Commercial wisdom in resolution plans limits judicial interference with creditor-approved distribution and feasibility decisions.

A resolution plan under the Insolvency and Bankruptcy Code was found compliant because it satisfied the statutory approval requirements, including creditor voting, eligibility conditions, stakeholder treatment, and payment above liquidation value. The plan was therefore approved and treated as binding on the corporate debtor and stakeholders. The commentary also states that scrutiny by the adjudicating authority is confined to statutory parameters, and that it cannot substitute its view for the committee of creditors on viability, feasibility, or distribution. A challenge to the distribution formula was rejected as an impermissible attack on commercial wisdom, particularly where the objector had itself voted in favour of the plan.

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Issues: (i) Whether the resolution plan submitted by the successful resolution applicant satisfied the requirements for approval under the Insolvency and Bankruptcy Code, 2016 and the applicable regulations; (ii) whether the adjudicating authority could interfere with the commercial decision of the committee of creditors on viability, feasibility, and distribution under the resolution plan.

Issue (i): Whether the resolution plan submitted by the successful resolution applicant satisfied the requirements for approval under the Insolvency and Bankruptcy Code, 2016 and the applicable regulations.

Analysis: The plan was examined on the touchstone of the statutory requirements governing approval of a resolution plan, including the compliance certificate, creditor voting, and the treatment of stakeholders. The plan provided payment above the liquidation value and was found to satisfy the mandatory requirements under the insolvency framework. The plan also recorded compliance with eligibility and participation requirements and had been approved by the committee of creditors by the requisite voting share.

Conclusion: The resolution plan was held to be compliant and was approved.

Issue (ii): Whether the adjudicating authority could interfere with the commercial decision of the committee of creditors on viability, feasibility, and distribution under the resolution plan.

Analysis: The decision emphasised that approval or rejection of a resolution plan is a commercial decision of the committee of creditors and that the adjudicating authority's scrutiny is confined to the statutory parameters. A challenge to the distribution formula and treatment of similarly placed financial creditors was rejected because it amounted to questioning the commercial wisdom of the committee of creditors. The objector had itself voted in favour of the plan, which further undermined the challenge.

Conclusion: Interference with the committee of creditors' commercial decision was declined, and the challenge to distribution was rejected.

Final Conclusion: The resolution plan stood sanctioned and became binding on the corporate debtor and stakeholders, while the separate challenge to the plan's distribution mechanism failed.

Ratio Decidendi: Judicial review in resolution-plan approval is limited to statutory compliance under the insolvency code, and the commercial wisdom of the committee of creditors on feasibility, viability, and distribution cannot be substituted by the adjudicating authority.

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