Avoidance relief under insolvency law requires prior statutory opinion and clear proof; inconclusive forensic evidence and a final plan defeated the challenge.

Avoidance relief under the insolvency framework was held to require prior compliance with the Resolution Professional's statutory duty to form an independent opinion and determine avoidable transactions before moving the Adjudicating Authority. That precondition was not shown on the record, so the avoidance application failed. On merits, the alleged preferential, undervalued and fraudulent transactions, including the brand licence arrangements, were not proved because the forensic material was tentative and inconclusive, and no reliable basis for recovery or contribution was established. A post-approval challenge to the brand-related arrangement was also not maintainable, as the resolution plan had attained finality and could not be reopened absent fraud or breach of section 30(2).

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Issues: (i) Whether the Resolution Professional had complied with the mandatory requirement of forming an independent opinion and making a determination under the insolvency regulations before seeking avoidance reliefs under the Code; (ii) whether the alleged preferential, undervalued and fraudulent transactions, including the brand licence arrangements, were established on merits so as to justify recovery or contribution; (iii) whether the challenge by the intervenor to the brand-related arrangement could be entertained after approval of the resolution plan.

Issue (i): Whether the Resolution Professional had complied with the mandatory requirement of forming an independent opinion and making a determination under the insolvency regulations before seeking avoidance reliefs under the Code?

Analysis: The Code and Regulation 35A require the Resolution Professional to form an opinion, determine the existence of avoidable transactions, and then approach the Adjudicating Authority within the prescribed timeline. The application and the record did not show formation of such independent opinion. The prayers in the application were not treated as a substitute for the statutory requirement. Non-compliance with the regulatory preconditions was held to be material and capable of defeating the application.

Conclusion: The statutory precondition was not satisfied, and the avoidance application was liable to fail on that ground.

Issue (ii): Whether the alleged preferential, undervalued and fraudulent transactions, including the brand licence arrangements, were established on merits so as to justify recovery or contribution?

Analysis: The forensic findings were found to be tentative, disclaimer-based and inconclusive. The alleged unsecured-loan repayments, sundry-creditor payments, receivables and advances were not supported by sufficient material to show the exact nature of the transactions or to dislodge the management explanations. The brand licence arrangements were also held not to support avoidance relief because the contract with Prashant Properties was outside the look-back period, no reliable basis existed to calculate any recoverable undervalue, and the inference drawn by the report did not establish preferential or fraudulent conduct.

Conclusion: The alleged avoidable transactions were not proved, and no recovery or contribution order could be sustained.

Issue (iii): Whether the challenge by the intervenor to the brand-related arrangement could be entertained after approval of the resolution plan?

Analysis: The resolution plan had already been approved and had attained finality. The Adjudicating Authority had no power of review in such circumstances, and no appeal under the Code had been filed within time. The intervenor had participated in the CIRP and related proceedings, and the application in substance sought a reconsideration of the approved plan, which was impermissible absent fraud or breach of section 30(2).

Conclusion: The intervenor's challenge was not maintainable and was rejected.

Final Conclusion: The avoidance application and the intervenor's claims were rejected, and no relief was granted against the former management or the brand-related counterparties.

Ratio Decidendi: Avoidance relief under the insolvency framework cannot be granted unless the Resolution Professional first forms the required statutory opinion and the alleged transaction is established by clear, non-tentative material; an inconclusive forensic report and a finalised resolution plan cannot be reopened through a collateral avoidance challenge.

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