CIRP challenge bidding and group-level eligibility upheld; appellate interference was refused absent material irregularity.

Challenge bidding and post-challenge negotiations under the CIRP Regulations were upheld as valid because the process note and request for resolution plans permitted rounds of bidding, incremental bids, and value-maximising negotiations. The resolution applicant was also found eligible, as "group" was interpreted broadly enough to include the promoter's net worth and turnover for group-level tangible net worth and turnover requirements. Additional GST and income-tax returns were rejected because they were not among the prescribed eligibility documents. No material irregularity under Section 61(3)(ii) was shown, so there was no basis to disturb approval of the resolution plan.

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Issues: (i) Whether the challenge process conducted on 27.10.2023 and the subsequent negotiation process were in accordance with the CIRP Regulations and the process documents; (ii) Whether the successful resolution applicant was ineligible under the invitation for expression of interest and whether the promoter's financials could be included for testing group-level eligibility; (iii) Whether additional documents such as GST returns and income-tax returns could be taken on record to dispute eligibility; (iv) Whether any material irregularity under Section 61(3)(ii) of the Insolvency and Bankruptcy Code, 2016 justified interference with approval of the resolution plan.

Issue (i): Whether the challenge process conducted on 27.10.2023 and the subsequent negotiation process were in accordance with the CIRP Regulations and the process documents.

Analysis: The process note permitted bidding in rounds, required matching or exceeding the threshold bid amount, and also required incremental bids in multiples of Rs. 10 crores. On the facts found, the consortium's bid in the second round did not satisfy the incremental requirement, while the successful resolution applicant's subsequent bid conformed to the stipulated process. Regulation 39(1A) of the CIRP Regulations, 2016 expressly permits use of a challenge mechanism, and the request for resolution plans also authorised negotiations for value maximisation. The subsequent negotiation process was therefore within the contractual and regulatory framework.

Conclusion: The challenge process and the negotiation process were held to be valid and in accordance with the governing regulations and process documents.

Issue (ii): Whether the successful resolution applicant was ineligible under the invitation for expression of interest and whether the promoter's financials could be included for testing group-level eligibility.

Analysis: The eligibility clause required a minimum group-level tangible net worth or group-level turnover. The expression "entity" in the definition of "group" was construed broadly and was not confined to a corporate body alone. On that construction, the promoter's net worth and turnover could be considered for group-level eligibility. The interpretation adopted by the resolution professional and the committee of creditors was also supported by the commercial and participative design of the process.

Conclusion: The successful resolution applicant was held eligible, and inclusion of the promoter's financials for group-level eligibility was upheld.

Issue (iii): Whether additional documents such as GST returns and income-tax returns could be taken on record to dispute eligibility.

Analysis: The documents required to be furnished along with the expression of interest and resolution plan were already specified in the invitation. GST returns and income-tax returns were not among the mandated eligibility documents. Since the eligibility determination had to proceed on the prescribed record, the proposed additional materials were not considered necessary for adjudication of the eligibility issue.

Conclusion: The applications seeking to place the additional documents on record were rejected.

Issue (iv): Whether any material irregularity under Section 61(3)(ii) of the Insolvency and Bankruptcy Code, 2016 justified interference with approval of the resolution plan.

Analysis: The challenge process, negotiation process, and eligibility assessment were all found to be within the framework of the CIRP Regulations and the process documents. In the absence of demonstrated non-compliance with the statutory requirements governing approval of a resolution plan, no basis was made out to disturb the committee of creditors' commercial decision or the adjudicating authority's approval.

Conclusion: No material irregularity was established and interference with the approval order was declined.

Final Conclusion: The appellate challenges to the approval of the resolution plan failed, as the process adopted for price discovery, negotiation, and eligibility assessment was upheld and no ground for appellate interference was made out.

Ratio Decidendi: Where the resolution process expressly permits challenge bidding and post-challenge negotiations, and the commercial decision of the committee of creditors is reached within the statutory framework, appellate interference is unwarranted absent a demonstrated material irregularity or non-compliance with the mandatory requirements for plan approval.

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