The NCLAT held that after approval of a resolution plan by the ...

After resolution plan approval, no new claims allowed; binding on all stakeholders. Adjudicating Authority can't modify unilaterally.

December 23, 2024

Case Laws     IBC     AT

The NCLAT held that after approval of a resolution plan by the Adjudicating Authority, it becomes binding on the corporate debtor, employees, creditors, guarantors and stakeholders. The plan cannot be modified by introducing new claims, as it would prejudice the successful resolution applicant (SRA) and create uncertainty. The Adjudicating Authority lacks power to modify an approved plan unilaterally and can only suggest modifications to the Committee of Creditors (CoC). As the respondent did not challenge the plan within the prescribed time, it attained finality. The SRA made payments per the approved plan, and no non-compliance was attributed to it. Thus, the Adjudicating Authority exceeded jurisdiction by reviving and directing payment of the respondent's gratuity claims, and the NCLAT set aside those orders.

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