EF LLP was under Corporate Insolvency Resolution Process (CIRP) and NCLT has approved the Resolution Plan submitted by XY Private Limited, who is totally unrelated to the EF LLP or its Partners. Prior to initiating of CI

As per section 32A (1) of the Insolvency & Bankruptcy Code the liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved by the Adjudicating Authority under section 31. According to section 32A (2) of the Insolvency & Bankruptcy Code no action shall be taken against the property of the corporate debtor in relation to an offence committed prior to the commencement of the corporate insolvency resolution process of the corporate debtor, where such property is covered under a resolution plan approved by the Adjudicating Authority, if the resolution plan results in the change in the management or control of the corporate debtor to a person who was not- (a) a promoter or in the management or control of the corporate debtor or a related party of such a person; or (b) a person with regard to whom the relevant investigating authority has, on the basis of material in its possession, reason to believe that he had abetted or conspired for the commission of the offence, and has submitted or filed a report or a complaint to the relevant statutory authority or Court It is further to be noted that if a prosecution had been instituted during the corporate insolvency resolution process against such corporate debtor, it shall stand discharged from the date of approval of the resolution plan subject to requirements of this sub-section having fulfilled. Apex Court in the case of Ghanashyam Mishra and Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited stated that, on the date of approval of the Resolution Plan by the Adjudicating Authority, all such claims which are not a part of the Resolution Plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not a part of the Resolution Plan. The legislative intent behind this is to freeze all the claims so that the Resolution Applicant starts on a clean slate and is not flung with any surprise claims. Accordingly, Q Ltd cannot proceed against EF LLP whose management is totally changed due to approval of Resolution plan of XY Private Limited, approved by the Adjudicating Authority. Hence, Q Ltd, cannot proceed against EF LLP or its present Partners for the breach done prior to CIRP.