M/S Pragiti Construction Through ... vs Committee Of Creditor Represented By ...

(Arising against the impugned order dated 12.11.2024 passed by the National Company Law Tribunal, Allahabad Bench, in I.A. No. 358 of 2024 and I.A. No. 401 of 2024, arising out of Company Petition (IB) No. 31/ALD/2021)

IN THE MATTER OF:

Pragiti Construction, Through Proprietor Renu Verma having its address at House No. G-1/73, Transport ...Appellant

Nagar, Phase-2, Lucknow - 226012, Uttar Pradesh.

Versus

Committee of Creditor of the Corporate Debtor, represented by M/s Mahavir Medicare, having its office at 82/1-B, "Shreeshyla", Doddakallasandra ...Respondent No. 1

Post, Kanakpura Main Road, Bengaluru - 560063.

Mr. Rajeev Ranjan Singh, Resolution Professional,

having his office at Flat No. 14049, 16 Avenue, Gaur

City-2, Greater Noida West, Gautam Budh Nagar, ...Respondent No. 2

Uttar Pradesh.

Present:

For Appellant: Mr. Rajat Srivastava, Advocate. For Respondents: Mr. Milan Singh Negi, Mr. Nikhil Kr. Jha, Ms. Katyayani, Advocates for R-2.

Cont'd..../ -2-

Mr. Saket Gogia, Mr. Gauri Pande, Man Singh, Sheetal Maggon, Ms. Damini, Mr. Deepesh M., Advocates for COC/R-1.

J U D G M EN T (6th February, 2026)

INDEVAR PANDEY, MEMBER (T)

The present appeals has been preferred under Section 61 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'Code')

by M/s Pragiti Construction, through its Proprietor Ms. Renu Verma,

assailing the impugned orders dated 12.11.2024 passed by the Learned

National Company Law Tribunal, Allahabad Bench, in I.A. No. 358 of

2024 and I.A. No. 401 of 2024, arising out of Company Petition (IB)

No. 31/ALD/2021 in the matter of M/s Mahavir Medicare (Operational

Creditor) versus Rancom Healthcare Pvt. Ltd (Corporate Debtor/CD).

2. The first appeal CA AT Ins No. 2330 of 2024 has been filed against

the order passed by the Adjudicating Authority (AA hereinafter) in IA No.

358 of 2024 on 12.11.2024. The AA, vide the said order, rejected the

application filed by the Appellant seeking consideration of its Resolution

Plan by the Committee of Creditors (CoC) and Resolution Professional (RP)

which has been earlier rejected by the RP and CoC vide their

order/communication dated 16.06.2024.

3. The second appeal CA AT Ins No. 2331 of 2024 has been filed by the

same appellant against the order passed by the Adjudicating Authority in

IA No. 401 of 2024 on 12.11.2024. The IA No. 401 had been filed by the

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -3-

RP seeking the approval of Resolution Plan submitted by the Operational

Creditor, M/s Mahavir Medicare. The AA vide the aforesaid order approved

the Resolution submitted by OC, the same order is under challenge here.

The same parties are arrayed in both the appeals.

4. M/s Mahavir Medicare/OC was also the sole member of the

Committee of Creditors holding 100% voting rights. The Appellant

contends that the Adjudicating Authority failed to consider material facts

placed on record, including that the Appellant was an eligible Prospective

Resolution Applicant under Section 29A of the Code, that its Resolution

Plan had been submitted within the overall statutory Corporate Insolvency

Resolution Process period of 180 days, and that the comparative merits of

the competing Resolution Plans were not objectively examined. Aggrieved

by the rejection of its Resolution Plan and the approval of the Resolution

Plan submitted by the sole CoC member in the same CIRP proceedings,

the Appellant has approached this Appellate Tribunal by way of the

present appeal.

