Section 31(1) of the IBC, as clarified by the Insolvency and Bankruptcy Code (Amendment) Act, 2019, provides that once a resolution plan is approved by the Adjudicating Authority, it is binding on all stakeholders, including creditors, employees, government authorities, and local bodies. The intent is to ensure that the SRA takes over the corporate debtor free from past baggage, thereby avoiding a multiplicity of proceedings over unresolved claims.
Importantly, the 2019 amendment has been held to be declaratory in nature, and thus it applies retrospectively from the inception of the IBC. This position was authoritatively affirmed by the Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. &…