Commercial discretion of the Committee of Creditors upheld: resolution plan sustained despite procedural, settlement and feasibility challenges.

The article addresses challenges to a resolution plan approved by the Committee of Creditors (CoC): non-furnishing of the plan to a suspended director did not vitiate approval because no statutory obligation then existed and the CoC's decision would have been unchanged; a one-time settlement before the CoC failed to meet statutory voting thresholds and its rejection does not invalidate the plan; condition precedent for third party consents necessary for implementation is permissible; differential treatment of operational creditors was sustained as within CoC commercial discretion where it preserved going concern value; certified feasibility and viability were not displaced; alleged promoter ineligibility was not established to set aside approval.

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Issues: (i) Whether non-provision of the approved resolution plan to the suspended director prior to CoC approval vitiates approval; (ii) Whether the Appellant's one-time settlement (OTS) required acceptance by the CoC or otherwise invalidates the approved resolution plan; (iii) Whether a resolution plan containing a condition precedent for third party consents is invalid; (iv) Whether the approved resolution plan unlawfully discriminates against operational creditors by full payment to certain lessors and nil payment to other operational creditors; (v) Whether the resolution plan is non viable or non feasible and therefore liable to be rejected; (vi) Whether the involvement or alleged collusion of a promoter (EIH) with the resolution applicant attracts ineligibility under Section 29A of the Code.

Issue (i): Whether non-provision of the approved resolution plan to the suspended director prior to CoC approval vitiates approval.

Analysis: The plan was approved on 18.12.2018 at a time when there was no statutory obligation under the Code or regulations to furnish the plan to suspended promoters; subsequent Supreme Court guidance in Vijay Kumar Jain post dated the CoC approval and the Resolution Professional circulated the approved plan after that judgment; the appellant attended CoC meetings and was aware of the plan's contents; CoC stated the decision would have remained unchanged even if the appellant had the plan earlier.

Conclusion: Non-provision of the plan prior to CoC approval does not vitiate the approval and does not invalidate the resolution plan in this case.

Issue (ii): Whether the Appellant's OTS required acceptance by the CoC or otherwise invalidates the approved resolution plan.

Analysis: The OTS was placed before the CoC and considered but did not secure the requisite support; settlement during CIRP could only proceed under Section 12A of the Code with 90% voting share approval of the CoC; the OTS failed to meet that threshold and was conditional.

Conclusion: The CoC's rejection of the OTS does not constitute legal infirmity and does not invalidate the approved resolution plan.

Issue (iii): Whether a resolution plan containing a condition precedent for third party consents is invalid.

Analysis: The condition precedent related to obtaining written consent of lessors/authorities necessary for change of control and restructuring; precedents of this Tribunal and the Supreme Court recognise condition precedents essential for implementation of a plan in certain businesses; where condition precedent is necessary for implementation, such clauses are permissible and do not warrant rejection if tied to implementation requirements.

Conclusion: The condition precedent in the resolution plan is valid and does not render the plan invalid.

Issue (iv): Whether the approved resolution plan unlawfully discriminates against operational creditors by full payment to certain lessors and nil payment to other operational creditors.

Analysis: The amended Section 30(2) and relevant authorities afford the CoC commercial discretion to approve differential treatment if the plan complies with the statutory tests of fair and equitable treatment; lessors (special operational creditors) had distinct rights essential for continuity of operations and payment to them in full was held to be permissible to preserve going concern value; CoC evaluated the distribution in exercise of commercial wisdom which is not justiciable absent illegality.

Conclusion: Differential treatment of operational creditors in the approved plan does not contravene the Code and is not unlawful in the facts of this case.

Issue (v): Whether the resolution plan is non viable or non feasible and therefore liable to be rejected.

Analysis: The CoC evaluated technical and financial parameters, certified feasibility and viability, and the Adjudicating Authority approved the plan after satisfaction; the appellant's assertions about lack of expertise of SRA and absence of implementation detail were not supported by specific legal or factual demonstration that would displace the CoC's commercial judgment.

Conclusion: The challenge to the viability and feasibility of the resolution plan fails.

Issue (vi): Whether the involvement or alleged collusion of a promoter (EIH) with the resolution applicant attracts ineligibility under Section 29A of the Code.

Analysis: The Adjudicating Authority had indicated EIH as ineligible under Section 29A; allegations of siphoning and collusion were pleaded but pending in other fora (e.g., writ proceedings) and not determinatively established before this Tribunal; the Tribunal considered Section 29A issues on the record before it and found no basis to set aside approval in this appeal.

Conclusion: The appeal does not succeed on the contention that Section 29A ineligibility of EIH vitiates the approved resolution plan.

Final Conclusion: The Appellant's grounds challenging approval of the resolution plan (non furnishing of plan, OTS, condition precedent, discriminatory treatment of operational creditors, feasibility/viability, and Section 29A issues) do not establish legal infirmity; the appeal is dismissed and the impugned order approving the resolution plan is upheld.

Ratio Decidendi: Where a committee of creditors, acting within the statutory framework, approves a resolution plan after assessing feasibility, viability and commercial considerations, and where any condition precedent is necessary for implementation, courts will not interfere with the CoC's commercial wisdom in absence of established illegality or prejudice; procedural developments after CoC approval (such as later judicial directions on circulation of plans) do not retrospectively vitiate a CoC approval given when no such obligation existed.

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