Sanctioned rehabilitation schemes are not Resolution Plans unless they satisfy the Insolvency and Bankruptcy Code framework and approval requirements.

A sanctioned rehabilitation scheme under the Sick Industrial Companies regime cannot be treated as a Resolution Plan under the Insolvency and Bankruptcy Code unless it fits the Code's definition and statutory framework. The 24.05.2017 notification, which sought to deem such schemes as approved resolution plans, was considered to exceed the removal of difficulties power. The text further notes that breach of such a scheme cannot itself justify liquidation under Section 33(4) where the scheme was never a valid Resolution Plan and was not approved by the Committee of Creditors as required for resolution plans.

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Issues: (i) Whether the sanctioned rehabilitation scheme dated 07.01.2005 was a Resolution Plan within the meaning of Section 5(26) of the Insolvency and Bankruptcy Code, 2016 in view of Notification No. S.O. 1683(E) dated 24.05.2017. (ii) Whether breach of the sanctioned scheme could sustain an application for liquidation under Section 33(4) of the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether the sanctioned rehabilitation scheme dated 07.01.2005 was a Resolution Plan within the meaning of Section 5(26) of the Insolvency and Bankruptcy Code, 2016 in view of Notification No. S.O. 1683(E) dated 24.05.2017.

Analysis: The definition of Resolution Plan under Section 5(26) of the Insolvency and Bankruptcy Code, 2016 contemplates a plan proposed for insolvency resolution in accordance with Part II of the Code. The Notification dated 24.05.2017, which sought to treat sanctioned rehabilitation schemes under the Sick Industrial Companies (Special Provisions) Repeal Act, 2003 as deemed approved resolution plans, had already been held by the appellate fora to travel beyond the scope of the removal of difficulties power under Section 242 of the Insolvency and Bankruptcy Code, 2016. The sanctioned scheme could not, therefore, be elevated to the status of a Resolution Plan under the Code.

Conclusion: The sanctioned rehabilitation scheme dated 07.01.2005 was not a Resolution Plan under the Insolvency and Bankruptcy Code, 2016.

Issue (ii): Whether breach of the sanctioned scheme could sustain an application for liquidation under Section 33(4) of the Insolvency and Bankruptcy Code, 2016.

Analysis: Once the sanctioned rehabilitation scheme was held not to be a Resolution Plan, no question arose of breach of implementation of any Resolution Plan for invoking liquidation under Section 33(4) of the Insolvency and Bankruptcy Code, 2016. In addition, the purported scheme had not been approved by the Committee of Creditors in the manner required by Section 30(4) of the Insolvency and Bankruptcy Code, 2016. The application seeking liquidation on that basis was consequently not maintainable.

Conclusion: The Respondent was not liable to be put into liquidation on the basis alleged, and the application under Section 33(4) was not maintainable.

Final Conclusion: The challenge to the Respondent's conduct failed because the foundational premise that the sanctioned rehabilitation scheme was a Resolution Plan was rejected, leaving no basis for liquidation under the Code.

Ratio Decidendi: A scheme sanctioned under the Sick Industrial Companies regime cannot be treated as a Resolution Plan under the Insolvency and Bankruptcy Code unless it validly falls within the statutory framework of the Code and satisfies the mandatory approval requirements applicable to resolution plans.

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