge and settlement of claims raised by original respondents - Section 31(1) of the Insolvency Bankruptcy Code, 2016 read with the Resolution Plan - HELD THAT - Undisputedly the applicant herein i.e. ArcelorMittal Nippon Steel India Ltd., formerly known as Essar Steel India Ltd., (ESIL) submitted a Resolution Plan which came to be approved by the CoC on 25.10.2018 and, thereafter, by the Hon ble Supreme Court in Committee of Creditors of Essar Steel India Ltd., vs. Satish Kumar Gupta and others, 2019 (11) TMI 731 - SUPREME COURT Upon approval of the said Resolution Plan all the claims RP by the creditors were settled or discharged by appropriate assignment of value. The Resolution Plan provides that all the claims of ESIL whether contingent or crystallized, known or unknown, filed or not filed shall stand irrevocably and unconditionally abated, discharged, settled and extinguished in perpetuity upon approval of the Resolution Plan. Further the Resolution Plan came to be finally approved by the Hon ble Supreme Court in the aforesaid judgment, wherein in view of the aforesaid judgment and Section 31 of the Code all the past dues, claims and liabilities against ESIL stands extinguished and hence no outstanding liability of ESIL/ AMNS now remains. In view thereof, the liability raised by the impugned notices which are subject matter of present writ-application stands extinguished so far as ESIL is concerned. The proceedings under the Insolvency and Bankruptcy Code 2016 has acquired finality with the aforesaid judgment passed by the Hon ble Supreme Court in COMMITTEE OF CREDITORS OF ESSAR STEEL INDIA LIMITED THROUGH AUTHORISED SIGNATORY VERSUS SATISH KUMAR GUPTA OTHERS 2019 (11) TMI 731 - SUPREME COURT which clearly shows discussion in detail of the entire scheme of the provisions of the Code and vide the aforesaid quoted paragraphs it clearly shows that undecided claim of the operational creditors i.e. stand extinguished by the said scheme of rehabilitation/revival approved by the committee of the creditors which came to be approved by the Hon ble Supreme Court. Application allowed.

Summary

Issues Involved:
1. Whether the claims raised by the Original Respondents stand abated, extinguished, discharged, and settled under Section 31(1) of the Insolvency & Bankruptcy Code, 2016.
2. The impact of the Resolution Plan approved by the Supreme Court on the claims and liabilities of Essar Steel India Ltd. (ESIL).

Issue-wise Detailed Analysis:

1. Abatement and Extinguishment of Claims under Section 31(1) of the Insolvency & Bankruptcy Code, 2016:
The applicant, ArcelorMittal Nippon Steel India Ltd., sought a declaration that the claims raised by the Original Respondents stand abated, extinguished, discharged, and settled under Section 31(1) of the Insolvency & Bankruptcy Code, 2016. The Resolution Plan, approved by the Committee of Creditors (CoC) on 25.10.2018 and by the Supreme Court on 15.11.2019, stipulates that all claims and liabilities of ESIL, whether contingent or crystallized, known or unknown, filed or not filed, shall stand irrevocably and unconditionally abated, discharged, settled, and extinguished in perpetuity upon approval of the Resolution Plan. Section 31 of the Code states that the Resolution Plan is binding on all stakeholders, including the Central Government, State Government, and local authorities. The Supreme Court's judgment in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta & Ors., reported in 2019 SCC OnLine SC 1478, further reinforces this binding nature.

2. Impact of the Supreme Court-approved Resolution Plan on Claims and Liabilities:
The Resolution Plan, as approved by the Supreme Court, mandates that all claims filed before the Resolution Professional (RP) by creditors were settled or discharged by appropriate assignment of value. The plan specifies that all claims and liabilities of ESIL stand extinguished, and no outstanding liability remains. The original respondents had filed various claims, including water charges, prior to 16.12.2019, which are under challenge in the present Special Civil Application. The applicant argued that these claims stand extinguished pursuant to the successful conclusion of the corporate insolvency resolution process and the approval of the Resolution Plan. The learned AGP for the respondent State confirmed that an amount of Rs.10,65,02,083/- was paid to the respondent No.2 in terms of the Resolution Plan, and this payment was treated as full and final settlement of all outstanding claims/dues. The Supreme Court's judgment in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta and others, reported in 2020 (8) SCC 531, held that once a Resolution Plan is approved, it is binding on all stakeholders, and all claims must be submitted to and decided by the Resolution Professional. The judgment emphasized that a successful resolution applicant cannot be faced with "undecided" claims after the Resolution Plan has been accepted, as this would create uncertainty.

The Resolution Plan provides that all claims along with related proceedings shall stand irrevocably and unconditionally abated, discharged, settled, and extinguished in perpetuity upon approval. No person is entitled to initiate or continue any proceedings in relation to claims that relate to the period prior to the Plan Approval Date. The payment of Rs.10,65,02,083/- to the respondent No.2 was accepted without any demurrer or protest, and the claims stand fully extinguished.

Conclusion:
The court concluded that the present Special Civil Application arose prior to the commencement of the Corporate Insolvency Resolution Process (CIRP) and stands extinguished by virtue of the Supreme Court's judgment in 2020 (8) SCC 531. The civil application in Special Civil Application No.8741 of 2008 filed by Essar Steel India Ltd. (ESIL) was allowed to the extent that all claims against ESIL/ArcelorMittal Nippon Steel India Ltd. stand extinguished.