Case Note & Summary
The case involves a civil revision petition filed by M/s. Capricon Food Products Indian Limited (the revision petitioner/judgment debtor) against M/s. Conveyor Engineering Systems (the respondent/decree holder). The respondent had obtained an award from the MSME Council on 25-02-2022 for Rs. 34,53,303/- and filed an execution petition (E.P. No. 92 of 2024) before the Principal District Judge, Krishnagiri. The revision petitioner challenged the order of the executing court dated 31.10.2025 allowing the execution petition. The key facts are that the revision petitioner was under Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC), with proceedings before NCLT, Chennai initiated in November 2020 (IBA/386/2020). A resolution plan was approved by NCLT on 12-07-2023. The respondent did not submit its claim during the CIRP process. The revision petitioner argued that under Section 31 of IBC, once a resolution plan is approved, all claims not included in the plan stand extinguished, and the execution petition is not maintainable. The respondent contended that the petitioner suppressed the award and cannot take advantage of its own wrong, and pointed to email exchanges regarding payment. The court, after hearing both sides, held that the execution petition is not maintainable because the claim was not submitted during CIRP and the approved resolution plan extinguishes all pre-existing claims. The court set aside the order of the executing court and dismissed the execution petition. The court relied on the Supreme Court judgments in Electrosteel Limited vs. Ispat Carrier Private Limited and Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited.
Headnote
A) Insolvency and Bankruptcy Code - Resolution Plan - Extinguishment of Claims - Section 31 IBC, 2016 - The court considered whether an execution petition for an MSME award can proceed after approval of a resolution plan under IBC. The revision petitioner (judgment debtor) was under CIRP and a resolution plan was approved by NCLT on 12-07-2023. The respondent (decree holder) had not submitted its claim during CIRP. The court held that once a resolution plan is approved, all claims not included in the plan stand extinguished, and the execution petition is not maintainable. The executing court's order allowing execution was set aside. (Paras 3-10) B) Insolvency and Bankruptcy Code - Moratorium - Section 14 IBC, 2016 - The court noted that a moratorium under Section 14 IBC was in force during CIRP, which prohibits institution or continuation of proceedings against the corporate debtor. The MSME award was obtained during the moratorium period, and the execution petition was filed after the resolution plan was approved. The court held that the moratorium and subsequent approval of the resolution plan render the claim inexecutable. (Paras 8-9) C) Insolvency and Bankruptcy Code - Binding Nature of Resolution Plan - Section 31 IBC, 2016 - The court relied on the Supreme Court decisions in Electrosteel Limited vs. Ispat Carrier Private Limited and Ghanashyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstruction Company Limited to hold that a resolution plan approved by NCLT is binding on all stakeholders, including those who did not submit claims. The claim of the respondent, not having been submitted during CIRP, stands extinguished. (Paras 5, 10)
Issue of Consideration
Whether an execution petition for recovery of an MSME award is maintainable when the judgment debtor is under CIRP and a resolution plan has been approved by NCLT, and whether the claim stands extinguished under Section 31 of IBC if not submitted during CIRP.
Final Decision
The court allowed the civil revision petition, set aside the order dated 31.10.2025 in E.P.No.92 of 2024 passed by the Principal District Judge, Krishnagiri, and dismissed the execution petition.
Law Points
- Effect of approved resolution plan under IBC on pre-existing claims
- Extinguishment of claims not submitted during CIRP
- Maintainability of execution proceedings post-resolution plan approval
- Section 31 IBC binding nature on all stakeholders
