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Issues: (i) whether the Adjudicating Authority could reject a resolution plan approved by the Committee of Creditors on grounds of alleged procedural irregularity, valuation concerns and inclusion of disputed assets; (ii) whether the plan was liable to be rejected for alleged non-compliance with statutory dues and the ratio of Rainbow Papers, including the grievance of Ahmedabad Municipal Corporation; and (iii) whether the suspended management's fresh settlement proposals and request for reconsideration by the Committee of Creditors could be entertained after approval of the resolution plan.
Issue (i): whether the Adjudicating Authority could reject a resolution plan approved by the Committee of Creditors on grounds of alleged procedural irregularity, valuation concerns and inclusion of disputed assets?
Analysis: The plan had been approved by the Committee of Creditors after competitive bidding and repeated revisions, and the scope of scrutiny under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 is confined to whether the plan satisfies Section 30(2). Allegations regarding valuation methodology, inclusion of disputed properties in the information memorandum, and the choice of commercial terms fall within the commercial wisdom of the Committee of Creditors, which is not open to substitution by the Adjudicating Authority in the absence of a specific violation of Section 30(2). The disputed properties had been disclosed, the plan proceeded on an as-is-where-is and no-recourse basis, and the record did not justify rejection on the ground of lack of transparency or improper valuation.
Conclusion: The rejection of the plan on these grounds was unsustainable and the plan could not be refused on the basis of those objections.
Issue (ii): whether the plan was liable to be rejected for alleged non-compliance with statutory dues and the ratio of Rainbow Papers, including the grievance of Ahmedabad Municipal Corporation?
Analysis: The resolution plan pre-dated the Rainbow Papers judgment, and the Resolution Professional identified the statutory dues covered by that judgment at Rs. 16.09 crores. The Successful Resolution Applicant expressed willingness to bear the additional amount of Rs. 2.33 crores so that the statutory dues covered by Rainbow Papers would be paid proportionately, without altering the commercial terms of the approved plan. The grievance of Ahmedabad Municipal Corporation therefore did not survive. The plan also provided for full CIRP costs, and the objections founded on alleged non-payment to employees, workmen or statutory authorities were found factually or legally untenable. The Tribunal treated the relief as one of implementation in conformity with binding law, not modification of the plan's commercial content.
Conclusion: The plan was not liable to be rejected on the ground of Rainbow Papers or alleged non-compliance with statutory dues.
Issue (iii): whether the suspended management's fresh settlement proposals and request for reconsideration by the Committee of Creditors could be entertained after approval of the resolution plan?
Analysis: The suspended management's earlier settlement proposals had already been considered and rejected by the Committee of Creditors. After approval of the resolution plan, and after earlier directions had already disapproved sending the matter back to the Committee of Creditors, a fresh round of reconsideration on the basis of subsequent offers would prolong the insolvency process contrary to the statutory timeline. A withdrawal or fresh settlement route under Section 12A cannot be used in a manner that unsettles an approved resolution plan, and the suspended management had no right to insist on reconsideration of the already approved plan.
Conclusion: The fresh settlement proposals and request to reopen consideration by the Committee of Creditors were not entertainable.
Final Conclusion: The impugned rejection order was set aside and the resolution plan approved, restoring the plan's enforceability in accordance with the Code and the binding commercial decision of the Committee of Creditors.
Ratio Decidendi: A resolution plan approved by the Committee of Creditors can be rejected by the Adjudicating Authority only for a demonstrated violation of Section 30(2) of the Insolvency and Bankruptcy Code, 2016, and not on grounds that lie within commercial wisdom or on objections that can be accommodated by implementation without altering the plan's commercial terms.
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