Commercial wisdom in insolvency plans limits interference despite undervaluation and pre-approval statutory dues objections.

Approved resolution plans under the Insolvency and Bankruptcy Code are protected by the committee of creditors' commercial wisdom, and judicial scrutiny remains limited to compliance with Section 30(2) and effective implementation under Section 31. Where the plan was supported by dual valuation and the plan value exceeded liquidation value, allegations of undervaluation and inadequate payment to an operational creditor did not justify interference. The Code's overriding effect under Section 238 also meant that pre-approval claims linked to Special Economic Zone transfer or renewal charges, if not included in the plan, did not invalidate it. The approved plan was sustained and the challenge failed.

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Issues: (i) Whether the approved resolution plan could be interfered with on the ground of alleged undervaluation and inadequate payment to the operational creditor; (ii) Whether the resolution plan was contrary to the statutory regime governing the Special Economic Zone authority and the claimed transfer or renewal charges.

Issue (i): Whether the approved resolution plan could be interfered with on the ground of alleged undervaluation and inadequate payment to the operational creditor.

Analysis: The plan had been approved by the committee of creditors after valuation by two registered valuers and adoption of the average of the two closest estimates. The statutory scheme under Sections 30 and 31 of the Insolvency and Bankruptcy Code, 2016 confines the adjudicatory scrutiny to compliance with the requirements of Section 30(2) and effective implementation of the plan. The commercial wisdom of the committee of creditors is not open to judicial reappraisal except within the narrow statutory limits. The material on record showed that the plan value was above the liquidation value and the plan had already been implemented.

Conclusion: The challenge to the plan on the ground of undervaluation and inadequate operational creditor payment was rejected, and the approved plan was held not to warrant interference.

Issue (ii): Whether the resolution plan was contrary to the statutory regime governing the Special Economic Zone authority and the claimed transfer or renewal charges.

Analysis: The asserted dues were examined against the overriding effect of the Insolvency and Bankruptcy Code under Section 238. Once a resolution plan is approved under Section 31, claims and dues not forming part of the plan stand frozen and statutory dues of governmental or local authorities for the pre-approval period are extinguished. On that basis, the claimed objection founded on the Special Economic Zone regime did not dislodge the approved plan.

Conclusion: The alleged inconsistency with the Special Economic Zone framework did not invalidate the resolution plan.

Final Conclusion: The approved resolution plan was sustained, and the appeal was dismissed after holding that the committee of creditors' commercial decision and the statutory finality of the resolution process prevailed.

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