CoC commercial wisdom upheld in insolvency resolution, with no interference on valuation, creditor classification, or dissenting creditor payout.

Commercial wisdom of the CoC governed approval of the resolution plan, and the appellate review of valuation was limited. The valuation reports were obtained from registered valuers, shared with stakeholders, and no procedural infirmity or haste was shown to justify interference. Differential treatment among creditor classes, including the haircut to financial creditors and the treatment of homebuyers as a separate class, was consistent with the Code and the statutory safeguards for plan approval. Dissenting financial creditors were entitled only to the minimum amount under the insolvency framework and could not payment based on the full value of their security interest. The resolution plan approval was therefore upheld.

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Issues: (i) Whether the resolution process and valuation exercise suffered from procedural infirmity or haste warranting interference with approval of the resolution plan. (ii) Whether the differential treatment of creditor classes, including the haircut to financial creditors and the treatment of homebuyers, violated the statutory requirements for approval of the resolution plan. (iii) Whether dissenting financial creditors were entitled to receive payment on the basis of the value of their security interest.

Issue (i): Whether the resolution process and valuation exercise suffered from procedural infirmity or haste warranting interference with approval of the resolution plan.

Analysis: The resolution process was conducted in the backdrop of urgent project exigencies and repeated CoC decisions requiring immediate commencement of construction and timely payment of statutory dues to preserve the project. The record showed that the valuation reports were obtained from registered valuers, were shared with the stakeholders, and were not shown to suffer from such defect as would justify appellate interference. The scope of review over valuation in insolvency resolution is limited, and the commercial decision of the CoC cannot be displaced merely because a different valuation or approach is suggested by dissenting creditors.

Conclusion: No procedural infirmity or valuation defect was found to warrant interference.

Issue (ii): Whether the differential treatment of creditor classes, including the haircut to financial creditors and the treatment of homebuyers, violated the statutory requirements for approval of the resolution plan.

Analysis: The plan was approved by an overwhelming majority of the CoC and was found to be in compliance with the statutory requirements governing resolution plans. Homebuyers form a separate class of financial creditors, and differential treatment between similarly situated and differently situated creditor classes is permissible within the framework of the Code. The mere fact that financial creditors received a lower recovery while homebuyers were to receive flats without escalation did not establish any legal violation, since distribution under a resolution plan is governed by the CoC's commercial wisdom subject to the minimum statutory safeguards.

Conclusion: The differential treatment did not violate the approval requirements, and the plan could not be disturbed on that ground.

Issue (iii): Whether dissenting financial creditors were entitled to receive payment on the basis of the value of their security interest.

Analysis: The statutory scheme entitles dissenting financial creditors only to the minimum amount prescribed under the Code, not to enforcement of the full value of their security interest through the resolution plan. Security interest does not confer a right to insist on a higher distribution than that contemplated by the statutory framework for dissenting creditors. The plan amount offered to the dissenting creditors was held to be in accordance with the Code.

Conclusion: Dissenting financial creditors were not entitled to payment according to security value, and the challenge on this ground failed.

Final Conclusion: The approval of the resolution plan was upheld, and no ground was made out for appellate interference with either the rejection of objections or the plan approval order.

Ratio Decidendi: In insolvency resolution, the CoC's commercial wisdom governs plan approval and creditor distribution, subject only to the statutory minimum payable to dissenting financial creditors, who cannot demand payment on the basis of the full value of their security interest.

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