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Issues: (i) Whether the Resolution Professional, with the approval of the Committee of Creditors, could accept resolution plans after the deadline for submission without first extending the public invitation process; (ii) whether such acceptance could be justified as an exercise of commercial wisdom of the Committee of Creditors; (iii) whether amended Regulation 36A of the CIRP Regulations applied to a CIRP commenced before the amendment came into force; and (iv) whether the impugned order was valid when passed by a reconstituted Bench that included a Member who had not heard the arguments on the relevant application.
Issue (i): Whether the Resolution Professional, with the approval of the Committee of Creditors, could accept resolution plans after the deadline for submission without first extending the public invitation process.
Analysis: The Resolution Process had been initiated through public notices in Form G, each fixing a last date for submission of expression of interest and resolution plans. The belated plans were received after the expiry of the final deadline and after the earlier plans had already been opened and considered. Once the process had reached that stage, any extension of time required a fresh public invitation in the prescribed manner. Acceptance of a new bid after the cut-off date, without following the prescribed procedure, was held to be arbitrary and contrary to the regulations governing the CIRP.
Conclusion: The issue was answered in favour of the Appellant.
Issue (ii): Whether such acceptance could be justified as an exercise of commercial wisdom of the Committee of Creditors.
Analysis: The commercial wisdom of the Committee of Creditors is generally not open to interference when it concerns approval or rejection of a compliant resolution plan. That principle, however, does not protect a process that is itself unlawful. The Resolution Professional and the Committee of Creditors cannot validate a procedure that departs from the statutory framework by invoking maximization of value or commercial wisdom. The limited scope of judicial review under the Insolvency and Bankruptcy Code permits scrutiny of material irregularity in the Resolution Professional's conduct, and the acceptance of a belated plan without due process fell within that scrutiny.
Conclusion: The issue was answered against the Respondents and in favour of the Appellant.
Issue (iii): Whether amended Regulation 36A of the CIRP Regulations applied to a CIRP commenced before the amendment came into force.
Analysis: The amended Regulation 36A was introduced with effect from 4 July 2018. The corporate insolvency resolution process in the matter had commenced on 14 May 2018. The amendment itself did not indicate retrospective operation, and the applicable procedural regime was therefore the one in force when the CIRP commenced. On that basis, the amended provision was held inapplicable to the ongoing process in question.
Conclusion: The issue was answered in favour of the Respondents.
Issue (iv): Whether the impugned order was valid when passed by a reconstituted Bench that included a Member who had not heard the arguments on the relevant application.
Analysis: The order on the objection application had been heard by a single-member Bench and reserved for orders. It was later pronounced by a reconstituted Bench comprising two Members, even though one Member had not heard the arguments. The principle that the Judge who hears must decide was treated as applicable, and the Bench was found to have acted contrary to that principle. This amounted to a violation of natural justice and vitiated the impugned order.
Conclusion: The issue was answered in favour of the Appellant.
Final Conclusion: The appeals succeeded because the belated acceptance of the resolution plan was held to be procedurally illegal and the impugned order was also vitiated by the Bench composition defect. The matter was sent back for fresh consideration of the plans already submitted within time.
Ratio Decidendi: Commercial wisdom of the Committee of Creditors does not extend to validating a resolution process that departs from the statutory procedure, and an order reserved by one Bench cannot validly be pronounced by a Bench including a Member who did not hear the case.
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