TaxTMI 
TaxTMI 
2026 (7) TMI 530
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....r Smt. Renu Verma v. Committee of Creditors of Rancom Healthcare Pvt. Ltd., represented through Mahavir Medicare & Anr. The aforesaid appeals arose from the orders dated 12.11.2024 passed by the Adjudicating Authority whereby the Resolution Plan submitted by Mahavir Medicare, the sole Operational Creditor and sole member of the Committee of Creditors of the Corporate Debtor, was approved, while the competing Resolution Plan submitted by Pragiti Construction was not accepted. By judgment dated 06.02.2026, this Appellate Tribunal set aside the approval of the Resolution Plan and directed initiation of liquidation proceedings against the Corporate Debtor, while also making certain adverse observations against the applicant in relation to the conduct of the CIRP. Aggrieved solely by the said observations and not by the substantive findings rendered in the appeals, the applicant preferred Civil Appeal Nos. 3060-3061 of 2026 before the Hon'ble Supreme Court. The Hon'ble Supreme Court, by order dated 13.03.2026, declined to interfere with the judgment but granted liberty to the applicant to approach this Tribunal with a prayer for expunging the remarks made against him. Pursuant t....
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.... the applicant informed the CoC that the Resolution Plan submitted by Pragiti Construction offered a higher value than the plan submitted by Mahavir Medicare and that consideration of such plan could result in a competitive process. Despite the said observations, the sole CoC member rejected the Resolution Plan of Pragiti Construction. (vii) Thereafter, both IA No. 358 of 2024 and IA No. 401 of 2024 were decided by the Adjudicating Authority through orders dated 12.11.2024. While IA No. 358 of 2024 was dismissed on the ground of commercial wisdom of the CoC, IA No. 401 of 2024 was allowed and the Resolution Plan submitted by Mahavir Medicare was approved under Section 31 of the IBC. (viii) Challenging both orders, Pragiti Construction filed Company Appeal (AT) (Ins.) Nos. 2330 and 2331 of 2024 before this Appellate Tribunal. By judgment dated 06.02.2026, this Tribunal held that the sole Operational Creditor, being also the Resolution Applicant, could not have approved its own Resolution Plan in view of Section 30(5) of the IBC. Accordingly, the approval of the Resolution Plan was set aside, liquidation of the Corporate Debtor was directed, and certain adverse obse....
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....y Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 specifically provides for situations where the Committee of Creditors consists solely of Operational Creditors. The said Regulation expressly stipulates that where the Committee comprises only Operational Creditors, such Operational Creditors shall enjoy the same rights, powers, duties and obligations as are available to a Committee of Creditors consisting of Financial Creditors. The legislative intent behind Regulation 16(4) is to ensure that insolvency proceedings are not rendered unworkable merely because no Financial Creditor exists in the Corporate Debtor. 7. He further submits that the above Regulation derives statutory support from Section 21 of the Insolvency and Bankruptcy Code, 2016. In particular, the proviso to Section 21(8) contemplates a situation where a Corporate Debtor does not have any Financial Creditor. In such circumstances, the Committee of Creditors is required to be constituted in the manner prescribed and such persons are empowered to discharge the functions ordinarily performed by a Committee of Creditors. Therefore, the Code itself recognises that insolvency resolu....
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....f the Appellant. The remarks made in this regard therefore deserve to be expunged. Issue No. 2 12. Whether such a Committee of Creditors consisting of only one member, who is also a Resolution Applicant and directly interested in the outcome of the resolution process, can fairly, objectively and independently assess the feasibility and viability of competing Resolution Plans submitted by other Resolution Applicants? 13. Ld. Counsel submits that this Appellate Tribunal considered Issue No.2 in paragraphs 85 to 92 of the judgment and recorded its conclusions in paragraphs 97 and 98. This Appellate Tribunal observed that the Resolution Professional failed to invite Pragiti Construction, the unsuccessful Prospective Resolution Applicant, to the meeting of the Committee of Creditors as contemplated under Section 30(5) of the Code. It was further observed that no Evaluation Matrix had been prepared and that the process adopted by the Committee of Creditors was contrary to the principle that no person should be a judge in his own cause. Based on these findings, this Hon'ble Tribunal concluded that the rejection of the Resolution Plan submitted by Pragiti Construction was vitiated....