Brief facts of the case

5. The brief facts of the case are as given below:

i. The Corporate Insolvency Resolution Process (CIRP) of the Corporate

Debtor commenced after an application filed under Section 9 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as

'Code') by the Operational Creditor was admitted by the Adjudicating

Authority, and pursuant thereto, by an order passed on 21.12.2023,

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -4-

Mr. Rajeev Ranjan Singh was appointed as the Interim Resolution

Professional to conduct the insolvency process.

ii. In furtherance of the said admission, a public announcement under

Form-A was issued on 23.12.2023, thereby inviting claims from

creditors and notifying initiation of the CIRP, while also indicating

that the estimated date for completion of the resolution process

would be 18.06.2024.

iii. During the course of the CIRP, the Resolution Professional

undertook the process of inviting Expressions of Interest and, after

due scrutiny, prepared and circulated a final list of eligible

Prospective Resolution Applicants through an email communication

sent on 30.03.2024, wherein the Appellant as well as the

Operational Creditor, M/s Mahavir Medicare, were both declared

eligible to submit Resolution Plans, with the stipulated deadline for

submission being fixed as 19.04.2024.

iv. It is the case of the Appellant, although it was found eligible and

placed in the final list of Prospective Resolution Applicants after due

verification under Section 29A of the Code, it could not submit its

Resolution Plan within the originally stipulated period owing to non-

availability of requisite information from the Resolution

Professional, which was essential for preparing a viable and

comprehensive plan.

v. In these circumstances, the Appellant addressed an email

communication to the Resolution Professional on 08.06.2024,

requesting permission to submit its Resolution Plan, even though

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -5-

the original submission deadline had elapsed, while specifically

expressing its intent to revive the Corporate Debtor and maximize

value for stakeholders.

vi. On the same day, the Resolution Professional responded by email

dated 08.06.2024, expressing his inability to independently

consider the Resolution Plan on account of the CIRP nearing its

statutory timeline, while stating that the Appellant's request had

been forwarded to the Committee of Creditors for consideration.

vii. Subsequently, by an email communication received on 10.06.2024,

the Appellant was informed that the Committee of Creditors had

refused to grant any further time for submission of the Resolution

Plan, and that the request made by the Appellant stood rejected,

despite the CIRP period not having yet expired.

viii. Notwithstanding such rejection, the Appellant proceeded to prepare

a detailed and exhaustive Resolution Plan dated 13.06.2024, which

was accompanied by investor credentials and a mandatory deposit

of Rs. 2,00,000/- and the said plan was submitted to the Resolution

Professional within the overall CIRP period of 180 days.

ix. The Appellant's Resolution Plan also included induction of an

investor, namely Mr. Shobhit Agarwal, Proprietor of M/s Champion

Shoppe, whose credentials, financial standing and business

experience were clearly disclosed to demonstrate the feasibility and

viability of the proposed revival of the Corporate Debtor.

x. However, by an email dated 16.06.2024, the Resolution Professional

conveyed to the Appellant that the Committee of Creditors had

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -6-

declined to accept the Resolution Plan on the ground that the time

for submission had expired, and enclosed the communication of the

CoC rejecting the Appellant's proposal.

xi. Being aggrieved by such rejection, the Appellant filed an application

being I.A. No. 358 of 2024 on 19.07.2024 before the Adjudicating

Authority, seeking directions for consideration of its Resolution

Plan, contending that the plan had been submitted within the

statutory CIRP period and offered better value to the Corporate

Debtor. The Resolution Professional filed his reply to the same on

06.09.2024.

xii. After hearing the parties, the Adjudicating Authority, by an order

passed on 10.09.2024, directed the Resolution Professional to place

and consider the Appellant's Resolution Plan before the Committee

of Creditors, keeping in view all relevant parameters including the

overall plan value.

xiii. Pursuant to the said direction, the sixth meeting of the Committee

of Creditors was convened on 18.09.2024, wherein the Resolution

Plan submitted by the Appellant was discussed. The Resolution

Professional noted that the Appellant's plan offered a comparatively

better value, however, the Committee of Creditors rejected the same

without assigning cogent reasons.

xiv. It further transpired that the sole member of the Committee of

Creditors, holding 100% voting rights, proceeded to approve its own

Resolution Plan, thereby acting both as a creditor and a competing

Resolution Applicant.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -7-

xv. Ultimately, by the impugned orders dated 12.11.2024, the

Adjudicating Authority rejected the contentions of the Appellant in

I.A. No. 358 of 2024 and approved the Resolution Plan submitted by

the Operational Creditor in I.A. No. 401 of 2024, without

undertaking a comparative evaluation of the two plans or

addressing the issue of conflict of interest.

xvi. The Appellant being aggrieved by the rejection of its Resolution Plan

and the approval of the plan submitted by the sole CoC member,

has preferred the present appeals challenging the legality, fairness

and correctness of the impugned orders.

