Summary
A successful resolution applicant cannot unilaterally withdraw or modify a plan after Committee of Creditors approval merely because adjudicating-authority approval remains pending. The asserted information deficiencies did not establish fraud: available records, disclaimers and disclosed audits required expert due diligence before bidding. The Court set aside the orders permitting the contrary outcome and held the submitted plan approved, with further NCLT proceedings directed. It distinguished ordinary data uncertainty from egregious fudging or concealment.
Issues
- Whether a CoC-approved plan could be withdrawn or altered before Section 31 approval.
- Whether the alleged information defects amounted to fraud justifying withdrawal.
- What operative approval and further proceedings should follow.
Provisions considered
- Section 31(1) and its proviso, Insolvency and Bankruptcy Code, 2016Limited approval scrutiny, including effective implementation, does not permit unilateral withdrawal or modification after CoC approval. The Court applied Ebix and held the submitted plan approved. (¶¶ 3, 4, 5, 6, 17)
- Section 62, Insolvency and Bankruptcy Code, 2016The Court determined the cross-appeals concerning the successful applicants’ plan and the refusal to enforce it, setting aside the NCLAT and NCLT orders. (¶¶ 1, 3, 17, 18, 19)
Held
- A CoC-approved resolution plan is a statutory product, not merely a private contract. Without statutory authority, neither its terms nor pending adjudicating-authority scrutiny permits the successful applicant unilaterally to withdraw or amend it. The implementation proviso does not authorise compelling an unwilling CoC to renegotiate. (¶¶ 3, 4, 5, 6)
- The alleged concealment concerning revenue sources, valuation material, machinery storage and financial reliability did not establish fraud or misleading information on this record. The information memorandum, data room, output records and statutory returns were available to applicants, and the consultant report contained qualifications and disclaimers. (¶¶ 7, 8, 9, 10, 11, 12, 13)
- The plan itself acknowledged transaction audits. Financial and domain experts submitting a plan are expected to assess available information, limitations and commercial risk before making the proposal. Post-approval objections based on ordinary ambiguity or insufficient detail should not enable withdrawal; the Court distinguished egregious cases of falsified or concealed facts. (¶¶ 14, 15)
- Distressed-company records can contain asymmetry, disputed data or errors; the resolution professional’s information role is assessed on a best-efforts basis rather than a guarantee of a complete risk picture. That did not excuse proved fraud; the Court found no such fraud here. (¶¶ 8, 15, 16)
- The NCLAT judgment and underlying NCLT order were set aside, and the resolution plan submitted by Deccan Value Investors and DVI PE (Mauritius) was held approved. Parties were directed to appear before NCLT on 9 April 2024 for further proceedings. (¶¶ 17, 18, 19, 20)
Result
Impugned NCLAT and NCLT orders set aside; submitted resolution plan held approved. Appeals disposed of in those terms, with appearance before NCLT on 9 April 2024 directed for further proceedings.