Arbitral Award renders unenforceable if claims are not part of a NCLT-approved Resolution Plan.

The Petitioner (MBL) was awarded a contract by NHAI for bridge construction in Bihar

On June 13, 2012, the Petitioner issued a work order to the Respondent for piling work valued at Rs. 4.03 Crores

Disputes arose regarding mobilization delays and alleged abandonment of work, leading to the appointment of a Sole Arbitrator in May 2014

During the pendency of arbitration, Corporate Insolvency Resolution Process (CIRP) was initiated against the Petitioner on March 30, 2017, by the NCLT, Kolkata

A Resolution Plan was subsequently approved by the NCLT on April 18, 2018, and upheld by the NCLAT on August 16, 2019

Despite these developments, the Arbitrator proceeded to pass an award on July 26, 2021, reasoning that the Respondent’s claims had not "crystallized" into a debt prior to the IBC proceedings and were thus not extinguished

The Court applied Section 31(1) of the Insolvency and Bankruptcy Code, 2016, which mandates that an approved Resolution Plan is binding on the corporate debtor, its employees, members, and creditors

The Court relied on the principle established in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd. (2021), which held that once a resolution plan is approved, all claims not part of the plan stand extinguished

It further applied Electrosteel Steel Limited v. Ispat Carrier Private Limited (2025), which clarified that a successful resolution applicant cannot be faced with "undecided claims" (the "hydra head" popping up) and that adjudicatory forums lose jurisdiction over extinguished claims

The Court reasoned that the Arbitrator erred in law by holding that the IBC did not apply to "uncrystallized" claims

Once the NCLT initiated CIRP on March 30, 2017, and issued a public announcement, the Respondent was statutory obligated to lodge its claims with the Resolution Professional

Since the Resolution Plan attained finality upon approval by the NCLT and NCLAT, any claim not included therein was extinguished by operation of law

The Court concluded that the IBC overrides inconsistent proceedings and that the Arbitrator’s continuation of the proceedings—and the subsequent issuance of an award for a net sum of Rs. 27,77,438—contravened the "clean slate" principle of the insolvency framework

The Court held that the Arbitrator lacked jurisdiction to pass the impugned Award as the underlying claims stood extinguished by the approved Resolution Plan

Consequently, the Court set aside the Arbitral Award dated July 26, 2021, and disposed of the petition in favor of the Petitioner