Submissions of the Appellant

6. Ld. Counsel for the Appellant submits that the Appellant's

Resolution Plan was not considered by the Committee of Creditors despite

a categorical direction issued by the Adjudicating Authority. It is

submitted that I.A. No. 358 of 2024 filed by the Appellant was disposed of

by the Learned NCLT vide order dated 10.09.2024, wherein the Resolution

Professional undertook to consider both Resolution Plans, namely the plan

already approved by the CoC and the plan submitted by the Appellant, in

terms of the relevant parameters including the total plan value. In

furtherance thereof, the Adjudicating Authority expressly directed the CoC

of Rancom Healthcare Private Limited to consider the Resolution Plan

submitted by the Appellant afresh and take a decision accordingly.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -8-

7. Ld. Counsel states that pursuant to the said order, a CoC meeting

was convened on 18.09.2024 to consider the Appellant's Resolution Plan;

however, the said meeting resulted in the rejection of the Appellant's plan.

It is submitted that during the said meeting, submissions were made that

M/s Pragiti Construction is a proprietorship concern of Ms. Renu Verma

and is primarily engaged in the real estate business, whereas the

Corporate Debtor is engaged in trading of pharmaceutical and medical

products.

8. Ld. Counsel further submits that it was stated before the CoC that

although the total value of the Resolution Plan submitted by the Appellant

is Rs. 20 lakhs, which is higher than the Resolution Plan submitted by

Mahavir Medicare, the distribution amount proposed to the operational

creditor is Rs. 10 lakhs against a claim of Rs. 14,99,25,340, resulting in a

haircut of 99.33% and recovery of 0.67%. It was also stated that Mahavir

Medicare's Resolution Plan proposes capital infusion of Rs. 10 lakhs as

compared to Rs. 5 lakhs proposed by the Appellant and that Mahavir

Medicare has more than 35 years of experience in the pharmaceutical

trading business, which was treated as the foremost criterion by the CoC.

9. It is the submission of the appellant that the Resolution Professional

himself placed before the CoC that the value of the Resolution Plan

submitted by Mahavir Medicare is Rs. 1 lakh, whereas the value of the

Appellant's Resolution Plan is Rs. 20 lakhs, out of which Rs. 10 lakhs

would be distributed to the operational creditor. The Resolution

Professional further stated that the Appellant's offer was an initial offer

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -9-

and could increase if the plan was considered in competition, and that

consideration of the Appellant's plan could lead to healthy competition.

10. Ld. Counsel submits that despite the aforesaid advantages, the CoC

rejected the Appellant's Resolution Plan on the ground that

reconsideration would lead to extension of the CIRP period and delay the

proceedings, as the Resolution Plan of Mahavir Medicare had already been

accepted and filed before the Adjudicating Authority. It is submitted that

the Resolution Professional thereafter agreed to place submissions before

the Hon'ble NCLT on the next date of hearing.

11. Ld. Counsel further submitted that the conduct of the Resolution

Professional and the CoC is vitiated by violations of Regulation 39 of the

CIRP Regulations. It is submitted that no evaluation of the Appellant's

Resolution Plan was carried out and no evaluation matrix was presented

to the CoC. The Appellant was not invited to the CoC meeting where its

Resolution Plan was considered. Details of avoidance and fraudulent

transactions were not shared with the Appellant, and simultaneous voting

on both Resolution Plans was not undertaken.

12. It is the submission of the Ld. Counsel that the background facts

reveal glaring misconduct. The Operational Creditor nominated the IRP,

who was appointed by the Adjudicating Authority. The Operational

Creditor was the sole claimant and the sole voting member of the CoC.

There were no other creditors or claimants. The IRP was confirmed as RP

by the CoC, and the Operational Creditor submitted its own Resolution

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -10-

Plan. Despite the Adjudicating Authority directing consideration of the

Appellant's Resolution Plan, the same was not afforded due consideration.

