Limited judicial review in resolution plan approval upheld despite objections on eligibility, funding, locus, and alleged irregularities.

The appellate tribunal upheld a homebuyer-led resolution plan, holding that the committee of creditors could apply different eligibility criteria for an allottees' association where the classification was reasonable and linked to value maximisation. It also sustained the registration cut-off date, found the association had locus to challenge the plan, and rejected objections based on alleged discrepancies in unsold area, receivables, car-park funding, and assured returns treatment. The tribunal held that Cimco Projects Ltd. had adequate opportunity to submit a plan and that the suspended director was heard on objections. Applying the limited scope of review under the Insolvency and Bankruptcy Code, it found no material irregularity or statutory breach warranting interference.

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Issues: (i) Whether the different eligibility criteria fixed for association of allottees as compared to other resolution applicants was unsustainable and discriminatory; (ii) whether the cut-off date of registration of an allottees' association prior to the constitution of the committee of creditors had no rational basis; (iii) whether Crown Business Park Tower A Buyers Association had locus to challenge the approved resolution plan; (iv) whether the figures of unsold area and receivables in the resolution plan were so discrepant as to vitiate approval; (v) whether funding through car parking sales was impermissible; (vi) whether non-commitment of the assured returns component amounted to modification of the resolution plan; (vii) whether Cimco Projects Ltd. was denied equal opportunity to submit a resolution plan; (viii) whether the suspended director was denied hearing on its objection; and (ix) whether any material irregularity in the conduct of the CIRP justified interference with approval of the resolution plan.

Issue (i): Whether the different eligibility criteria fixed for association of allottees as compared to other resolution applicants was unsustainable and discriminatory.

Analysis: The resolution process regulations empower the committee of creditors to specify the criteria for prospective resolution applicants. The criteria need not be identical for every category of applicant if the classification is reasonable and connected with the object of resolution and value maximisation. The allottees formed the overwhelming majority of the committee of creditors and the relaxation in earnest money/security requirements for an association of allottees was treated as a commercial decision taken in the context of their substantial admitted claims and their role in reviving the project.

Conclusion: The different eligibility criteria were held to be sustainable and not in violation of the CIRP Regulations.

Issue (ii): Whether the cut-off date of registration of an allottees' association prior to the constitution of the committee of creditors had no rational basis.

Analysis: The date was linked to the constitution of the committee of creditors and was used to identify an association already in existence when the creditor body came into being. That linkage was treated as a rational criterion rather than an arbitrary exclusion. The appellant association also did not promptly challenge the criterion before the resolution professional or the adjudicating authority.

Conclusion: The cut-off date was upheld as having a rational basis and was not set aside.

Issue (iii): Whether Crown Business Park Tower A Buyers Association had locus to challenge the approved resolution plan.

Analysis: Although some members of the association supported the plan, the association itself represented a larger body of homebuyers, including members whose claims were not admitted or were still under consideration. The challenge raised issues affecting a class of stakeholders beyond the members who voted in favour, so the appeal was not rejected on locus alone.

Conclusion: The association was held to have locus to file the appeal.

Issue (iv): Whether the figures of unsold area and receivables in the resolution plan were so discrepant as to vitiate approval.

Analysis: The plan proceeded on the basis of the available saleable area after accounting for admitted claims and kept a portion of the balance area for contingencies and belated claims. The figures used in the plan were treated as the resolution applicant's commercial assessment, made with full knowledge that claims were still being verified and that the adjudicating authority had kept several applications pending. The same approach was applied to receivables, which were calculated on the basis of admitted claims rather than on a theoretical maximum area.

Conclusion: The discrepancy alleged in the unsold area and receivables did not justify setting aside the plan.

Issue (v): Whether funding through car parking sales was impermissible.

Analysis: The plan dealt with covered parking in a commercial project and provided for allocation and pricing of parking slots as part of the funding mechanism. The restriction relating to open parking as common area under the real estate law did not, on the facts, prohibit the proposed treatment of covered parking slots as a source of funding.

Conclusion: The proposed funding from car parking was held to be permissible.

Issue (vi): Whether non-commitment of the assured returns component amounted to modification of the resolution plan.

Analysis: The plan itself contemplated that surplus or deficit in execution could affect the assured returns component and that any shortfall would stand adjusted accordingly. The treatment of assured returns was therefore built into the plan as a contingent and adjustable feature rather than as an immutable promise.

Conclusion: Non-commitment of the full assured returns amount was not treated as a modification of the resolution plan.

Issue (vii): Whether Cimco Projects Ltd. was denied equal opportunity to submit a resolution plan.

Analysis: Cimco Projects Ltd. had submitted its expression of interest and obtained an extension of time, but did not file any resolution plan within the extended period. A further request for extension was declined by the committee of creditors. The opportunity available to the applicant was therefore found to have been adequate.

Conclusion: Cimco Projects Ltd. was held not to have been denied equal opportunity.

Issue (viii): Whether the suspended director was denied hearing on its objection.

Analysis: The objection application filed by the suspended director was heard, order was reserved, and the adjudicating authority dealt with the objections in the impugned order. The record showed that the grievance was considered and rejected after hearing.

Conclusion: The suspended director was held to have been afforded opportunity of hearing.

Issue (ix): Whether any material irregularity in the conduct of the CIRP justified interference with approval of the resolution plan.

Analysis: The resolution professional collated and verified claims, claims were admitted and reconstituted as required, and the plan was approved by a dominant homebuyer-led committee of creditors. The court applied the settled limits of judicial review under the Insolvency and Bankruptcy Code, holding that interference is confined to contravention of section 30(2) or proven material irregularity, neither of which was made out on the facts.

Conclusion: No material irregularity warranting interference was found.

Final Conclusion: The approved resolution plan was substantially sustained, the connected appeals by the other appellants were dismissed, and the approval was upheld with directions to give effect to subsequently admitted claims in accordance with the plan and to decide the pending claim applications expeditiously.

Ratio Decidendi: In resolution plan approval matters, the adjudicating and appellate authorities may interfere only on the limited statutory grounds of non-compliance with section 30(2) or proven material irregularity, and they cannot substitute their view for the commercial wisdom of the committee of creditors where the plan otherwise conforms to the Code and Regulations.

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