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2019 Amendment to Sec. 31 of the IBC is clarificatory in nature and therefore has retrospective effect : SC

April 14, 2021[2021] 126 taxmann.com 132 (SC)
13 Views

IBC : 2019 amendment to section 31 is clarificatory and declaratory in nature and therefore when resolution plan is approved by NCLT, claims, which are not part of resolution plan, shall stand extinguished and proceedings related thereto shall stand terminated

Facts

• The High Court in impugned order held that since the resolution plan of the petitioner Company was approved by the NCLT vide its order dated 17-4-2018 which is much prior to the 2019 amendment, the said amendment in Section 31(1) of the IB Code, 2016 shall not apply to the resolution plan of the petitioner Company.

Held

(i)   That once a resolution plan is duly approved by the Adjudicating Authority under sub­-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan;
(ii)   2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has come into effect;
(iii)   Consequently 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.

• [Ultra Tech Nathdwara Cement Ltd. v. State of UP [2021] 125 taxmann.com 420 (All.), Electrosteel Steels Ltd. v. State of Jharkhand [2021] 125 taxmann.com 421 (Jharkhand.), Edelweiss Asset Reconstruction Company Ltd. v. Orissa Manganese & Minerals Ltd. [2019] 106 taxmann.com 18 (NCL-AT)/154 SCL 18 (NCL-AT) set aside.]

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