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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the approval of the successful resolution applicant's plan could be interfered with on the ground that the unsuccessful resolution applicant was not separately or formally communicated rejection of his plan; (ii) Whether revision of resolution plans more than once and the absence of a challenge mechanism vitiated the approval process.
Issue (i): Whether the approval of the successful resolution applicant's plan could be interfered with on the ground that the unsuccessful resolution applicant was not separately or formally communicated rejection of his plan.
Analysis: The plan of the appellant had in fact been considered by the committee of creditors along with other plans, and the successful resolution applicant's plan was approved with 100% vote share. The absence of a written communication rejecting the appellant's plan did not affect the validity of the commercial decision taken by the committee of creditors. The tribunal reiterated that such commercial wisdom is not open to interference at the instance of an unsuccessful resolution applicant.
Conclusion: The challenge based on non-communication of rejection failed, and the approval of the resolution plan could not be interfered with.
Issue (ii): Whether revision of resolution plans more than once and the absence of a challenge mechanism vitiated the approval process.
Analysis: Regulation 39(1A) restricts the resolution professional from permitting modification of a resolution plan more than once, but that restriction was held not to curtail the committee of creditors' power to seek revisions or negotiate with resolution applicants. The challenge mechanism was treated as an enabling device intended to assist value maximisation, and its non-use was held not to be a valid ground to question approval of the plan.
Conclusion: The objections based on alleged violation of Regulation 39(1A) and non-holding of a challenge mechanism were rejected.
Final Conclusion: No ground was made out to unsettle the committee of creditors' approval of the resolution plan, and the applications were rightly rejected.
Ratio Decidendi: An unsuccessful resolution applicant cannot defeat approval of a resolution plan by relying on absence of formal rejection communication, and the committee of creditors' commercial wisdom to revise, negotiate, and approve plans cannot be invalidated merely because a challenge mechanism was not adopted.
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