13. Ld. Counsel submits that the actions of the IRP, RP, and CoC

demonstrate bias against the Appellant. The Resolution Plan of the

Appellant, which was ten times the value of the Resolution Plan of the

Successful Resolution Applicant, was ignored. The minutes of the 6th CoC

meeting held on 18.09.2024 demonstrate apparent bias. The Resolution

Professional failed to verify the highly inflated claim of the Successful

Resolution Applicant and acted in violation of the order dated 10.09.2024.

It is submitted that the conduct also amounts to breach of the Code of

Conduct for Insolvency Professionals and the Guidelines for Committee of

Creditors dated 06.08.2024.

14. Ld. Counsel further submits that the rejection of the Appellant's

Resolution Plan is arbitrary and based on extraneous considerations. The

CoC failed to exercise its commercial wisdom in conformity with the

objectives of the IBC, including maximisation of value. The reasons cited,

namely sector incompatibility and apprehension of time loss, are unknown

to law and unsupported by the Code.

15. It is the submission of appellant that his Resolution Plan offered ten

times the amount to the operational creditor as compared to the competing

plan, and the total plan value was also ten times higher. It is further

submitted that the Appellant is based in Lucknow and sought to revive the

Corporate Debtor at Lucknow, whereas the Successful Resolution

Applicant is based in Bengaluru, a fact which was overlooked.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -11-

16. Ld. Counsel submits that the conduct of the CoC lacks

transparency; is not reasoned; does not show arm's length independence

from the RP; and is malafide exercise of commercial wisdom. Decisions of

the CoC are not supported by reasoned data or objective evaluation. The

Appellant submits that the entire process has resulted in gross prejudice

and denial of a fair opportunity.

17. It is the submission of Ld. Counsel that the present case involves a

position of conflict where the Operational Creditor acted as complainant,

investigator, decision-maker, and beneficiary. Such conduct violates the

principles of natural justice, particularly the rule that no person can be a

judge in his own cause, and is contrary to the fairness framework

embedded within the IBC.

18. Ld. Counsel for the Appellant submits that the arbitrary rejection of

a higher value Resolution Plan and the failure of the Committee of

Creditors to consider the same in a fair and transparent manner is

contrary to the settled legal position laid down by the Hon'ble Supreme

Court and this Hon'ble Appellate Tribunal. Reliance is placed on the

judgment of the Hon'ble Supreme Court in Committee of Creditors of Essar

Steel India Limited v. Satish Kumar Gupta & Ors., (2019) 16 SCC 479,

wherein it has been held that while the commercial wisdom of the CoC is

ordinarily non-justiciable, the decision-making process must conform to

the objectives of the Insolvency and Bankruptcy Code, including value

maximisation, fairness, and equitable treatment of stakeholders. It is

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -12-

submitted that arbitrariness, lack of transparency, or reliance on

extraneous considerations vitiates the process itself.

19. Ld. Counsel further places reliance on Swiss Ribbons Pvt. Ltd. v.

Union of India, (2019) 4 SCC 17, wherein the Hon'ble Supreme Court

categorically held that the Insolvency and Bankruptcy Code is not a mere

recovery legislation, but a beneficial statute intended for resolution,

revival, and preservation of the Corporate Debtor as a going concern. It

was emphasised that the insolvency framework must operate with

fairness, reasonableness, and non-discrimination. Counsel submits that

exclusion of a bona fide Resolution Applicant offering a substantially

higher plan value, without due process, directly violates the principles laid

down in Swiss Ribbons.

20. Ld. Counsel for the Appellant relies upon the decision of this Hon'ble

Appellate Tribunal in Binani Industries Limited v. Bank of Baroda & Anr.,

Company Appeal (AT) (Insolvency) No. 82 of 2018, wherein it was held that

Resolution Plans must be evaluated on the basis of overall feasibility,

viability, and value contribution, and that a higher value Resolution Plan

cannot be rejected on technicalities or marginal considerations. It was

further held that exclusion of a Resolution Applicant without objective

evaluation defeats the purpose of the Code and undermines the integrity

of the resolution process.

21. Ld. Counsel submits that the failure of the Resolution Professional

to ensure a fair and transparent process is contrary to the principles

reiterated in Essar Steel India Limited (supra), wherein the Hon'ble

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -13-

Supreme Court underscored the pivotal role of the Resolution Professional

in conducting the CIRP strictly in accordance with the provisions of the

Code and ensuring that no stakeholder is unfairly prejudiced. It is

submitted that non-compliance with statutory duties and disregard of

binding judicial directions renders the process illegal.

