CIRP irregularities and misrepresentation can vitiate Resolution Plan approval despite the Committee of Creditors' commercial wisdom.

Unlawful confirmation of an Interim Resolution Professional as Resolution Professional, execution of a memorandum of understanding without prior Committee of Creditors approval, and misrepresentation to the Committee of Creditors were treated as serious CIRP violations. The Tribunal found that such non-compliance, including retrospective execution and indicators of related-party connection, constituted material irregularities affecting fairness, transparency, and integrity of the insolvency process. Those defects were held to vitiate the approval process, with the result that the approved Resolution Plan could not be sustained and the impugned approval order was set aside.

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Issues: (i) Whether the Interim Resolution Professional was lawfully confirmed as Resolution Professional by the Committee of Creditors and whether his conduct in the CIRP was compliant with the Code and Regulations. (ii) Whether the Memorandum of Understanding executed with SIPL was valid and whether SIPL was a related party, with misleading facts having been placed before the Committee of Creditors. (iii) Whether material irregularities in the CIRP vitiated approval of the Resolution Plan.

Issue (i): Whether the Interim Resolution Professional was lawfully confirmed as Resolution Professional by the Committee of Creditors and whether his conduct in the CIRP was compliant with the Code and Regulations.

Analysis: The voting record from the first Committee of Creditors meeting showed dissent on confirmation of the Interim Resolution Professional as Resolution Professional. The later attempt to replace him, the additional affidavit filed by the Committee of Creditors, and the disciplinary findings of the insolvency regulator were treated as supporting material showing that the confirmation was not lawfully completed in the manner asserted. The Tribunal also found prima facie breaches of several CIRP regulations and misconduct in the conduct of the process.

Conclusion: The confirmation of the Interim Resolution Professional as Resolution Professional was held not to have been lawfully made, and his conduct was found to be contrary to the Code and Regulations.

Issue (ii): Whether the Memorandum of Understanding executed with SIPL was valid and whether SIPL was a related party, with misleading facts having been placed before the Committee of Creditors.

Analysis: The Memorandum of Understanding was executed without prior approval of the Committee of Creditors and was dated with retrospective effect to the CIRP commencement date. The Tribunal found that the document had been represented to the Committee of Creditors as a draft after it had already been executed, which amounted to misrepresentation. On the materials placed, including the GST registration particulars and the shared business address, SIPL was treated as connected with the Corporate Debtor.

Conclusion: The Memorandum of Understanding was held to have been executed in violation of the Code and CIRP Regulations, SIPL was held to be a related party, and misleading facts were held to have been furnished to the Committee of Creditors.

Issue (iii): Whether material irregularities in the CIRP vitiated approval of the Resolution Plan.

Analysis: The Tribunal held that material irregularity includes significant non-compliance, misrepresentation, concealment, and procedural deviation affecting fairness and integrity of the CIRP. It relied on the regulator's findings and on the principle that procedural safeguards are substantive. On that basis, the Tribunal concluded that the irregularities found in the CIRP went to the validity of the approval process and affected the plan itself.

Conclusion: The approved Resolution Plan was held to stand vitiated by material irregularities in the CIRP and could not be sustained.

Final Conclusion: The appeals challenging approval of the Resolution Plan succeeded, the impugned approval order was set aside, and the connected contempt proceeding was disposed of without further examination.

Ratio Decidendi: Where the CIRP is vitiated by unlawful confirmation of the resolution professional, execution of a material transaction without prior Committee of Creditors approval, and proven material irregularities affecting fairness and transparency, approval of the Resolution Plan cannot be sustained despite commercial wisdom of the Committee of Creditors.

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