No Belated Statutory Claims After Resolution Plan Is Approved—Supreme Court Quashes Income Tax Demand Raised Post CIRP Approval

Once a Resolution Plan Is Approved, All Unclaimed Dues Stand Extinguished— In a crucial verdict Supreme Court of India held that tax demands not submitted during the Corporate Insolvency Resolution Process (CIRP) cannot be enforced after the approval of a resolution plan. The Court quashed the Income Tax Department’s post-approval demand notices for Assessment Years 2012–13 and 2013–14, ruling them as invalid and unenforceable, thereby reaffirming the “clean slate doctrine” under Section 31 of the Insolvency and Bankruptcy Code, 2016 (IBC).
“All Claims Not Part of Resolution Plan Stand Extinguished”—Supreme Court Applies Ghanashyam Mishra Doctrine
The appellants, joint resolution applicants, had submitted a Resolution Plan for M/s. Tehri Iron and Steel Casting Ltd., which was approved by the NCLT on May 21, 2019. While the plan mentioned Income Tax dues of ₹16.85 crore for AY 2014–15 under contingent liabilities, no mention or claim was made regarding AYs 2012–13 and 2013–14.
Despite this, the Income Tax Department issued fresh demand notices in December 2019—after the plan's approval. The Monitoring Professional contested these demands, but the NCLT dismissed the application as “frivolous”, a finding which the NCLAT later upheld.
The Supreme Court, however, declared: “All the dues including statutory dues owed to the Central Government, if not part of the Resolution Plan, shall stand extinguished. No proceedings could be continued in respect of such dues.”
Referring to the three-judge ruling in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss ARC (2021), the Court held that Section 31(1) of the IBC, especially after its 2019 amendment, is binding on all creditors including the Government, and extinguishes any claims not submitted during CIRP.

“Once Plan Is Approved, Fresh Claims Cannot Be Raised—Resolution Applicant Must Not Be Haunted by Undecided Claims”
The Supreme Court strongly reinforced the objective of finality in insolvency proceedings. Relying on Essar Steel India Ltd. v. Satish Kumar Gupta, the Court reiterated that no undecided or belated claims can survive beyond the approval of a resolution plan.
Quoting the Essar Steel judgment, the Court observed: “A successful resolution applicant cannot suddenly be faced with ‘undecided’ claims… this would amount to a hydra head popping up which would throw into uncertainty the amounts payable.”
The Court noted that accepting such belated demands would cripple the implementation of the Resolution Plan, preventing the applicant from reviving the corporate debtor on a clean slate, thereby defeating the very essence of the IBC framework.
“NCLAT Brushed Aside a Binding Precedent—Such Approach Cannot Be Approved”
The Supreme Court criticized the NCLAT’s refusal to apply the Ghanashyam Mishra precedent, holding such reasoning as perverse and legally untenable. The NCLAT had reasoned that since the case law was not cited before the NCLT, it could not be relied upon in appeal.
Rejecting this, the Court said: “The NCLAT ignored the binding precedent and the legal effect of the approval of the Resolution Plan. The reason given by the NCLAT… is perverse.”
Further, the Court disapproved the NCLT’s dismissal of the Monitoring Professional’s application without recording reasons, and imposition of ₹1 lakh costs on the applicants, terming such conduct as unsustainable and unjustified.

Final Holding: Post-Approval Tax Demands Are Invalid, Cannot Be Enforced
The Supreme Court conclusively held that: “The demands raised by the Income Tax Department against the corporate debtor for the years 2012–13 and 2013–14 are invalid and cannot be enforced.”
“If such demands are taken into consideration, the resolution applicants will not be in a position to recommence the business of the corporate debtor on a clean slate.”
Accordingly, the orders of the NCLT and NCLAT were quashed, and the appeal was allowed.
This ruling is a resounding reaffirmation of the IBC’s core objective—to provide certainty and finality to insolvency resolution and to protect successful resolution applicants from post-resolution liabilities. The judgment strengthens the jurisprudence that statutory authorities must file claims during the CIRP or risk having them extinguished permanently.

Date of Decision: March 20, 2025