The Insolvency and Bankruptcy Code, 2016 (“IBC”) has reshaped insolvency framework in India by prioritising time-bound resolution and certainty for stakeholders. At the heart of this framework lies the clean slate doctrine, which ensures that once a resolution plan is approved, the successful resolution applicant (“SRA”) takes over the corporate debtor free from historical liabilities.
The Supreme Court, in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020 8 SCC 531) and Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021 9 SCC 657), firmly established that claims not filed or adjudicated during the Corporate Insolvency Resolution Process (“CIRP”) cannot survive beyond approval of the plan.
In a recent case of Electrosteel Steel Ltd. vs. Ispat Carrier Pvt. Ltd (2025 SCC Online SC 829), the Supreme Court has further reinforced and refined this principle in the context of arbitral proceedings and pending claims. The Hon’ble Court rejected the argument that ongoing disputes merely remain in suspension during the moratorium and revive once it is lifted. Instead, it made clear that unless expressly included in the approved resolution plan, such proceedings stand extinguished. By doing so, the Court has reiterated the centrality of finality and certainty in insolvency resolution, while also underscoring the binding force of Section 31 of the IBC.
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. & Ors., which held that no claims—statutory or otherwise—can survive once a resolution plan is approved, unless specifically provided for therein.
The jurisprudence on the clean slate doctrine highlights the importance of finality in insolvency proceedings. By extinguishing claims not included in the approved resolution plan, the IBC prevents “hydra-headed” litigation—multiple proceedings arising from the same set of facts—that could otherwise derail the CIRP.
This ensures that SRAs can acquire and operate the corporate debtor without the constant threat of pending disputes. At the same time, the doctrine provides certainty to all stakeholders, enhancing investor confidence and promoting a stable environment for insolvency resolution.
The Supreme Court in Electrosteel Steel Ltd. directly addressed the fate of pending arbitral proceedings. It clarified that claims under arbitration, even if pending at the time of CIRP initiation, cannot be resurrected post-approval of the resolution plan unless expressly provided for therein. The Hon’ble Court went further to quash ongoing execution proceedings relating to an arbitral award, reiterating that decreed or crystallised claims enjoy no special status if excluded from the plan.
This decision confirms that the clean slate doctrine applies uniformly to both adjudicated and sub-judice claims, thereby reinforcing the principle of finality enshrined under Section 31(1).
Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021 9 SCC 657)
In Ghanashyam Mishra, the Supreme Court clarified the scope and operation of the clean slate doctrine under the IBC. The Court held that once a resolution plan is approved by the Adjudicating Authority, all claims not included in the plan are extinguished. Importantly, it affirmed that no stakeholder—including government authorities, operational creditors, or other claimants—can continue or initiate proceedings in respect of claims excluded from the approved resolution plan.
This ruling cemented the principle that finality and certainty are paramount in insolvency resolution, ensuring that SRAs take over corporate debtors free from legacy liabilities.
In Ebix Singapore Pvt. Ltd., the Supreme Court emphasized that the binding effect of an approved resolution plan extends beyond direct participants in the CIRP. The Court held that even stakeholders who were not parties to the CIRP are bound by the consequences of the approved plan.
This ruling reinforced the principle of finality under the clean slate doctrine, ensuring that resolution applicants can operate corporate debtors free from legacy claims, and highlighting the all-encompassing nature of Section 31(1) of the IBC.
Vaibhav Goel and Anr. v. DCIT and Anr. (2025 SCC Online SC 592)
In Vaibhav Goel, the Supreme Court reaffirmed that no belated or post-facto claims can be introduced once a resolution plan has been approved by the National Company Law Tribunal (NCLT). The Court held that allowing claims after approval would undermine the finality of the resolution plan and defeat the purpose of the clean slate doctrine.
This ruling reinforces the principle that Section 31(1) of the IBC ensures certainty and conclusiveness, providing resolution applicants the ability to operate corporate debtors free from legacy liabilities or unexpected claims.
Electrosteel Steel Ltd. v. Ispat Carrier Pvt. Ltd. (2025 SCC Online SC 829)
In Electrosteel Steel Ltd., the Supreme Court closely examined the IBC provisions alongside prior judicial pronouncements on the clean slate doctrine. The Court held that once a resolution plan is approved by the NCLT under Section 31 of the IBC, all claims not incorporated within the plan stand extinguished.
The Hon’ble Court further observed that the Facilitation Council lacked jurisdiction to arbitrate Ispat Carrier’s claim post-approval. It emphasized that permitting creditors to pursue individual claims after the resolution plan’s approval would directly undermine the objectives of the IBC, which aims to provide a genuine “fresh start” for the corporate debtor.
This ruling reinforces the binding effect of Section 31 and underscores the importance of finality and certainty in insolvency resolution.
The clean slate doctrine remains the cornerstone of the IBC, ensuring that resolution applicants acquire corporate debtors free from prior liabilities. The Electrosteel Steel Ltd. vs. Ispat Carrier Pvt. Ltd. judgment has reaffirmed its rigor, particularly regarding pending arbitral proceedings and crystallised claims.
By extinguishing unfiled or excluded claims, the doctrine prevents hydra-headed litigation and promotes investor confidence, operational certainty, and economic stability. While refinements may be needed to protect smaller stakeholders, the judicial position is clear: once a resolution plan is approved, the slate is wiped clean—and the corporate debtor begins anew.
About the authors: Kapil Madan is the Managing Partner of KMA Attorneys. Deepanshu Khanna is an Associate at Firm.
Disclaimer: The opinions expressed in this article are those of the author. The opinions presented do not necessarily reflect the views of Bar & Bench.
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