Union Of India & Anr Vs Ramswarup Lohh Udyog & Ors (Calcutta High Court)
After Approval of Resolution Plan Corporate Entity Starts Fresh & All Claim gets Extinguished
In the case of Union Of India & Anr vs. Ramswarup Lohh Udyog & Ors before the Calcutta High Court, the central issue revolved around the aftermath of a corporate insolvency resolution process (CIRP) and the subsequent approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC).
Defendant No. 1 had merged with Defendant No. 5 in 2008 as per a previous order of the Calcutta High Court. After this merger, Defendant No. 5 ceased operations for over fourteen years. Subsequently, the company faced insolvency proceedings under the IBC, culminating in the approval of a resolution plan on March 16, 2019, by the Committee of Creditors (CoC). The National Company Law Tribunal (NCLT), Kolkata Branch, affirmed this plan through an order dated September 4, 2019. By an order dated April 6, 2022, the NCLT directed the parties to implement the resolution plan within thirty days.
In the present proceedings, GA 2 of 2024, the authorized representative of Defendant No. 5 contended that post-insolvency and approval of the resolution plan, the corporate entity starts afresh, with all previous claims extinguished. This position was supported by legal precedent, particularly citing the case of Ghanashyam Mishra & Sons (P.) Ltd. Vs. Edelweiss Asset Reconstruction Co. Ltd. [(2021) 9 SCC 657], which established that companies undergoing revival through a resolution plan under the IBC begin anew without liabilities from the past.
