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Issues: (i) Whether refusal to admit the homebuyers' claims on the basis of no dues certificates and alleged cash payments, and the differential treatment between homebuyers and the financial creditor in the resolution plan, suffered from legal error; (ii) whether the resolution plan was impermissible because its value was below the liquidation value; (iii) whether the successful resolution applicant was barred from submitting the resolution plan on the ground of alleged association with the financial creditor.
Issue (i): Whether refusal to admit the homebuyers' claims on the basis of no dues certificates and alleged cash payments, and the differential treatment between homebuyers and the financial creditor in the resolution plan, suffered from legal error.
Analysis: The claims of the homebuyers were rejected because the alleged payments were not supported by reliable documentary proof and could not be verified from the corporate debtor's records. The Court reiterated that the distribution under a resolution plan falls within the commercial wisdom of the Committee of Creditors, and that the scope of interference under the Code is confined to the statutory parameters. It also held that homebuyers entering the project at different stages could be treated differently in the resolution framework, and that such differential treatment did not by itself render the plan illegal.
Conclusion: The refusal to admit the claims and the differential treatment in the resolution plan were upheld, and no legal error was found in favour of the appellant.
Issue (ii): Whether the resolution plan was impermissible because its value was below the liquidation value.
Analysis: The Court applied the principle that there is no requirement under the Insolvency and Bankruptcy Code or the regulations that a resolution plan must match the liquidation value. The liquidation value is only an aid to decision-making for the Committee of Creditors, while approval by the statutory majority is the decisive factor. Once the plan satisfied the statutory requirements and was approved by the Committee of Creditors, the adjudicating authority was not required to reject it merely because the plan amount was lower than liquidation value.
Conclusion: The challenge based on comparison with liquidation value was rejected and decided against the appellant.
Issue (iii): Whether the successful resolution applicant was barred from submitting the resolution plan on the ground of alleged association with the financial creditor.
Analysis: The allegation of collusion was not substantiated. The record showed only a financial support arrangement for funding the resolution applicant, which was not prohibited by the Code. The Court held that the Code does not create an embargo on a financial creditor supporting or funding a resolution applicant, and therefore such a relationship does not by itself disqualify the applicant. The Court also relied on the principle that once a class of stakeholders has voted in favour of a resolution plan, an individual constituent of that class cannot later oppose it.
Conclusion: No disqualification or bar was made out against the successful resolution applicant, and the objection was rejected.
Final Conclusion: The appeal failed on all material grounds, and the approval of the resolution plan was sustained without any finding of patent illegality or material irregularity.
Ratio Decidendi: A resolution plan cannot be interfered with on grounds that lie within the commercial wisdom of the Committee of Creditors, unless it contravenes the limited statutory requirements under the Code; liquidation value is not a mandatory benchmark for approval, and a lawful funding arrangement with a resolution applicant does not by itself establish disqualification or collusion.
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