Section 31 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 31 of the IBC, as amended in 2026, expressly prohibits any application being entertained after plan approval in respect of claims subsumed in the resolution plan, including applications by government departments and statutory bodies. The clean slate principle is codified with retrospective effect from 2016, and Competition Commission approval must now be obtained before the plan is filed with the Adjudicating Authority.
Why a settled principle needed a statute
The clean slate principle — that all past claims, liabilities and obligations of the corporate debtor stand extinguished on approval of a resolution plan — is what makes resolution commercially viable. A bidder prices what it is buying; it cannot price an unknown tail of historic claims.
ICAI records the position precisely: despite being implicitly recognised in several Supreme Court and NCLAT judgments, the principle was repeatedly contested by government departments including the Income Tax Department, GST authorities and other statutory bodies, who continued filing applications before the NCLT, NCLAT, High Courts and even the Supreme Court after plan approval. A principle a successful applicant has to defend in four forums is not certainty — it is a litigation budget.
What the amendment actually does
| Change | Effect |
|---|---|
| Express statutory bar | No application may be entertained after plan approval in respect of claims subsumed in the plan |
| Government and statutory bodies named | The bar applies expressly to applications by government departments and statutory bodies |
| Retrospective from 2016 | The codified principle applies from the Code's commencement, resolving a decade of uncertainty |
| CCI approval timing fixed | Competition Commission approval must be obtained before the plan is filed with the Adjudicating Authority |
The commercial consequence — it shows up in the bid
Post-approval litigation risk is priced. A bidder that expects to spend three years defending an income-tax demand from a period before it acquired the company discounts its offer accordingly, and that discount is borne by the creditors.
ICAI's framing: the change materially reduces the hidden risk premium embedded in bid values, so investors — particularly foreign private equity funds, distressed asset investors and institutional creditors — can now offer better plan values with greater certainty, which in turn improves overall recovery for creditors.
That is the mechanism worth understanding: the clean slate is not a benefit given to acquirers at the expense of creditors. It is a benefit given to acquirers that returns to creditors through higher bids.
The retrospective element
Codification with retrospective effect from 2016 is what resolves the existing stock of disputes. Plans approved years ago, still being litigated by a statutory authority, fall within the statutory bar. Practitioners with such matters pending should re-examine them against the amended section 31 rather than continuing to argue the principle from case law.
The CCI timing change
Separately, and easily missed among the clean-slate provisions: Competition Commission approval must now be obtained before the plan is filed with the Adjudicating Authority. ICAI describes this as resolving a longstanding ambiguity.
The practical effect is on the transaction timetable. CCI clearance is not a step that can run in parallel with tribunal approval or be treated as a condition subsequent — it has to be complete before filing. For a plan involving a strategic acquirer with an overlapping business, that clearance timeline now sits on the critical path of the CIRP itself.
What the clean slate does not cover
The bar attaches to claims subsumed in the resolution plan. It is not a general immunity. Claims that are not subsumed — because they arise after the approval, or are outside the scope of the plan — are not extinguished by section 31, and the analysis of what a plan subsumes remains a drafting question of the first importance.
Compliance checklist
- Draft the plan so that the claims intended to be extinguished are clearly subsumed in it — the bar follows the plan's scope.
- Secure CCI approval before filing, and build that lead time into the process timetable.
- For plans already approved and still under challenge by a statutory authority, re-argue on the amended section 31 with retrospective effect.
- Advise bidders that the risk premium for historic statutory claims should now come out of the bid.
- Confirm that government and statutory body claims were before the CoC and are dealt with in the plan.
- Do not treat the clean slate as covering post-approval liabilities.
Common mistakes
- Treating CCI approval as a condition subsequent to plan filing.
- Assuming the clean slate covers claims outside the plan's scope.
- Continuing to litigate the principle from case law where the statutory bar now applies.
- Pricing the historic statutory claim risk into a bid as though nothing has changed.
- Leaving statutory dues out of the plan and expecting section 31 to extinguish them anyway.