Resolution plan restructuring upheld where commercial wisdom supported business change and suspended directors lacked locus to appeal.

Suspended directors had no independent locus to challenge an approved resolution plan after commencement of CIRP, so their appeal on behalf of the corporate debtor was not maintainable. The plan was also not liable to interference merely because it contemplated a change in the corporate debtor's business model and conversion of industrial land for residential or commercial use. A resolution plan may include restructuring measures, asset transfers, amendments to constitutional documents, and changes in goods, services or technology where the Committee of Creditors, acting in its commercial wisdom, approves a viable restructuring and the plan does not contravene the Insolvency and Bankruptcy Code. On that basis, approval of the plan was sustained.

---

---

Issues: (i) Whether the appeal filed by the suspended directors was maintainable. (ii) Whether the approved resolution plan could be interfered with on the ground that it changed the nature of the corporate debtor's business and contemplated conversion of industrial land to residential/commercial use.

Issue (i): Whether the appeal filed by the suspended directors was maintainable.

Analysis: The Board of Directors stood suspended after commencement of CIRP and the resolution process was being conducted by the insolvency professional. The challenge was directed against a resolution plan already approved by the Committee of Creditors and affirmed by the Adjudicating Authority. In such circumstances, the suspended directors had no independent locus to maintain the appeal on behalf of the corporate debtor.

Conclusion: The appeal by the suspended directors was not maintainable and was liable to fail.

Issue (ii): Whether the approved resolution plan could be interfered with on the ground that it changed the nature of the corporate debtor's business and contemplated conversion of industrial land to residential/commercial use.

Analysis: A resolution plan under the Code may include restructuring measures, transfer or sale of assets, amendment of constitutional documents, change in portfolio of goods or services, and change in technology. The record showed that the corporate debtor's existing business had become unviable, the plant was old and non-operational, licences had lapsed, and the assets were underutilised. In that setting, the Committee of Creditors, acting in its commercial wisdom, approved a plan that proposed a different business model. The Tribunal also found the conduct surrounding the lease arrangements to be suspect and not deserving of equitable relief.

Conclusion: The approved resolution plan was not shown to be contrary to law, and no interference was warranted.

Final Conclusion: The approval of the resolution plan was sustained, and both appeals were dismissed.

Ratio Decidendi: A resolution plan may validly contemplate restructuring, change in business model, and change in use of assets if supported by the commercial wisdom of the Committee of Creditors and if it does not contravene the Insolvency and Bankruptcy Code; suspended directors lack locus to assail such approval on behalf of the corporate debtor.

---