Resolution applicant reconstitution requires fresh eligibility review before plan proceeds, while replacement of the resolution professional must follow statutory process.
A change in the constitution of a successful resolution applicant requires the Committee of Creditors to first examine whether the reconstituted applicant remains eligible to proceed and whether the resolution plan can still be pursued in its altered form. The statutory role of the authorised representative also remains central where class creditors seek replacement of the resolution professional: if the requisite support exists, a meeting of the Committee of Creditors may be convened and the request considered in accordance with the insolvency framework. Challenges to a remand order are not excluded merely because earlier approval issues or consent objections are raised, where the remand itself reopens the matter for fresh consideration.
Issues: (i) whether the challenge to the remand order was maintainable despite objections based on locus and alleged consent; (ii) whether the change in constitution of the successful resolution applicant required the Committee of Creditors to examine its continued eligibility and the resolution plan afresh; (iii) whether the request for replacement of the resolution professional could be considered on requisition of the requisite number of class creditors.
Issue (i): whether the challenge to the remand order was maintainable despite objections based on locus and alleged consent.
Analysis: The appeals did not question the original approval vote of the Committee of Creditors but were directed against the later order remitting the resolution plan for fresh consideration. The earlier principle binding minority financial creditors within a class on a duly approved plan did not apply because the impugned order itself displaced the earlier approval and sent the matter back for reconsideration. The order was also not treated as a consent order, since the applicants had raised substantive objections and had not accepted the remand as a complete waiver of their challenge.
Conclusion: The preliminary objections to maintainability were rejected.
Issue (ii): whether the change in constitution of the successful resolution applicant required the Committee of Creditors to examine its continued eligibility and the resolution plan afresh.
Analysis: The change in the composition of the successful resolution applicant went to the root of the basis on which the plan had earlier been considered. The question was whether the altered applicant still remained eligible to proceed as the resolution applicant and whether the plan could still be pursued in its changed form. Such matters were held to fall within the Committee of Creditors' domain and had to be examined before any further step on the plan could be taken.
Conclusion: The Committee of Creditors must first determine the eligibility of the reconstituted resolution applicant and then decide the future course regarding the resolution plan.
Issue (iii): whether the request for replacement of the resolution professional could be considered on requisition of the requisite number of class creditors.
Analysis: Replacement of the resolution professional was held to depend on the statutory mechanism under the insolvency framework and the requisite request from members of the class through the authorised representative. If the authorised representative is satisfied that the threshold support exists, a meeting of the Committee of Creditors may be convened and the issue of replacement can be taken up in accordance with law.
Conclusion: The authorised representative may requisition a meeting on the requisite support and the Committee of Creditors may decide the issue of replacement in accordance with law.
Final Conclusion: The impugned order was sustained, but the matters of the resolution applicant's continued eligibility and the resolution professional's replacement were directed to be examined by the Committee of Creditors before further steps on the plan.
Ratio Decidendi: Where the constitution of a successful resolution applicant changes materially after approval has been placed in issue, the Committee of Creditors must first determine continued eligibility before any further consideration of the plan, and the statutory procedure governing replacement of the resolution professional must be followed through the authorised representative and the Committee of Creditors.
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