2026 Supreme(SC) 791

SUPREME COURT OF INDIA
MANOJ MISRA, MANMOHAN, JJ.
M/S Tata Steel Ltd. – Appellant
Versus
Varsha & Anr. – Respondents
Civil Appeal Nos. 9052-9053 of 2026 (Arising out of SLP(C) Nos. 24000-24001 of 2026) (@Diary No.36520 Of 2019)
Decided On : 17-07-2026

An approved resolution plan under the insolvency framework is binding on all stakeholders. It operates on the "clean slate" doctrine, whereby all claims not specifically provided for in the plan, including pending sub-judice claims, stand extinguished upon approval, preventing the revival of past liabilities against the successful resolution applicant.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 30 and 31 - Corporate insolvency resolution process - Approval of resolution plan - Binding nature of plan - Extinguishment of claims - Clean slate doctrine - Whether pending civil suits or arbitration proceedings initiated by operational creditors can continue after approval of resolution plan - Held, once a resolution plan is approved by the adjudicating authority, it becomes binding on all stakeholders - Claims not forming part of the plan stand extinguished - Resolution applicant is entitled to start on a clean slate, free from unforeseen or undecided liabilities - Pending legal proceedings that have not culminated in quantifiable claims by the date of approval stand abated or withdrawn. (Paras 51, 57, 61)

(B) Commercial Wisdom - Committee of Creditors - Non-justiciability - The commercial wisdom exercised by the committee in approving a resolution plan is not subject to judicial review unless it violates the provisions of the code - Courts cannot rewrite the plan or assume the role of an equity court to protect claims not incorporated therein. (Paras 22, 51)

Facts of the case:
The corporate debtor underwent an insolvency resolution process. Certain creditors had pending civil suits and arbitration proceedings regarding their dues. These claims were admitted at a notional value in the final list of creditors. Upon approval of the resolution plan, the successful resolution applicant sought the dismissal of these pending proceedings, arguing that all claims not specifically provided for in the plan stood extinguished. The lower courts permitted the proceedings to continue, leading to the present appeals.

Findings of Court:
The court held that the resolution plan, once approved, is final and binding. The "clean slate" doctrine is central to the insolvency framework, ensuring that the new management is not burdened by past, unquantified liabilities. The court found that the resolution plan did not provide for the continuation of sub-judice claims and that such claims were effectively extinguished upon the plan's approval.

Issues: The main issues were whether sub-judice claims survive the approval of a resolution plan and whether pending legal proceedings can be continued by creditors after the plan has been sanctioned.

Ratio Decidendi: The court reasoned that the legislative intent of the insolvency framework is to provide a fresh start to the corporate debtor. Allowing pending litigation to continue would create uncertainty and undermine the resolution process. Therefore, all claims not part of the approved plan are deemed extinguished, and the resolution applicant is protected from such liabilities.

Result: Appeals allowed; impugned orders set aside; pending civil and arbitration proceedings dismissed.