Approval of resolution plan and post-approval modification of acquisition structure; operational creditors and employee dues protected.

Clarifies that a resolution applicants contractual right to alter acquisition structure under an approved plan is permissible when exercised with Committee of Creditors approval, and such modification does not breach the time limit for completion of the corporate insolvency resolution process where the approved plan was filed before the adjudicating authority; operational creditors are entitled to the amounts provided in the approved plan and no overpayment claim was established by appellant; employees provident fund and gratuity must be paid in full and are not subject to the monetary cap proposed by the resolution applicant, thereby preserving employee dues under the plan.

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Issues: (i) Whether approval of the resolution plan and subsequent modification/alteration effected on 01.04.2025 violated the time-limit under Section 12(1) of the Insolvency and Bankruptcy Code, 2016; (ii) Whether the approved resolution plan contravenes Section 30(2)(b) of the IBC and Section 53 by providing an inadequate payout to operational creditors (including employees) and failing to protect statutory dues.

Issue (i): Whether the approval of the resolution plan and the modification of the acquisition structure on 01.04.2025 violated the 180-day time-limit under Section 12(1) of the IBC.

Analysis: The CIRP commenced on 30.09.2024, making the 180-day period expire on 28.03.2025. The CoC approved the resolution plan in the 10th CoC meetings held on 19.02.2025 and 21.02.2025, a Letter of Intent was issued on 24.02.2025, accepted on 24.02.2025, and performance security was submitted on 27.02.2025. The approved resolution plan expressly reserved under Clause 3.7.1 the right of the SRA to alter the acquisition structure without changing amounts payable to stakeholders, subject to CoC approval. The revised acquisition structure approved by the CoC on 01.04.2025 did not alter amounts receivable by stakeholders and was within the contractual power retained under the approved plan; the RP had already filed the application for approval before expiry of 180 days.

Conclusion: The Court concluded that there was no violation of Section 12(1); the resolution plan was approved by the CoC within 180 days and the modification under Clause 3.7.1 did not contravene the statutory timeline.

Issue (ii): Whether the resolution plan violated Section 30(2)(b) of the IBC and Section 53 by providing only Rs. 1 crore to operational creditors including employees and by not protecting provident fund and gratuity dues.

Analysis: Section 30(2)(b) requires that operational creditors receive not less than what they would obtain under liquidation as per Section 53. The liquidation value of the corporate debtor was shown to be insufficient to satisfy financial creditors and left operational creditors effectively with nil liquidation recovery. The plan provided Rs. 1 crore to operational creditors (0.18% of admitted operational claims) which is not less than their liquidation entitlement in the factual matrix. The adjudicating authority expressly directed payment in full of Employees Provident Fund and gratuity dues (paragraph 12.12), excluding those statutory dues from the Rs. 1 crore outer limit.

Conclusion: The Court held that the resolution plan did not violate Section 30(2)(b) or Section 53; payment to operational creditors was not less than liquidation value and statutory PF and gratuity dues are to be paid in full as directed by the adjudicating authority.

Final Conclusion: The appeals do not disclose any valid ground to interfere with the adjudicating authority's approval of the resolution plan; the challenges on timeline and inadequate payment to operational creditors fail and the impugned order approving the resolution plan is upheld.

Ratio Decidendi: Where a resolution plan is approved by the Committee of Creditors within the 180-day CIRP period and the approved plan expressly reserves a contractual right to modify acquisition structure without altering amounts payable to stakeholders, such post-approval modifications (with CoC approval) do not constitute a breach of Section 12(1); and under Section 30(2)(b) operational creditors must receive not less than their liquidation entitlement, so a plan providing amounts not less than liquidation value (with statutory dues protected) complies with the Code.

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