Locus standi and resolution plan review: suspended directors cannot challenge approval without a real legal grievance.

Suspended directors cease to have a cognisable personal stake after commencement of CIRP and therefore lack locus standi to challenge approval of a resolution plan unless they can show a genuine legal grievance. A resolution plan is not liable to be disturbed merely because creditors receive different treatment, as creditor-wise allocation falls within the Committee of Creditors' commercial wisdom where the statutory minimum under the insolvency framework is met. Objections based on employee dues, unsecured creditor allocation, and provident fund treatment are unsustainable unless non-compliance with the Code or related law is specifically shown; preservation of priority for provident fund dues subject to quantification is sufficient.

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Issues: (i) whether the suspended directors had locus standi as persons aggrieved to challenge the approval of the resolution plan; (ii) whether the resolution plan was liable to be interfered with on the grounds of alleged inadequacy of treatment to employees and workmen, nil allocation to an unsecured financial creditor, and alleged non-compliance with the Insolvency and Bankruptcy Code, 2016 and the EPF law.

Issue (i): whether the suspended directors had locus standi as persons aggrieved to challenge the approval of the resolution plan.

Analysis: The appeal was directed by persons whose role had ceased on commencement of CIRP, and the impugned approval did not create any legal prejudice to them. The record also showed that the challenge was not founded on any demonstrated personal right affected by the plan. In insolvency proceedings, a challenge to approval of a resolution plan is maintainable only by a person who can show that he is genuinely aggrieved by the order.

Conclusion: The suspended directors were not persons aggrieved and had no locus standi to maintain the appeal.

Issue (ii): whether the resolution plan was liable to be interfered with on the grounds of alleged inadequacy of treatment to employees and workmen, nil allocation to an unsecured financial creditor, and alleged non-compliance with the Insolvency and Bankruptcy Code, 2016 and the EPF law.

Analysis: The plan provided at least the minimum payable with reference to liquidation value under the insolvency framework, and the commercial allocation between different classes of creditors fell within the Committee of Creditors' commercial wisdom. Differential treatment among classes of creditors was not, by itself, impermissible. The alleged grievance regarding nil allocation to the unsecured financial creditor could not be pursued by the appellants on behalf of that creditor, and the eventual allocation of a sum to that creditor also rendered that objection academic. The complaint regarding employee and workmen dues was also found unsustainable, as the allocation was treated as compliant with the statutory minimum and the manner of distribution was not shown to be illegal. The allegation regarding provident fund dues was rejected because the plan preserved priority for such dues subject to quantification.

Conclusion: No ground was made out to set aside the approved resolution plan on merits.

Final Conclusion: The appeal failed both on maintainability and on merits, and the approval of the resolution plan was left undisturbed.

Ratio Decidendi: An appeal against approval of a resolution plan is not maintainable at the instance of suspended directors who are not persons aggrieved, and a resolution plan that satisfies the minimum statutory threshold under the insolvency framework cannot be overturned merely because the court considers the creditor-wise allocation inequitable or insufficient in commercial terms.

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