Materially incomplete disclosures can justify withdrawal of a resolution plan before approval, with only partial forfeiture of deposits.

A resolution applicant may withdraw a plan before tribunal approval where materially inaccurate or incomplete disclosures in the information memorandum undermine the plan's feasibility and commercial viability, especially where the applicant reserved a contractual right to withdraw on adverse change. On the facts, a discrepancy concerning land and generation capacity, including an additional essential land parcel, made the plan commercially unsafe, so withdrawal was permitted. The earnest money deposit and performance bank guarantee were not forfeited in full; the tribunal ordered only partial forfeiture and refund of the balance, balancing process consequences against the applicant's withdrawal.

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Issues: (i) Whether the successful resolution applicant could withdraw the resolution plan after approval by the Committee of Creditors and before approval by the Tribunal, and if so, in what circumstances; (ii) Whether the earnest money deposit and performance bank guarantee furnished for participation in the resolution process were liable to be forfeited in full or returned on withdrawal of the plan.

Issue (i): Whether the successful resolution applicant could withdraw the resolution plan after approval by the Committee of Creditors and before approval by the Tribunal, and if so, in what circumstances?

Analysis: The plan was prepared on the basis of the information memorandum and related disclosures, and the applicant had reserved a contractual right to withdraw if material information changed or if adverse facts emerged. The record showed a substantial discrepancy between the land and generation capacity represented in the information memorandum and the later discovered position, including the existence of an additional land parcel said to be essential for the project and the resulting impact on feasibility and projected returns. In these circumstances, the applicant could not be compelled to proceed with a plan that had become commercially unsafe on the basis of materially incomplete or misleading information.

Conclusion: The applicant was permitted to withdraw the resolution plan before approval by the Tribunal.

Issue (ii): Whether the earnest money deposit and performance bank guarantee furnished for participation in the resolution process were liable to be forfeited in full or returned on withdrawal of the plan?

Analysis: The Tribunal balanced the withdrawal of the plan against the expenses and consequences of the failed process, and found that full forfeiture was not warranted. At the same time, it held that the applicant should bear a part of the CIRP burden. It therefore directed partial forfeiture and refund of the balance amount.

Conclusion: The deposits were not forfeited in full and only a part was ordered to be forfeited, with the balance directed to be refunded.

Final Conclusion: The resolution applicant was relieved from implementing the plan because of materially adverse and incomplete disclosures affecting feasibility, and the monetary deposits were adjusted by partial forfeiture rather than complete confiscation.

Ratio Decidendi: A resolution applicant cannot be compelled to specifically perform a resolution plan before tribunal approval when material inaccuracies or undisclosed facts in the information memorandum undermine the plan's feasibility and commercial viability.

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