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Issues: (i) Whether a Resolution Applicant who is an Operational Creditor and the sole member of the Committee of Creditors (holding 100% voting rights) can vote to approve its own resolution plan; (ii) Whether a single-member Committee of Creditors that is also a competing Resolution Applicant can fairly, objectively and independently assess and reject a competing resolution plan, particularly where a judicial direction required fresh consideration.
Issue (i): Whether an Operational Creditor, who is not a Financial Creditor, acting as a Resolution Applicant and sole voting member of the CoC can validly vote to approve its own resolution plan.
Analysis: Section 30(5) of the Insolvency and Bankruptcy Code, 2016 contains a proviso that a resolution applicant shall not have a right to vote at the CoC meeting unless such resolution applicant is also a financial creditor. The statutory scheme thus separates the role of a resolution applicant from the role of a voting decision-maker to prevent influence and conflict. In the factual matrix where the sole CoC member was an Operational Creditor who also submitted and approved its own plan, the statutory prohibition in Section 30(5) was breached. Such voting and approval by an Operational Creditor who is not a Financial Creditor directly defeats the purpose of the proviso and creates a material irregularity in the decision-making process.
Conclusion: Issue (i) answered in the negative. Approval of its own resolution plan by an Operational Creditor who is not a Financial Creditor and who held 100% voting rights in the CoC is void-ab-initio and amounts to a material irregularity.
Issue (ii): Whether the single-member CoC that was also a competing Resolution Applicant conducted a fair, objective and independent assessment of the competing resolution plans when the Adjudicating Authority had directed fresh consideration.
Analysis: The Adjudicating Authority directed the CoC to freshly consider the appellant's plan keeping relevant parameters including total plan value in view. The minutes of the 6th CoC meeting, however, show absence of an evaluation matrix, lack of comparative financial analysis, failure to invite the appellant to the meeting, non-sharing of relevant material (including PUFE information), and predetermined rejection based on internal discussion. The stark disparity in plan values (appellant's plan being significantly higher) heightened the obligation on the CoC and RP to undertake a structured, transparent comparative evaluation. The single-member CoC's rejection without meaningful evaluation, and the RP's failure to ensure compliance with Regulation 39 and the AA direction, constitute procedural infirmity, denial of a meaningful opportunity, and violation of principles of natural justice.
Conclusion: Issue (ii) answered against the CoC and RP. The decision-making process was vitiated by material irregularity, conflict of interest and denial of natural justice; the CoC's approval cannot be sustained.
Final Conclusion: The impugned orders approving the resolution plan of the sole CoC member and rejecting the appellant's plan are set aside due to material irregularity and violation of Section 30(5) and principles of natural justice; the Corporate Insolvency Resolution Process cannot be continued within the present framework and the Corporate Debtor is ordered to be liquidated.
Ratio Decidendi: Section 30(5) of the Insolvency and Bankruptcy Code, 2016 prohibits a resolution applicant who is not a financial creditor from voting at the CoC meeting; where a sole CoC member who is an operational creditor votes to approve its own plan and the process lacks a structured, transparent comparative evaluation and compliance with judicial directions, the approval is void-ab-initio and constitutes a material irregularity justifying judicial intervention including setting aside the approval.
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