Resolution plan approval under insolvency law prevails over inconsistent creditor claims and binds all stakeholders once sanctioned.
A resolution plan approved by the committee of creditors and supported by the resolution professional's compliance certificate may be sanctioned if it satisfies section 30(2) of the Insolvency Code and is not contrary to section 29A or the applicable regulations. Operational and statutory creditors cannot defeat approval by insisting on full payment where the plan provides treatment under the liquidation value and distribution matrix. The Insolvency Code prevails over inconsistent demands under other enactments, and belated claims cannot justify reopening an approved plan. The plan may also provide for extinguishment of pending and future proceedings, and once sanctioned it binds stakeholders and ends the moratorium.
Issues: (i) Whether the resolution plan satisfied the statutory requirements for approval under the insolvency framework and could be sanctioned. (ii) Whether the objections of operational and statutory creditors could prevent approval of the plan or compel full payment of their claims.
Issue (i): Whether the resolution plan satisfied the statutory requirements for approval under the insolvency framework and could be sanctioned.
Analysis: The plan had been approved by the committee of creditors and was supported by the resolution professional's compliance certificate. The plan was examined against the requirements of section 30(2) of the insolvency code and the relevant regulations, and it was found that the plan was not in contravention of section 29A. The plan also provided for implementation terms, distribution to stakeholders, and the transfer of management to the successful resolution applicant. The statutory preconditions for approval were therefore satisfied.
Conclusion: The plan was approved.
Issue (ii): Whether the objections of operational and statutory creditors could prevent approval of the plan or compel full payment of their claims.
Analysis: The objections raised by the operational creditor and statutory authorities were rejected because the plan had already provided treatment of their claims on the basis of the liquidation value and the approved distribution matrix. The order treated the claims of statutory authorities in the same manner as other creditors and held that inconsistent demands for full recovery could not override the approved plan. The decision also relied on the overriding effect of the insolvency code over inconsistent provisions of other enactments and held that reopening the plan on the basis of belated or contrary claims was impermissible. The plan's provision for extinguishment of pending and future proceedings relating to the corporate debtor was accepted as necessary to ensure successful resolution.
Conclusion: The objections were rejected and full payment was not ordered.
Final Conclusion: The resolution plan was sanctioned, became binding on all stakeholders, and the moratorium ceased to operate from the date of the order.
Ratio Decidendi: Once a resolution plan is approved by the committee of creditors and is found to comply with the insolvency code and regulations, the adjudicating authority may approve it, and inconsistent claims or objections by creditors cannot displace the binding effect of the approved plan.
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