Approval of a resolution plan extinguishes debt exclusively qua the corporate debtor

The approval and implementation of a corporate insolvency resolution plan under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 results in the complete discharge and extinguishment of liabilities exclusively qua the corporate debtor. The statutory resolution and discharge granted to a corporate debtor to facilitate its revival on a clean slate does not, by operation of law, result in the automatic effacement or discharge of surviving claims against third parties, guarantors, or security providers. The liability of the principal borrower is discharged by virtue of statutory intervention rather than contractual performance, and the underlying debt ceases to exist only in respect of the corporate debtor itself, leaving third-party suretyship liabilities intact unless explicitly released under the plan. (UV Asset Reconstruction Company Limited Vs Electrosteel Castings Limited | 2026 INSC 14)