Appeal against resolution plan dismissed; no locus, no Section 30(2) IBC breach, CoC wisdom upheld

NCLAT (Chennai) dismissed the appeal, upholding NCLT's refusal to entertain the appellant's application challenging the approved resolution plan. It held that the appellant lacked locus standi, as earlier orders of NCLT and NCLAT had already negatived its right to intervene, and the appellant was neither a necessary party nor even an unsuccessful resolution applicant. The Tribunal reiterated that it cannot interfere with the CoC's commercial wisdom absent a proven violation of Section 30(2) of the IBC. Alleged information gaps and subsequent sale of certain units did not vitiate the plan, particularly since the successful resolution applicant had accepted the corresponding liabilities.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether a delay of 12-13 days in filing the appeal against the impugned order deserved condonation under the proviso to Section 61(2) of the Insolvency and Bankruptcy Code, 2016.

1.2 Whether a prospective resolution applicant, who did not submit a resolution plan within the prescribed timeline and whose intervention earlier stood finally rejected, has locus standi to maintain an application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016 challenging the resolution process and the approved resolution plan.

1.3 Whether alleged defects and non-updation of the Information Memorandum, including non-reflection of certain liabilities, vitiated the CIRP and warranted setting aside the process from the stage of issuance of the Information Memorandum, issuance of a fresh Form G, and calling for fresh resolution plans.

1.4 Whether, in the facts of the case, the Adjudicating Authority or the Appellate Tribunal could interfere with or remit the resolution plan for reconsideration by questioning the commercial wisdom of the Committee of Creditors, absent any established violation of Section 30(2) of the Insolvency and Bankruptcy Code, 2016.

1.5 Whether the appeal and the underlying application were a bona fide challenge based on alleged informational deficiencies, or a mala fide attempt to derail and re-run the resolution process.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of delay in filing the appeal

Legal framework (as discussed)

2.1 The Court considered the limitation prescribed in Section 61(2) of the Insolvency and Bankruptcy Code, 2016, particularly the proviso permitting extension of the 30-day appeal period up to a maximum of 45 days on sufficient cause being shown.

Interpretation and reasoning

2.2 The impugned order was uploaded on 27.03.2025. The basic 30-day period expired on 26.04.2025. The appeal was filed on 07.05.2025, resulting in 12 days' delay beyond the initial 30 days but still within the 45-day outer limit contemplated by the proviso to Section 61(2).

2.3 The Court examined the reasons stated in the condonation application (especially paras 3.2 and 3.3) and found them satisfactory for explaining the short delay.

Conclusions

2.4 The delay of 12 days in filing the appeal was condoned as it fell within the statutory outer limit of 45 days and sufficient cause was shown.

Issue 2: Locus standi of the appellant to challenge the resolution process and plan

Legal framework (as discussed)

2.5 The application before the Adjudicating Authority was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Rule 11 of the NCLT Rules, 2016. The Court examined the concept of "aggrieved person" and locus standi in the context of an unsuccessful/ non-participating prospective resolution applicant seeking to assail the resolution plan and resolution process.

Interpretation and reasoning

2.6 The appellant was only a shortlisted Prospective Resolution Applicant (PRA) whose name appeared in the final list; however, he did not submit any resolution plan by the cut-off date of 18.03.2024, despite publication of Form G on 08.12.2023 and adequate notice of the deadline.

2.7 The appellant's intervention application (IA No. 20/2024) to be impleaded in proceedings concerning approval of the successful resolution applicant's plan had been rejected by the Adjudicating Authority on 13.06.2024. That rejection was affirmed by the Court in earlier appeals decided on 20.12.2024, wherein it was categorically held that:

- The revised plan allegedly submitted by the appellant had been rejected; that rejection was never challenged and had attained finality.

- The appellant had no locus standi to intervene or challenge the approval of the resolution plan of the successful resolution applicant.

- Upon rejection of intervention and affirmation of that order, the appellant ceased to have any right to challenge the resolution plan approval process.

- The appellant did not fall within the domain of an "aggrieved person" capable of challenging the approval of the resolution plan.

2.8 It was undisputed that the said judgment of 20.12.2024 had not been challenged before the Supreme Court and therefore had attained finality. On that premise, the Court held that the issue of the appellant's locus was concluded and binding.

2.9 In light of the above, the Court reasoned that the appellant, having failed to submit a resolution plan, having had his intervention rejected, and having had his earlier appeals dismissed, could not again seek to challenge the same resolution plan indirectly by alleging defects in the Information Memorandum through IA (IBC) No. 439/2025.

