Insolvency framework governs fixed deposit claims, and commercial wisdom limits interference with resolution plan distribution.

Fixed deposit holders of a financial service provider were treated as financial creditors under the insolvency framework, because the deposits were reflected as liabilities and no statutory trust over the amounts was established. The Code governed repayment, its non obstante clause prevailed over inconsistent provisions in the National Housing Bank Act and the Reserve Bank of India Act, and those enactments did not secure full repayment. The approved resolution plan was also left undisturbed, because review was confined by the Code and the Committee of Creditors' commercial wisdom could not be substituted absent a legal infirmity in distribution.

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Issues: (i) Whether the fixed deposit holders were entitled to repayment in full on the footing that the deposits were held in trust or otherwise outside the insolvency regime and whether the National Housing Bank Act and the Reserve Bank of India Act could override the insolvency process; (ii) Whether interference was warranted with the resolution plan and the Committee of Creditors' decision on distribution to fixed deposit holders.

Issue (i): Whether the fixed deposit holders were entitled to repayment in full on the footing that the deposits were held in trust or otherwise outside the insolvency regime and whether the National Housing Bank Act and the Reserve Bank of India Act could override the insolvency process.

Analysis: The deposited amounts were treated in the corporate debtor's books as liabilities and the depositors were held to be financial creditors. The record did not establish any statutory trust over the deposits. Rule 10 of the FSP Rules protects only third-party assets held in trust, and the statutory provisions relied upon in the National Housing Bank Act and the Reserve Bank of India Act required repayment according to the terms and conditions of the deposits, but did not guarantee full repayment. In insolvency, the Code operated as the governing framework, and its non obstante clause prevailed over inconsistent provisions of other enactments.

Conclusion: The claim that the fixed deposits were outside the insolvency framework or payable in full as a matter of overriding statutory right was rejected.

Issue (ii): Whether interference was warranted with the resolution plan and the Committee of Creditors' decision on distribution to fixed deposit holders.

Analysis: The plan approval process had been undertaken within the limits prescribed by the Code. The adjudicatory authority and the appellate forum were bound by the circumscribed scope of review under the insolvency regime and could not substitute their view for the commercial wisdom of the Committee of Creditors. Once the plan satisfied the statutory requirements, differential treatment in distribution could not be interfered with merely on equitable considerations. The direction to reconsider the amount payable to fixed deposit holders did not create a right to full payment, and the Committee of Creditors was not bound to grant parity with secured creditors.

Conclusion: No interference with the approved resolution plan or the Committee of Creditors' decision was warranted.

Final Conclusion: The appeals failed because the insolvency framework governed the claims of the fixed deposit holders and the approved resolution plan could not be disturbed in the absence of a statutory infirmity.

Ratio Decidendi: In insolvency proceedings, fixed deposit holders of a financial service provider are to be treated as financial creditors under the Code, and repayment claims must yield to the statutory distribution framework and the commercial wisdom of the Committee of Creditors unless a specific legal infirmity is shown.

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