NCLAT: BIFR Scheme Claims Extinguished Once Resolution Plan Under IBC Is Approve
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench, comprising Justice Mohammad Faiz Alam Khan (Judicial Member) and Naresh Salecha (Technical Member), has held that an unresolved claim under a scheme sanctioned by the erstwhile Board for Industrial and Financial Reconstruction (BIFR) constitutes a “claim” within the meaning of Section 3(6) of the Insolvency and Bankruptcy Code (IBC). However, once a resolution plan is approved under the IBC, such claims cannot be pursued independently, as the resolution plan supersedes the BIFR scheme.
The appeal was filed under Section 60(5) of the IBC by Trinity Auto Components Ltd. against an order of the NCLT, Mumbai Bench, which had partly allowed its interlocutory application. The appellant argued that despite the repeal of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) with effect from 01.12.2016, the BIFR scheme sanctioned on 07.11.2014, and later modified by the Delhi High Court, continued to remain binding by virtue of Section 5(1)(d) of the SICA Repeal Act, 2003. It was submitted that the bank had charged excess interest contrary to the 12% rate stipulated in the sanctioned scheme, and the benefit of such concessions should still be available.
The respondent, Axis Bank, countered that the appellant had failed to implement the BIFR scheme, compelling it to file an application under Section 10 of the IBC, which was admitted on 25.05.2017. Following this, a resolution plan was approved by the CoC and the adjudicating authority on 22.01.2018, under which the bank extended substantial financial assistance. The respondent argued that the resolution plan eclipsed the BIFR scheme, and therefore, no further benefits could be claimed under it.
Tribunal’s Observations
The NCLAT observed that while the appellant sought to enforce selective benefits from the BIFR scheme, there was no provision in the approved resolution plan incorporating the terms of the BIFR scheme except with respect to contingent statutory liabilities. The Bench emphasized that “the resolution plan approved by this Tribunal surpasses and supersedes the BIFR scheme,” and parties could only claim rights arising under the resolution plan.
The Tribunal clarified that the differential interest claimed by the bank (₹118.46 lakhs) constituted a financial debt under Section 5(8) of the IBC, and Axis Bank, holding 96% voting share in the CoC, had ample opportunity to include such claims during the CIRP. Since the resolution plan was approved without reference to this amount, any attempt to revive the claim afterward would defeat the clean slate principle and the objectives of the IBC.
Relying on precedents such as Ghanashyam Mishra & Sons v. Edelweiss ARC (2021), CoC of Essar Steel v. Satish Kumar Gupta (2020), and Vaibhav Goyal v. DCIT (2025), the Tribunal reiterated that once a resolution plan is approved, all prior claims not forming part of the plan stand extinguished. The Code provides a complete framework for dealing with pre-existing liabilities, and Section 238 ensures that its provisions override inconsistent laws, including SICA.
Holding that any unresolved claim from a BIFR scheme must be treated as a claim within the IBC and cannot survive independently after approval of a resolution plan, the NCLAT dismissed the appeal. It concluded that the appellant could not seek concessions under the BIFR scheme once the resolution plan, binding on all stakeholders, had come into effect.
Appearance
For Appellant : Mr. Sanat Jariwala (CA), Ms. Purti Gupta, Ms. Heena George & Ms. Sunidhi Shah, Advocates.
For Respondent : Mr. Ranjeev Carvalho, Ms. Suchitra Valjee, Ms. Rajni Shah & Mr. Vansh Ved, for Axis Bank.
Cause Title: Trinity Auto Components Ltd. V. Axis Bank Ltd.
Case No: Company Appeal (AT) (Insolvency) No. 1757 of 2024
Coram: Justice Mohammad Faiz Alam Khan, Mr. Naresh Salecha (Technical Member)
