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Claims Outside Resolution Plan Will Be Extinct Under Insolvency And Bankruptcy Code: The Supreme Court Of India In M/s. Ruchi Soya Industries Ltd. Vs. Union Of India & Ors.

Charchit Pathak ,
  25 May 2023       Share Bookmark

Court :
The Supreme Court of India
Brief :

Citation :
Civil Appeal Nos. 447448 of 2013

Case title:

M/s. Ruchi Soya Industries Ltd. vs. Union of India & Ors.

Date of Order:

17 February, 2022    


Hon’ble Justice B.R. Gavai & Justice S. Ravindra Bhat 


Appellant: M/s. Ruchi Soya Industries Ltd.

Respondent: Union of India & Ors.


The Hon’ble Supreme Court of India has allowed appeal filed by the appellant against the order passed by the High Court of Karnataka. This case revolves around the concept of claims outside the Resolution Plan, which was declared invalid by the Apex Court of India; As per the interpretation of the below mentioned Sections of Insolvency and Bankruptcy Code, 2016.


Insolvency and Bankruptcy Code, 2016

  • Section 7 – Allows financial creditors to start insolvency proceedings against a corporate debtor for defaulting on debt payments.
  • Section 13 – Enables operational creditors to initiate insolvency proceedings against a corporate debtor for defaulting on operational debt payments.
  • Section 15 – Imposes a moratorium during insolvency proceedings, preventing legal action or recovery against the corporate debtor.
  • Section 31 – It outlines the procedure for the approval of a resolution plan submitted by a resolution applicant. Once approved by the committee of creditors and the NCLT, the resolution plan becomes binding on the corporate debtor and all stakeholders involved.
  • Section 30(6) – Establishes the order of priority for distributing proceeds from the approved resolution plan among stakeholders.
  • Section 5 (21) – Defines an operational creditor as a person or entity owed operational debt arising from the provision of goods, services, or government dues.


  • In this case the writ petition is filed for issuance of mandamus directing that the notification was not applicable to the goods consisting of 1647,414 metric tonnes of crude palmolein covered under the bill of entry for home consumption. But, the aforesaid bail was rejected by the High Court of Karnataka, Thereafter, and the aggrieved filed appeal for the same.
  • The appellant pointed out the subsequent developments in his appeal.
  • It is undeniable that the Standard Chartered Bank filed a case before the National Company Law Tribunal in Mumbai while the current proceedings were still pending (hence referred to as the "NCLT") with regard to the current appellant in accordance with the provisions of the 2016 Insolvency and Bankruptcy Code (hereinafter referred to as the "IBC").
  •  After that the procedure which was required under the different provisions of the IBC and an application under Section 30(6) of IBC seeking the approval of the Resolution Plan of the winning Resolution Applicant, a request was filed by the Resolution Professional.
  • The request made by the Resolution Professional for approval of the resolution plan submitted by the winning resolution applicant was granted.   Because of this, the victorious Resolution Applicant ended up with administration of the appellant.  


  • Whether the respondent's (revenue) claim can be taken into consideration at this time given that it was not submitted to the Resolution Professional following the publication of public notices as required by Sections 13 and 15 of the IBC or not?
  • Whether the appeals filed by the appellant challenging the judgement passed by the High Court of Karnataka is valid or not?


  • The Learned Counsel on the behalf of the appellant presented the case of Ghanashyam Mishra & Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Ors. and focused of the law laid down by the Apex Court in this case. 
  • The respondent submitted a claim for one of their claims to the Resolution Professional, but they did not submit a claim for the demand that is the focus of the current proceedings.
  • In accordance with the Supreme Court's interpretation of Section 31 of the Insolvency and Bankruptcy Code (IBC), the respondents are not permitted to assert any claims for sums that are not included in the Resolution Plan.
  • The Learned counsel on the behalf of the respondent mentioned that, there is uncertainty regarding whether the respondent's claim qualifies under the criteria of operational debt as stated in Section 5(21) of the IBC because no notification was given to the Authority in Mangalore.
  • There is a chance that the respondent's office did not file a claim relating the current proceedings as a result of the uncertainty. 


  • The Supreme Court's ruling in the matter of Ghanashyam Mishra & Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Ltd. & Ors. (2021) 9 SCC 657 governs the current appeals. The resolution plan's claims must remain frozen and be binding on the debtor company and other stakeholders after they have been formally authorized by the adjudicating body, according the aforementioned judgement, to which the court makes reference. Any claims that are not covered under the settlement plan shall be void.
  • In this instance, the respondent failed to file a claim regarding the disputed demand after Sections 13 and 15 of the IBC's public notices were made. As a result, all claims were put on hold until the Resolution Plan was approved, and any claims that were not covered by the plan did not survive.
  • The aforementioned justification leads the court to the conclusion that the respondent's claim, which is not covered by the Resolution Plan, does not hold up, and the appeals are therefore granted. The appellant's deposit amount must be returned, together with any interest that has accumulated.


In this matter, the appellant is appealing the dismissal of writ petitions that were submitted by him to the High Court of Karnataka. The issue centres on how some imported products were left out of a customs notification. The appellant's appeals were submitted in the middle of bankruptcy proceedings under the bankruptcy and Bankruptcy Code, 2016 (IBC), which were started by Standard Chartered Bank. The Supreme Court determined that all claims not covered by the authorised Resolution Plan are extinguished and that only claims covered by the plan are legitimate. The respondent's claim was denied because they did not submit a claim for the particular demand. The appeals were upheld, and the appellant's deposit money was ordered to be returned.

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