New Delhi: The Supreme Court on Friday held that pending civil suits and arbitration proceedings relating to pre-insolvency, operational claims cannot continue once a resolution plan has been approved, unless such claims had crystallised and formed part of the approved plan.
In a significant ruling strengthening the "clean slate" doctrine under the Insolvency and Bankruptcy Code (IBC), a bench of Justices Manoj Misra and Manmohan allowed appeals filed by Tata Steel Ltd, the successful resolution applicant for Bhushan Steel Ltd, and set aside judgments of the Bombay High Court that had permitted a recovery suit by an operational creditor to proceed despite approval of the resolution plan.
