Resolution plans cannot depend on eviction relief beyond insolvency jurisdiction; preferential transaction actions may proceed in resolution or liquidation.

A resolution plan conditioned on cancellation of an unregistered lease and eviction of the lessee was held incompatible with the Insolvency and Bankruptcy Code because it depended on reliefs the Adjudicating Authority could not grant. The Tribunal held that eviction or cancellation of the lease was outside the Authority's insolvency jurisdiction, so approval of a plan requiring such orders was legally unsustainable. It further held that avoidance proceedings for a preferential transaction are not confined to one stage: they may be pursued during resolution or liquidation by the resolution professional or liquidator, subject to the statutory framework. The rejection of the plan and the consequential liquidation order were upheld.

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Issues: (i) whether a resolution plan that made approval conditional upon cancellation of an unregistered lease and eviction of the lessee could be approved under the Insolvency and Bankruptcy Code, 2016; (ii) whether the Adjudicating Authority had jurisdiction to order eviction or cancel the lease as part of the resolution process; (iii) whether an application to avoid a preferential transaction could be pursued during the resolution or liquidation stage and by the liquidator.

Issue (i): whether a resolution plan that made approval conditional upon cancellation of an unregistered lease and eviction of the lessee could be approved under the Insolvency and Bankruptcy Code, 2016;

Analysis: The resolution plan was not a bare revival proposal but was expressly made subject to termination of existing arrangements and handover of the unit free from encumbrances. The plan also sought reliefs that required nullifying a subsisting lease and securing eviction of the lessee. Such conditional approval was treated as inconsistent with the requirement that a resolution plan must conform to the law and satisfy the statutory conditions governing approval.

Conclusion: The plan was held to be contrary to section 30(2)(e) of the Insolvency and Bankruptcy Code, 2016 and could not be approved.

Issue (ii): whether the Adjudicating Authority had jurisdiction to order eviction or cancel the lease as part of the resolution process;

Analysis: The dispute concerned a lessee in possession under a lease deed, and the relief sought required adjudication of the lease's validity and eviction from possession. The Tribunal held that such eviction relief was not within the Adjudicating Authority's jurisdiction under the insolvency framework and that the proper remedy lay before the appropriate forum. The approval of a plan dependent on such relief was therefore legally unsustainable.

Conclusion: The Adjudicating Authority was held not to have jurisdiction to pass an eviction order or cancel the lease in the manner proposed in the plan.

Issue (iii): whether an application to avoid a preferential transaction could be pursued during the resolution or liquidation stage and by the liquidator;

Analysis: The Tribunal held that the avoidance provisions are not confined to one stage alone. Where a resolution professional or liquidator forms the requisite opinion that a transaction amounts to a preference, an application may be moved and appropriate relief can be granted by the Adjudicating Authority. The liquidator also has power, subject to supervisory control, to investigate the corporate debtor's affairs and pursue such issues.

Conclusion: The Tribunal held that preferential transaction issues can be pursued during resolution or liquidation, and that the liquidator has jurisdiction to investigate and initiate such action.

Final Conclusion: The rejection of the resolution plan and the consequential liquidation order were upheld, and the appeal failed in its entirety.

Ratio Decidendi: A resolution plan must comply with the mandatory requirements of section 30(2)(e); it cannot be approved if its implementation depends on reliefs that the Adjudicating Authority is not competent to grant, while avoidance proceedings under sections 43 and 44 may be pursued during resolution or liquidation by the resolution professional or liquidator, as the case may be.

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