All Claims Which Are Not Part Of Resolution Plan Shall Stand Extinguished, No Person Entitled To Initiate Any Proceedings Over Such Claims: Bombay HC

The Bombay High Court bench of Justice Sharmila U. Deshmukh dismissed an Interim Application filed by the Appellant seeking the release of the bank guarantees, stating that all claims which are not part of the Resolution Plan shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect of any such claim. The Appellant draws support from the decision of the Apex Court in Ghanshyam Mishra & Sons Ltd. v. Edelweiss Asset Reconstruction Co., Ltd and the decision in Committee of Creditors of Essar Steel India Ltd v. Satish Kumar Gupta stating that once the Resolution Plan is approved under Section 31 of IBC, all claims as provided in resolution plan stand frozen and all claims not forming part of the Resolution Plan stand extinguished. The Appellant in response to the monies deposited in Court becoming custodia legis based on the judgment of this Court in Rajendra Prasad Bansal v. Reliance Communication Ltd has been considered in the decision of Siti Networks Ltd. v. Rajiv Suri holding that judgment in the case of Rajendra Prasad Bansal v. Reliance Communication Ltd apply only to the parties in that case and that the statement of law contained therein has been overtaken by the Supreme Court's order in the matter of Siti Networks Ltd. v. Rajiv Suri permitting the withdrawal of bank guarantees. The court for the first issue relied on the judgement of the Hon'ble Apex Court in the case of Ghanshyam Mishra & Sons Ltd. v. Edelweiss Asset Reconstruction Co., where whether after approval of resolution plan by the Adjudicating Authority, a creditor including the Central Government, State Government or any local authority is entitled to initiate any proceedings for recovery of any of the dues from the corporate debtor which are not part of resolution plan approved by the Adjudicating Authority.