Madras HC Quashes ₹34.5 Lakh MSME Award: CIRP Moratorium and Approved Resolution Plan Extinguishes Creditor’s Claim [Read Order]

In a recent ruling, the Madras High Court has set aside the enforcement of a ₹34.5 lakh MSME holding that the claim stood extinguished once the company entered the Corporate Insolvency Resolution Process (CIRP).

The dispute arose when Conveyor Engineering obtained an award of ₹34.5 lakh from the MSME Council and sought to enforce it through execution proceedings.

The company challenged the enforcement, arguing that the award was passed during the moratorium period under Section 14 of the Insolvency and Bankruptcy Code (IBC), and that the resolution plan approved by the National Company Law Tribunal (NCLT) in July 2023 extinguished all claims not included in the plan.

The appellant, Capricon Food Products Indian Limited, relied on Supreme Court precedents in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss ARC and Electrosteel Ltd. v. Ispat Carrier Pvt. Ltd., which held that once a resolution plan is approved under Section 31 of the IBC, all other claims stand extinguished.

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The respondent submitted that the petitioner has suppressed the valid award passed in favour of the respondent in the insolvency proceedings, and therefore, the petitioner cannot take advantage of his own wrong and contend that the claim has not been brought to the notice of the resolution professional, and it does not form part of the resolution plan.

After hearing both sides, the high court observed that the MSME award was passed on 25 February 2022, when the moratorium was already in force, and because of thatthe award itself should not have been passed in the first place.

The Court noted that the creditor had knowledge of the insolvency process but failed to submit its claim to the resolution professional.

Referring to the Supreme Court’s rulings, the bench Justice P.B. Balaji held that even lifting of the moratorium would not revive the claim of the creditor and that claims not forming part of the resolution plan are legally extinguished.

Accordingly, the High Court allowed Capricon’s revision petition, set aside the order of the executing court dated 31 October 2025, and closed the connected miscellaneous petition, with no order as to costs.

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