Arising from the Bhushan Steel Limited CIRP, the Supreme Court has held that an operational creditor whose claim was admitted at a nominal quantified value of Re. 1 in an approved resolution plan cannot later revive the full, uncrystallised value of that claim through a pending civil suit or arbitration.
Reaffirming the 'clean slate' doctrine, the Court held that only claims crystallised and quantified as of the effective date of the resolution plan are payable on a pro-rata basis, and that claims not so crystallised stand abated, extinguished, waived or withdrawn once the plan is approved — dismissing both a pending civil recovery suit and connected arbitration references brought to recover the higher, uncrystallised amount. The Court separately urged a legislative review of protections for MSME and other small operational creditors.
The ruling gives resolution applicants further confirmation that the clean-slate principle shields them from stale, unquantified operational-creditor claims resurfacing years after a resolution plan takes effect — but it puts operational creditors, and MSMEs especially, on clear notice that they must ensure their claims are properly crystallised and quantified before the plan is approved, not after.