22. Ld. Counsel further relies upon the judgment of the Hon'ble Delhi

High Court in Kunwer Sachdev v. IDBI Bank Ltd. & Ors., judgment dated

12.02.2024, wherein it was held that although the commercial wisdom of

the CoC is generally not open to judicial interference, the process of

decision-making must nevertheless reflect fairness, reasonableness,

objectivity, and absence of arbitrariness. Counsel submits that the present

case squarely falls within the exception carved out by the said judgment.

23. Ld. Counsel submits that the Code of Conduct for the Committee of

Creditors issued by the Insolvency and Bankruptcy Board of India vide

Guidelines for Committee of Creditors dated 06.08.2024 mandates

integrity, objectivity, professional competence, due care, transparency,

and fair reasoning in decision-making. It is submitted that the conduct of

the CoC in the present case is in clear violation of these binding norms, as

decisions were unsupported by reasoned data or objective evaluation.

24. Ld. Counsel further submits that in the absence of express statutory

safeguards governing a situation where the Petitioning Creditor is the sole

claimant, sole CoC member, sole Resolution Applicant, and beneficiary,

the Mischief Rule of statutory interpretation must be applied. Reliance is

placed on Heydon's Case (1584) 76 ER 637, which propounds that

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -14-

statutes must be interpreted in a manner that suppresses the mischief

and advances the remedy. Counsel submits that the mischief sought to be

remedied by the IBC is precisely the abuse of insolvency proceedings for

self-serving ends.

25. Ld. Counsel further relies upon Smith v. Hughes, [1960] 2 All ER 859,

wherein the Court adopted a purposive interpretation to cure statutory

defects and prevent abuse, holding that the focus must be on the mischief

sought to be addressed rather than a narrow literal interpretation. It is

submitted that similar purposive interpretation is warranted in the

present case. Ld. Counsel also places reliance on Eastbourne Borough

Council v. Stirling & Morley, [2000] EWHC Admin (Paragraph 19), wherein

it was reiterated that courts must look at the substance and effect of

conduct rather than its form, particularly where rigid literal interpretation

would result in injustice.

26. Counsel for appellant submits that the principles governing

purposive interpretation were further reiterated by the Hon'ble Supreme

Court in The Bengal Immunity Company Limited v. The State of Bihar &

Ors., AIR 1955 SC 661, wherein it was held that in order to properly

interpret a statute, it is necessary to consider the mischief for which the

old law did not provide and the remedy which the new law seeks to cure.

Counsel submits that these principles apply with full force to the present

insolvency process.

27. Ld. Counsel finally submits that the cumulative effect of the above

precedents establishes that where the insolvency process is conducted in

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -15-

a manner that is arbitrary, biased, and driven by conflict of interest,

judicial intervention is not only permissible, but necessary to preserve the

sanctity of the IBC framework and the principles of natural justice

embedded therein. He strongly argues that in the light of above the appeals

be allowed and the Resolution Plan be set aside.

Submissions of Respondent No. 1/Committee of Creditor

28. Ld. Counsel for the Respondent No. 1/CoC, represented by M/S

Mahavir Medicare, respectfully submits that the present appeal is liable to

be dismissed at the threshold as the undisputed chronology of events

clearly demonstrates strict compliance with the Insolvency and

Bankruptcy Code, 2016 by Respondent No. 1, while the Appellant has

consistently defaulted in adhering to statutory and process-driven

timelines.

29. Ld. Counsel states that the Corporate Insolvency Resolution Process

was initiated pursuant to an application filed under Section 9 of the Code

on 19.03.2021 by Respondent No. 1 before the Hon'ble NCLT, Allahabad,

which came to be admitted on 21.12.2023, whereupon an Interim

Resolution Professional was appointed. Consequent thereto, the IRP

issued a public announcement on 23.12.2023 in "Financial Express" and

"Jansatta" inviting claims from creditors.

