Resolution plan distribution between creditor classes cannot be upset where operational creditors receive liquidation value and statutory priorities under the Code remain intact.

A resolution plan cannot be disturbed merely because operational creditors receive a lower recovery percentage than financial creditors, since the two classes are treated differently under the insolvency framework and equitable treatment applies only within the same class. The minimum protection for operational creditors is payment of at least liquidation value, and once the statutory requirements are met, distribution falls within the Committee of Creditors' commercial wisdom. An electricity dues regulation creating a charge for unpaid dues cannot override the distribution mechanism under the Insolvency and Bankruptcy Code or confer special priority in resolution proceedings. The approval of the resolution plans was upheld.

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Issues: (i) Whether the resolution plan could be interfered with on the ground that operational creditors received a much lower percentage than financial creditors. (ii) Whether the electricity dues regulation could override the distribution scheme under the Insolvency and Bankruptcy Code, 2016.

Issue (i): Whether the resolution plan could be interfered with on the ground that operational creditors received a much lower percentage than financial creditors.

Analysis: The minimum protection for operational creditors under a resolution plan is payment of at least liquidation value, and equitable treatment under the insolvency framework applies only to creditors within the same class. Financial creditors and operational creditors form different classes, and the law does not require parity of recovery percentage between them. Once the plan satisfies the statutory requirements, distribution among different classes of creditors falls within the commercial wisdom of the Committee of Creditors.

Conclusion: The challenge on the ground of discriminatory distribution between financial and operational creditors was rejected.

Issue (ii): Whether the electricity dues regulation could override the distribution scheme under the Insolvency and Bankruptcy Code, 2016.

Analysis: The electricity dues regulation creates a charge on the premises for recovery of unpaid electricity charges, but it does not alter the priorities or distribution mechanism prescribed by the insolvency . Such a regulation cannot displace the statutory scheme under Section 53 of the Insolvency and Bankruptcy Code, 2016, and does not confer a special priority in the resolution distribution process.

Conclusion: The electricity dues regulation did not provide a ground to upset approval of the resolution plans.

Final Conclusion: The approval of the resolution plans was upheld and no interference was called for in either appeal.

Ratio Decidendi: A resolution plan cannot be invalidated merely because operational creditors receive a lower recovery than financial creditors, so long as the statutory minimum for operational creditors is met and the plan otherwise complies with the insolvency framework; ancillary supply-code provisions cannot override the distribution scheme under the Code.

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