Lockdown exclusion and CoC commercial wisdom upheld in insolvency resolution, with no Section 29A disqualification found.

Lockdown periods may be excluded from the corporate insolvency resolution process timeline under the applicable regulation, and the absence of a separate day-wise tabulation does not invalidate relief that expressly grants exclusion. A challenge to resolution applicant eligibility under Section 29A failed because the alleged disqualification of a shareholder/director as an undischarged insolvent was not established on the record. The rejection of a settlement offer and approval of the resolution plan were also upheld, since the plan value was higher than liquidation value and the Committee of Creditors' commercial wisdom, supported by 100% voting, was not open to interference absent legal infirmity.

---

---

Issues: (i) Whether the exclusion of the lockdown period from the Corporate Insolvency Resolution Process timeline was valid despite the absence of a separate specific numerical order. (ii) Whether the resolution applicant was ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016 because of the alleged status and connections of its shareholder/director. (iii) Whether the rejection of the appellant's settlement offer and approval of the resolution plan could be interfered with on the ground that the plan was below liquidation value and the Committee of Creditors ought to have preferred the settlement proposal.

Issue (i): Whether the exclusion of the lockdown period from the Corporate Insolvency Resolution Process timeline was valid despite the absence of a separate specific numerical order.

Analysis: Regulation 40C of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 excluded the lockdown period from computation of timelines for activities that could not be completed because of lockdown. The application before the Adjudicating Authority had sought extension of time and exclusion of the lockdown period, and the order granted extension of 90 days together with exemption of the lockdown period from 25.03.2020 in terms of the regulation. The absence of an express tabulation of days did not invalidate the exemption when the order itself granted the relief.

Conclusion: The exclusion of the lockdown period was upheld and no error was found in the impugned order.

Issue (ii): Whether the resolution applicant was ineligible under Section 29A of the Insolvency and Bankruptcy Code, 2016 because of the alleged status and connections of its shareholder/director.

Analysis: The objection was founded on the assertion that the shareholder/director was an undischarged insolvent and therefore attracted disqualification through the concept of a connected person. The Court found that the Code does not define "undischarged insolvent", that such status depends upon a legal declaration, and that the material on record did not establish disqualification under the relevant UK regime. The reasoning of the Adjudicating Authority on the eligibility issue was found to be well considered and supported by the record.

Conclusion: The challenge to the resolution applicant's eligibility under Section 29A failed.

Issue (iii): Whether the rejection of the appellant's settlement offer and approval of the resolution plan could be interfered with on the ground that the plan was below liquidation value and the Committee of Creditors ought to have preferred the settlement proposal.

Analysis: The resolution plan value was held to be higher than both the liquidation value and the appellant's settlement offer. It was further held that the Insolvency and Bankruptcy Code does not require a resolution plan to exceed liquidation value, and that the commercial wisdom of the Committee of Creditors, which approved the plan with 100% voting share, is not subject to judicial interference in the absence of legal infirmity.

Conclusion: No interference was warranted with the approval of the resolution plan or with rejection of the settlement offer.

Final Conclusion: The impugned orders were sustained and the appeal was found to be without merit.

Ratio Decidendi: In insolvency resolution, timelines may validly exclude lockdown periods under the applicable regulations, and the commercial wisdom of the Committee of Creditors in approving a resolution plan cannot be interfered with unless a clear legal violation is shown, including on challenges to eligibility under Section 29A.

---