30. Ld. Counsel for the Respondent No. 1 further submits that

Respondent No. 1 duly filed its claim on 04.01.2024 for an amount of Rs.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -16-

14,99,25,340/, and no other creditor filed any claim despite due notice

and publication. As a result, Respondent No. 1 became the sole member

of the Committee of Creditors, a position which has never been disputed

by the Appellant at any stage.

31. Ld. Counsel for the Respondent No. 1 further states that Form-G

inviting Expressions of Interest was issued on 18.02.2024 and the final

list of eligible Prospective Resolution Applicants, including the Appellant,

was circulated on 30.03.2024. The last date for submission of Resolution

Plans was initially fixed as 19.04.2024 and, at the specific request of the

Appellant, the same was extended till 04.05.2024, thereby affording

sufficient opportunity to the Appellant.

32. Ld. Counsel further submits that despite the extension being

granted solely for the benefit of the Appellant, the Appellant failed to

submit any Resolution Plan within the extended timeline. In contrast,

Respondent No. 1 submitted its Resolution Plan on 04.05.2024, well

within the permissible period. The Resolution Professional accordingly

informed the CoC on 06.05.2024 that only one Resolution Plan had been

received within time.

33. Respondent No. 1 further states that the 5th CoC meeting was

convened on 07.06.2024 for consideration of the Resolution Plan

submitted by Respondent No. 1, which was thereafter approved through

e-voting on 11.06.2024. It was only on 08.06.2024, that the Appellant

sought permission to submit its Resolution Plan belatedly, which request

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -17-

was rejected by the RP in accordance with the decision of the CoC taken

in exercise of its commercial wisdom.

34. Ld. Counsel submits that notwithstanding the rejection, the

Appellant unilaterally deposited an EMD of Rs. 2,00,000/- and submitted

its Resolution Plan on 13.06.2024, nearly forty days after the extended

deadline. Subsequent applications were filed, including IA No. 358/2024

by the Appellant seeking consideration of its belated plan and IA No.

401/2024 by the RP seeking approval of the Resolution Plan of

Respondent No. 1.

35. Ld. Counsel further states that although the Hon'ble NCLT, by order

dated 10.09.2024, directed the CoC to consider the Appellant's plan, the

same was duly placed before the 6th CoC meeting held on 18.09.2024 and

was rejected for detailed and recorded reasons. Ultimately, by orders dated

12.11.2024, the Hon'ble NCLT dismissed IA No. 358/2024 and approved

the Resolution Plan of Respondent No. 1, which orders are the subject

matter of the present appeal.

36. Ld. Counsel further submits that the present appeal has become

wholly infructuous, inasmuch as the Resolution Plan approved by the

Hon'ble NCLT has already been fully implemented. On 11.12.2024, the

Resolution Professional received the entire upfront consideration of Rs.

1,00,000/- along with CIRP costs amounting to Rs. 11,61,136/- from

Respondent No. 1 in its capacity as the Successful Resolution Applicant.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -18-

37. Ld. Counsel for the Respondent No. 1 states that upon receipt of the

aforesaid amounts, the Resolution Professional proceeded with

implementation and distribution strictly in accordance with the approved

Resolution Plan. Once the plan has been implemented, the CIRP attains

finality and no effective relief survives for adjudication in the present

appeal.

38. Ld. Counsel further submits that the Appellant has only itself to

blame for its exclusion, having failed to submit a Resolution Plan within

the original deadline of 19.04.2024 or even within the extended deadline

of 04.05.2024, which extension was granted solely at the Appellant's

request.

39. Ld. Counsel for the Respondent No. 1 further states that by the time

the Appellant approached the RP on 08.06.2024, the Resolution Plan of

Respondent No. 1 had already been placed for voting. The RP, acting with

the approval of the CoC, rightly rejected the belated request. Even

thereafter, the Appellant's plan, submitted on 13.06.2024, was far beyond

the permissible timeline.

40. Ld. Counsel submits that despite this, and pursuant to the NCLT's

order dated 10.09.2024, the Appellant's Resolution Plan was duly

considered by the CoC in the 6th meeting and rejected on merits for lack

of feasibility and viability, with reasons recorded in the minutes. Thus, no

procedural or substantive prejudice has been caused to the Appellant.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -19-

41. Ld. Counsel further submits that the decision of the CoC to reject

the Appellant's Resolution Plan is a pure commercial decision taken in

exercise of its statutory commercial wisdom. The IBC does not contemplate

adjudication of inter se rights between prospective resolution applicants,

nor does it confer any vested right upon a belated applicant to demand

reconsideration.