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....ber of the Committee of Creditors independently took up the issue of the Resolution Plan submitted by Pragiti Construction under Agenda Item No.4 relating to the overview of the CIRP and proceeded to reject the Resolution Plan. The rejection was not a consequence of any instruction or direction issued by the Appellant. On the contrary, the Appellant actively endeavoured to persuade the sole CoC member to consider the Resolution Plan submitted by Pragiti Construction, particularly because such consideration could potentially lead to value maximisation and would be beneficial for the insolvency resolution process. 19. It is further submitted that the allegation regarding non-preparation of an Evaluation Matrix must also be appreciated in the factual context of the case. The Resolution Plan submitted by Pragiti Construction was not formally taken on record during the original CIRP process because it had been submitted long after expiry of the extended timeline granted for submission of Resolution Plans. It was only pursuant to the order dated 10.09.2024 passed by the Ld. Adjudicating Authority that the possibility of considering the said Resolution Plan arose. Consequently, the Eva....
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....lure to invite Pragiti Construction to the meeting in which its Resolution Plan came to be rejected. 24. Insofar as the first allegation is concerned, the Appellant has already demonstrated that the grant of voting rights to the sole Operational Creditor was based upon Regulation 16(4) of the CIRP Regulations read with the proviso to Section 21(8) of the Code and was undertaken in discharge of the Appellant's statutory duties. 25. Insofar as the second allegation is concerned, the notice convening the 6th CoC meeting clearly demonstrates that there was no agenda item for consideration of the Resolution Plan submitted by Pragiti Construction. The meeting was convened to discuss the next lawful course of action in view of the peculiar factual and legal circumstances prevailing at that stage. Notwithstanding this position, the sole CoC member proceeded to reject the Resolution Plan under a different agenda item despite the Appellant's efforts to persuade the Committee to consider the proposal in the interest of value maximisation. 26. Ld. Counsel further submits that after pronouncement of the judgment dated 06.02.2026, the Appellant acted promptly and responsibly by filing I....
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....ar legal situation of the present case and initiate necessary amendments to the Insolvency and Bankruptcy Code. 30. At the outset, it is necessary to clarify that the scope of the present Interlocutory Application is extremely limited. The Applicant does not seek review of the Judgment dated 06.02.2026 on merits, nor does he seek reconsideration of the findings recorded by this Tribunal while deciding Company Appeal (AT) (Ins.) Nos. 2330 and 2331 of 2024. The findings recorded therein on the legality of the Corporate Insolvency Resolution Process, the approval of the Resolution Plan, and the role of the Committee of Creditors have attained finality and are not the subject matter of the present proceedings. The Applicant has confined the present application only to the adverse observations and consequential directions recorded against him in paragraph 99 of the said Judgment, pursuant to the liberty granted by the Hon'ble Supreme Court. 31. The Applicant has submitted that he discharged his duties as the Resolution Professional bona fide and in accordance with his understanding of the provisions of the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations. Accordin....
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....ings recorded by this Tribunal in the Judgment dated 06.02.2026 were rendered in the context of the peculiar facts of the present case. The Tribunal found that the approval of the Resolution Plan suffered from material irregularity arising out of the composition of the Committee of Creditors and the manner in which the Resolution Plan came to be approved. Those findings have attained finality and are not liable to be reopened in the present proceedings. Consequently, the observations regarding the statutory obligations expected from a Resolution Professional and the importance of ensuring compliance with the provisions of the Code do not call for any interference. 35. We find substance in the explanation given by the Applicant for his actions in the CIRP proceedings. The error on his part appears to have arisen, because of the peculiar statutory scheme governing the present case and not because of any intentional attempt to violate the provisions of the Code. Regulation 16 of the CIRP Regulations provides that where there are no Financial Creditors, the Committee of Creditors shall consist of Operational Creditors and that such Committee and its members shall have the same ....