A civil appeal was made in case of Ghanashyam Mishra And Sons Private Limited Vs.Edelweiss Asset Reconstruction Company Limited where the court delt with 3 major issues.
Whether any creditor including the central government, state government or any local authority is bound by the resolution plan once it is approved by any adjudicating authority under section 31 (1) of I&B code. Whether amendment to section 31 by section 7 of the act 26 of 2019 is clarificatory declaratory or substantive in nature. Whether after approval of resolution plan by adjudicating authority creditors can institute proceedings against corporate debtor for dues which are not a part of resolution plan approved by AA?
The court while observing the case stated that Section 31 (1) of IBC code 2016 make the resolution plan binding on all stakeholder since the inception of IBC.
When regulation 37 is read with section 31 a creditor is bound by RP even if not decided in his favour.
Regulation 37 of IBBI Regulations, 2016 mandates Resolution Applicant to provide RP with a reduced amount payable to creditor.
The court stated beyond any doubts that the dominant purpose of IBC is that the corporate debtor should start with fresh slate on the basis of the resolution plan.
Further the court in the matter has held that amendment of 2019 to section 31 of IBC code is declaratory in nature and therefore will have retrospective operation. When the resolution plan is approved by NCLT, the claim which are not part of resolution plan shall stand extinguished and proceeding relating there to shall stand terminated.
Since the subject matter of the petition are the proceedings which relate to the claim of the respondents prior to the approval of plan, same can not be continued.
With this the court held and declared that respondents are not entitled to recover any claims or debt owned to them from corporate debtor accruing prior to the transfer data.