Conclusions

2.10 The appellant had no locus standi to challenge the resolution plan or the resolution process. He was neither a successful nor an unsuccessful resolution applicant and did not qualify as an aggrieved person. The application IA (IBC) No. 439/2025 was thus not maintainable at his behest.

Issue 3: Effect of alleged defects and non-updation of the Information Memorandum; prayer to set aside CIRP from IM stage and call for fresh plans

Interpretation and reasoning

2.11 The appellant contended that the Information Memorandum was incomplete and defective as it did not reflect certain liabilities towards individual purchasers (who had filed separate IAs) and that, despite specific directions in those IAs, the Resolution Professional failed to revise the Information Memorandum. He argued that this prevented him from formulating a viable resolution plan and vitiated the CIRP.

2.12 The Resolution Professional contended that the liabilities in question were already reflected in the financial statements forming an integral part of the Information Memorandum, that the successful resolution applicant had been directed and had undertaken to incorporate the liabilities in its plan, and that PRAs were independently obligated to conduct their own due diligence.

2.13 The Adjudicating Authority had found that the alleged defects in the Information Memorandum were not material enough to justify issuance of a fresh Form G or re-starting the process. It also found no violation of Section 30(2) of the Insolvency and Bankruptcy Code on that account.

2.14 The Court concurred that the alleged information gaps did not impact the viability or legality of the resolution plan. The new information (i.e., certain units having already been sold) would normally reduce the asset value and hence the resolution value, but in this case the successful resolution applicant had acknowledged the liability and undertaken to comply with the directions of the Adjudicating Authority. Hence, there was no necessity to alter or revisit the resolution plan approval process on that ground.

2.15 The Court further held that, in any event, given the appellant's lack of locus, he could not demand revision of the Information Memorandum or a re-run of the CIRP from the IM stage.

Conclusions

2.16 The alleged deficiencies or non-updation of the Information Memorandum did not vitiate the CIRP or warrant setting aside the process from the IM stage, issuance of a fresh Form G, or calling for fresh resolution plans.

2.17 The liabilities in question stood acknowledged by the successful resolution applicant, and there was no established breach of Section 30(2) of the Insolvency and Bankruptcy Code on this account.

Issue 4: Scope of interference with the commercial wisdom of the Committee of Creditors and applicability of Section 30(2)

Legal framework (as discussed)

2.18 The Court examined the limitation on judicial intervention in matters falling within the commercial wisdom of the Committee of Creditors and the circumstances under which a resolution plan can be interfered with, particularly in the context of express violations of Section 30(2) of the Insolvency and Bankruptcy Code, 2016.

Interpretation and reasoning

2.19 The resolution plan submitted by the successful resolution applicant had been approved by the Committee of Creditors on 22.03.2024. An application for approval of the plan was pending, with orders reserved.

2.20 The Adjudicating Authority had concluded that no grounds had been made out to show violation of Section 30(2), and thus it could not interfere with the commercial wisdom of the Committee of Creditors or remit the plan for reconsideration.

2.21 The Court endorsed this view, holding that it found no occasion or ground to differ from the Adjudicating Authority. In the absence of specific and proven contraventions of Section 30(2), it was impermissible to question the Committee of Creditors' business decision to approve the plan.

Conclusions

2.22 There was no established violation of Section 30(2) of the Insolvency and Bankruptcy Code in the approval process of the resolution plan.

2.23 Neither the Adjudicating Authority nor the Court could interfere with or remit the resolution plan by questioning the commercial wisdom of the Committee of Creditors in the facts presented.

Issue 5: Nature of the challenge - bona fide grievance or mala fide attempt to derail CIRP

Interpretation and reasoning

2.24 IA (IBC) No. 439/2025 was filed nearly a year after the last date for submission of resolution plans (18.03.2024), and after the resolution plan of the successful resolution applicant had been approved by the Committee of Creditors and the matter reserved for orders.

2.25 The Court noted that the appellant, having failed to submit a resolution plan within time and having already lost his intervention attempts and earlier appeals, sought a re-run of the resolution process on the ostensible ground of a faulty Information Memorandum.

2.26 The Court inferred that no legitimate or fruitful objective could be intended by seeking issuance of a fresh Form G at such a belated stage, other than to derail the decision-making process and resolution of the corporate debtor's insolvency.

2.27 The Court characterised the appellant, in these circumstances, as an "intruder" to the proceedings, who had no right to be heard and was not likely to be adversely affected by any order on the resolution plan.

Conclusions

2.28 The proceeding initiated by the appellant, under the guise of correcting a faulty Information Memorandum, was held to be mala fide and intended to derail the CIRP.

2.29 The appeal lacked merit and was dismissed; all pending interlocutory applications were closed.

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