Corporate insolvency resolution plan meets s.30(2) and reg.39(4) requirements; approved u/s30(6)/s.31, binding all stakeholders.

The dominant issue was whether the resolution plan could be approved under s.30(6) read with s.31(1) of the IBC and reg.39(4) of the CIRP Regulations. The NCLT held that its scrutiny is confined to the limited judicial review permitted under s.30(2) read with s.31 and it cannot interfere with the commercial wisdom of the CoC. On examining the plan as filed and explained by the successful resolution applicant, the NCLT found that it satisfied the mandatory requirements of s.30(2) and disclosed no legal impediment to approval. The resolution plan was approved and made binding on the corporate debtor, its employees, shareholders, all creditors (including governmental authorities for statutory dues), and other stakeholders, and the application was allowed.

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1. ISSUES PRESENTED AND CONSIDERED

1) Whether the objections of the dissenting financial creditor disclosed any legal non-compliance warranting rejection or modification of the approved resolution plan, including (a) alleged impermissible post-approval modification rights, (b) treatment of subsidiaries, (c) impact on third-party collateral and guarantor rights, (d) alleged contingent/uncertain funding, (e) tenure of performance security, (f) validity of indemnity protection, (g) essential supplies post-moratorium, and (h) challenge to an operational creditor-related clause for want of locus.

2) Whether the resolution plan, as approved by the requisite voting share of the committee of creditors, satisfied the mandatory requirements under Section 30(2) and the applicable regulations for approval under Section 31(1), and the extent of the Tribunal's permissible scrutiny (without entering commercial merits).

3) Whether, and to what extent, reliefs/concessions/waivers sought in the plan could be granted by the Tribunal, and whether such reliefs were to be confined to what is provided in the Code.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Maintainability and merits of objections to the approved resolution plan

Legal framework (as discussed by the Tribunal): The Tribunal evaluated objections in the context of the Code-compliance scrutiny it must undertake while considering approval, and treated clarifications/undertakings filed by the successful resolution applicant (SRA) and the resolution professional (RP) as relevant to determine whether impugned clauses created illegality or contravention.

Interpretation and reasoning: (a) On alleged unilateral modification/"material adverse effect" reservation, the Tribunal accepted the SRA's clarifications and affidavit that (i) the plan would remain binding in line with the Ebix principle and (ii) in case of inconsistency, clarifications would prevail, concluding clauses 2.1 and 2.2 merely enabled compliance with the Code and did not confer a unilateral right to withdraw/modify. (b) On subsidiaries, the Tribunal accepted the clarification that rights under clause 8.2 would not be exercised without the Adjudicating Authority's approval and held that any exercise could only be to the extent of the corporate debtor's shareholding/investment and strictly as per the Code; it expressly refused to grant any relief sought under clause 8.2 beyond the Code. (c) On third-party collateral/guarantees, the Tribunal relied on the SRA's clarification that the plan did not deal with or restrict lender rights against third-party securities/guarantors (save a specifically dealt asset), and therefore held that no extinguishment or compelled surrender of such collateral would arise. (d) On "contingent" funding, the Tribunal noted that the plan disclosed sources and included substantial committed infusion (initial cash infusion and non-fund-based support exceeding INR 100 crores) and treated the financial proposal as falling within the CoC's business decision once mandatory requirements were met. (e) On performance bank guarantee tenure, the Tribunal found compliance with the RFRP requirement and accepted the stated tenure (till 28.02.2025, extendable as required), holding the objection inconsequential. (f) On indemnity, the Tribunal construed the clause as limited protection against liability for acts of third parties during CIRP and not a bar to statutory inquiries; it upheld the clause but directed cooperation in inquiries. (g) On essential supplies, the Tribunal accepted that the clause was to prevent interruption in the going concern context and contemplated approaching the Tribunal for implementation; it found no substantiated illegality. (h) On operational creditor treatment under clause 13.5.2, the Tribunal held the objector (an unsecured financial creditor) was not affected by such payments and therefore lacked locus to challenge that clause.

Conclusions: All objections were rejected on merits or for want of locus; the objection application was dismissed. The Tribunal further recorded that clarifications/affidavits would prevail in case of contradiction and would bind the SRA as part of the plan.

Issue 2: Whether the plan satisfied Section 30(2) and regulatory requirements for approval; scope of Tribunal review

Legal framework (as discussed by the Tribunal): The Tribunal considered Section 31 read with Section 30(2) of the Code, Regulation 39(4) (Form H compliance certificate), and mandatory contents under the CIRP Regulations as discussed in the order. The Tribunal also relied on the principle that its jurisdiction is limited to checking statutory compliances and not reassessing commercial wisdom.

Interpretation and reasoning: The Tribunal examined the plan's features and the compliance material placed by the RP, including provision for payment of CIRP costs in priority, treatment of operational creditors, post-approval management, implementation and supervision mechanisms, and non-contravention of law. It accepted the RP's Form H compliance certificate and the affidavit of eligibility under Section 29A. On feasibility/viability and funding structure, it treated these as principally within CoC's domain after confirming statutory compliance. The Tribunal expressly held that it is not an appellate body over the CoC's commercial decision and confined itself to Section 30(2) parameters.

Conclusions: The Tribunal concluded that mandatory requirements under Section 30(2) were complied with and there was no impediment to approval. The resolution plan was approved and made binding on the corporate debtor and all stakeholders specified in the order; moratorium ceased from the date of pronouncement; the plan became effective from the date of the approval order; implementation reporting and record-forwarding directions were issued.

Issue 3: Grant of reliefs/concessions/waivers sought in the plan

Legal framework (as discussed by the Tribunal): The Tribunal considered the limitation that rights falling outside the Code, particularly in the realm of public law or requiring action by other authorities, cannot be "short-circuited" through the Tribunal in the resolution plan approval process.

Interpretation and reasoning: While approving the plan, the Tribunal clarified that it was not inclined to grant reliefs/concessions/waivers prayed for in the plan beyond what is provided in the Code. It directed that the SRA may approach appropriate forums/authorities to seek such reliefs in accordance with respective laws.

Conclusions: Reliefs and concessions were not granted except to the extent available under the Code; the plan formed part of the approval order subject to this limitation.

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