Avoidance proceedings under insolvency law may continue after resolution plan approval and be pursued under the binding plan terms.

Avoidance proceedings under the insolvency code are treated as independent from the corporate insolvency resolution process and may continue after completion of resolution and approval of the plan, because their purpose is to preserve the asset pool and prevent unjust enrichment from suspect transactions. Where the approved resolution plan expressly authorises it, the successful resolution applicant may be substituted to pursue pending avoidance applications, and that substitution operates under the binding terms of the plan rather than as an exercise of the resolution professional's statutory powers. Applications filed after plan approval are not barred merely on that ground if they fall within the same avoidance regime contemplated by the plan.

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Issues: (i) Whether avoidance applications under the insolvency code survive completion of the corporate insolvency resolution process and approval of the resolution plan; (ii) whether the successful resolution applicant can be substituted in place of the erstwhile administrator or resolution professional to pursue pending avoidance applications; (iii) whether avoidance applications filed after approval of the resolution plan by the committee of creditors could still be pursued.

Issue (i): Whether avoidance applications under the insolvency code survive completion of the corporate insolvency resolution process and approval of the resolution plan.

Analysis: The statutory scheme treats avoidance proceedings as distinct from the corporate insolvency resolution process. The filing of an avoidance application does not affect the insolvency resolution process, and the provisions dealing with avoidance, recovery of avoided amounts, and the contents of a resolution plan contemplate that such proceedings may continue even after resolution. The object of these provisions is to preserve and augment the asset pool for creditors and to prevent unjust enrichment through suspect transactions.

Conclusion: Avoidance applications do survive completion of the corporate insolvency resolution process and approval of the resolution plan.

Issue (ii): Whether the successful resolution applicant can be substituted in place of the erstwhile administrator or resolution professional to pursue pending avoidance applications.

Analysis: The approved resolution plan specifically empowered the successful resolution applicant to pursue pending avoidance applications. Once the plan was approved, its terms became binding on all stakeholders. The substitution ordered by the adjudicating authority was therefore not a delegation of a resolution professional's statutory powers, but a consequence of the approved plan and the legislative scheme recognising post-resolution pursuit of avoidance proceedings.

Conclusion: The successful resolution applicant could validly be substituted and allowed to pursue the pending avoidance applications.

Issue (iii): Whether avoidance applications filed after approval of the resolution plan by the committee of creditors could still be pursued.

Analysis: There is no statutory bar making such applications non-maintainable merely because they were filed after the committee of creditors approved the plan. The relevant question is whether the plan accounted for pending avoidance proceedings and whether, on the facts, the applications were part of the same avoidance regime intended to continue for the benefit of creditors. In the present case, the plan expressly contemplated pursuit of such applications.

Conclusion: The later-filed avoidance applications could still be pursued and were not liable to be rejected on that ground alone.

Final Conclusion: The challenge to the substitution orders failed, and the appeals were rejected because the avoidance proceedings were held to be maintainable post-resolution and capable of being pursued by the successful resolution applicant under the approved plan.

Ratio Decidendi: Avoidance proceedings under the insolvency code are independent of the corporate insolvency resolution process, may survive approval of the resolution plan, and can be pursued in accordance with the binding terms of an approved plan for the benefit of creditors.

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