Pre-CIRP statutory dues not filed through a claim are extinguished upon resolution plan approval under the clean slate principle.

The Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor (CD) commenced on 02.12.2020

A Resolution Plan submitted by the Successful Resolution Applicant (SRA) was approved by the Adjudicating Authority (NCLT) and subsequently affirmed by the NCLAT.

Although the Appellant (Surat Municipal Corporation) did not file a formal claim, the Plan allocated ₹27,368/- for its property tax dues to keep the CD as a going concern.

Despite payment of this amount, the Appellant refused to remove the seal on the CD's premises, demanding pre-CIRP dues of ₹39,96,685/-.

To operationalize the unit, the SRA paid the demanded sum "under protest" and subsequently moved the NCLT for a refund.

The NCLT allowed the refund on 25.04.2025, leading to this appeal.

Whether the SRA is liable to pay pre-CIRP statutory dues (property tax) that were not part of the admitted claims in the approved Resolution Plan.

Whether a statutory authority can withhold services or maintain a distraint (sealing of premises) for recovery of extinguished pre-CIRP dues after the approval of a Resolution Plan.

The court primarily applied the "Clean Slate" doctrine as settled by the Hon’ble Supreme Court in Ghanshyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Limited, which mandates that once a Resolution Plan is approved, all dues not included in the plan stand extinguished, and the SRA cannot be burdened with "undecided" claims.

It further distinguished the Madras High Court decision in Empee Distilleries Limited v. Superintending Engineer, noting that the "Clean Slate" principle remains the prevailing law unless specific statutory first charges or pending litigations create an exception not present here.

The Tribunal rejected the Appellant's reliance on Empee Distilleries Limited, noting that in that case, litigation regarding dues was pending during CIRP and there were lapses in information collection by the RP.

In the present case, the Appellant failed to file a claim despite the CIRP being public knowledge.

The Tribunal observed that the approved Resolution Plan specifically provided for the Appellant’s dues (₹27,368/-), and once this plan attained finality, any additional pre-CIRP demand by the Municipal Corporation was legally unsustainable.

The court reasoned that allowing a statutory body to force payment of extinguished dues by keeping premises sealed would defeat the object of the IBC, which is to allow the SRA to start with a clean slate.

The court held that pre-CIRP dues not filed as a claim or not provided for in the Resolution Plan are extinguished upon the Plan's approval per the Ghanshyam Mishra precedent.

The delay in refiling the appeal was condoned.