Commercial wisdom of creditors governs resolution plan rejection; liquidation follows when no approved plan survives and bank guarantee restraint is declined.

Committee of Creditors' rejection of a revised resolution plan based on alleged ineligibility, EMD non-compliance and commercial unviability was treated as a matter of commercial wisdom, which the Adjudicating Authority cannot ordinarily re-examine under the Insolvency and Bankruptcy Code, 2016. Where no approved resolution plan survived within the CIRP period, liquidation was to follow, and a request to restrain invocation of bank guarantees was declined because such restraint would prejudice stakeholder interests. The corporate debtor was therefore taken into liquidation, the resolution professional was appointed as liquidator, and the creditors' commercial decision was left undisturbed.

---

---

Issues: (i) Whether the Adjudicating Authority could interfere with the Committee of Creditors' rejection of the revised resolution plan on grounds of eligibility, EMD compliance and commercial viability. (ii) Whether liquidation of the corporate debtor was warranted and whether the prayer to restrain invocation of bank guarantees could be granted.

Issue (i): Whether the Adjudicating Authority could interfere with the Committee of Creditors' rejection of the revised resolution plan on grounds of eligibility, EMD compliance and commercial viability.

Analysis: The resolution plan was rejected by the Committee of Creditors after considering the alleged deviation in consortium composition, the alleged non-submission of earnest money deposit with the original plan, the alleged failure to satisfy the eligibility criteria and the commercial unacceptability of the proposal. The order records that the commercial wisdom of the Committee of Creditors is not open to judicial review and that the Adjudicating Authority cannot substitute its own assessment for that of the creditors where the rejection is based on business and commercial considerations under the Insolvency and Bankruptcy Code, 2016.

Conclusion: The challenge to the rejection of the resolution plan was not entertained and stood rejected.

Issue (ii): Whether liquidation of the corporate debtor was warranted and whether the prayer to restrain invocation of bank guarantees could be granted.

Analysis: Once no resolution plan approved by the Committee of Creditors remained before the Adjudicating Authority within the prescribed CIRP period, liquidation followed in terms of the Code. The prayer to restrain invocation of bank guarantees was declined on the ground that such restraint would adversely affect the rights and interests of stakeholders.

Conclusion: Liquidation was ordered and the restraint against invocation of bank guarantees was refused.

Final Conclusion: The corporate debtor was directed into liquidation, the resolution professional was appointed as liquidator, and the objections to the Committee of Creditors' commercial decision were rejected.

Ratio Decidendi: The commercial decision of the Committee of Creditors in rejecting a resolution plan is ordinarily not justiciable, and once liquidation is validly resolved or no approved resolution plan survives, the Adjudicating Authority must proceed in accordance with the Code.

---