Resolution applicant default and liquidation upheld: agreed plan terms, earnest money forfeiture, and limited review of commercial wisdom.

A successful resolution applicant who knowingly accepted the resolution framework could not later treat the letter of intent as conditional and withdraw from the approved process. Stipulations referring to pending proceedings and allocation of employee and worker liabilities were treated as part of the agreed resolution structure, not as a basis to resile. The earnest money deposit was validly forfeited because the applicant failed to accept the letter of intent and did not submit the performance guarantee within the stipulated time, as authorised by the request for resolution plan. The Committee of Creditors' decision to reject the defaulting plan and proceed to liquidation was upheld as an exercise of commercial wisdom, subject only to limited statutory review under the Insolvency and Bankruptcy Code, 2016.

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Issues: (i) Whether the letter of intent issued to the successful resolution applicant was rendered conditional by stipulations referring to pending proceedings and risk allocation, (ii) whether the forfeiture of earnest money deposit for non-acceptance of the letter of intent and failure to submit the performance guarantee was lawful, and (iii) whether the Committee of Creditors could validly reject the resolution plan and proceed to liquidation after the applicant's default.

Issue (i): Whether the letter of intent issued to the successful resolution applicant was rendered conditional by stipulations referring to pending proceedings and risk allocation.

Analysis: The stipulations in the letter of intent only recorded that the resolution process would remain subject to the outcome of pending proceedings and that liabilities relating to employee and worker claims would be borne by the successful resolution applicant in accordance with the resolution framework. The applicant had participated in the relevant Committee of Creditors meetings, was aware of the pending litigation, and expressly accepted the relevant terms. In that context, the Court found no basis to treat the letter of intent as a conditional instrument that entitled the applicant to resile from the approved plan.

Conclusion: The challenge to the letter of intent failed, and the stipulations did not make it conditional in the sense urged by the appellant.

Issue (ii): Whether the forfeiture of earnest money deposit for non-acceptance of the letter of intent and failure to submit the performance guarantee was lawful.

Analysis: Clause 1.9.4 of the Request For Resolution Plan authorized forfeiture where the successful applicant failed to submit the performance guarantee within time or otherwise failed to comply with the resolution process. The Court noted that the seven-day period for performance guarantee was consistent with the Request For Resolution Plan and that the applicant had earlier agreed to comply with that requirement. The applicant's refusal to accept the terms and subsequent resistance to the process justified invocation of the forfeiture clause.

Conclusion: The forfeiture of the earnest money deposit was held to be valid and lawful.

Issue (iii): Whether the Committee of Creditors could validly reject the resolution plan and proceed to liquidation after the applicant's default.

Analysis: The Court held that once the Committee of Creditors had approved the plan and the applicant failed to proceed in accordance with its obligations, no further modification or withdrawal at the applicant's instance was permissible. The applicant was found to have acquiesced in the terms and could not approbate and reprobate. The Court further held that Section 33 of the Insolvency and Bankruptcy Code, 2016 permits liquidation before confirmation of a resolution plan when the Committee of Creditors so decides in exercise of its commercial wisdom, and such decision is not amenable to judicial interference absent statutory infraction.

Conclusion: The decision to reject the plan and liquidate the corporate debtor was upheld.

Final Conclusion: The appeals failed, the orders of the fora below were sustained, and the liquidation process was permitted to continue in accordance with the Code.

Ratio Decidendi: A successful resolution applicant who has knowingly accepted the terms of the resolution process cannot later resile from an approved plan by characterising agreed stipulations as conditional, and the Committee of Creditors' commercially wise decision to reject such a defaulting plan and move to liquidation is not open to judicial review except on limited statutory grounds.

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