42. Ld. Counsel states that principles of natural justice cannot be

invoked to override statutory timelines or to dilute the primacy accorded

to commercial wisdom under the Code.

43. Respondent No. 1 further submits that the Resolution Plan

submitted by the Appellant suffered from fundamental procedural and

substantive infirmities. The Appellant disclosed an undisclosed co-

applicant in the Resolution Plan, despite submitting its EOI in its sole

name, which itself rendered the plan defective.

44. Ld. Counsel for the Respondent No. 1 further states that the

Appellant lacks domain expertise, being engaged in real estate, whereas

the Corporate Debtor operates in pharmaceutical trading. The proposed

haircut of 99.32%, absence of a credible revival strategy, and lack of

implementation clarity clearly justified the CoC's decision to reject the

plan.

45. Respondent No. 1 further submits that the Appellant lacks any

legitimate commercial interest in the resolution of the Corporate Debtor

and has indulged in a colourable exercise. The Appellant itself asserted

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -20-

that the liquidation value of the Corporate Debtor is approximately Rs. 3.5

lakhs, yet offered Rs. 10 lakhs without any commercial justification.

46. Ld. Counsel states that the Corporate Debtor has no substantial

assets and functions merely as a distributor, making such a

disproportionate offer commercially irrational. This assumes significance

in view of the proceedings initiated by the Resolution Professional under

Sections 45 and 66 of the Code, based on transaction audits revealing

undervalued and fraudulent transactions exceeding Rs. 5.6 crores. The

Appellant's conduct, therefore, appears aimed at creating artificial locus

rather than genuine resolution.

47. Ld. Counsel further submits that the balance of equities

overwhelmingly favours Respondent No. 1. The Appellant's exposure is

limited to Rs. 10 lakhs and incidental CIRP costs, which are minimal and

compensable. The Respondent No. 1 has an admitted claim exceeding Rs.

14 crores, and any interference with the approved Resolution Plan would

cause irreparable prejudice. The revival of the Corporate Debtor was

intended to serve as a strategic extension of Respondent No. 1's

pharmaceutical operations, justifying the CoC's preference in its

commercial wisdom.

48. Ld. Counsel for the Respondent No. 1 further submits that the sole

prayer in IA No. 358/2024 was for consideration of the Appellant's

Resolution Plan. Pursuant to the order dated 10.09.2024, the said plan

was duly considered by the CoC and rejected with recorded reasons.

Counsel further states that once the Appellant's plan has already been

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -21-

considered and rejected, nothing survives in the said IA, and

consequently, the present appeal is devoid of any subsisting cause of

action.

49. Ld. Counsel further submits that the allegation of conflict of interest

is wholly misconceived. The Insolvency and Bankruptcy Code does not

prohibit a sole CoC member from submitting a Resolution Plan. Counsel

further states that the CIRP was conducted strictly in accordance with

law, and Respondent No. 1, having over 36 years of experience in the same

line of business, possesses the requisite expertise to revive the Corporate

Debtor and has also proposed capital infusion, unlike the Appellant.

50. Ld. Counsel for the Respondent No. 1 further submits that the

Resolution Plan of Respondent No. 1 aligns squarely with the legislative

intent of the IBC, namely revival of the Corporate Debtor as a going

concern and maximisation of value. The plan envisages capital infusion,

operational synergy, and deployment of domain expertise, thereby

ensuring sustainable revival rather than mere paper recovery.

51. Respondent No. 1 further submits that decisions relating to

timelines, feasibility, viability, and acceptance or rejection of Resolution

Plans fall exclusively within the commercial domain of the Committee of

Creditors. Ld. Counsel further states that neither the Adjudicating

Authority nor the Appellate Tribunal can substitute its own view for a

business decision taken by the CoC in exercise of its commercial wisdom.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -22-

52. Ld. Counsel submits that the CoC rightly declined to match the

Appellant's offer, as increasing the amount from Rs. 1 lakh to Rs. 10 lakhs

would have had negligible impact on recovery against an admitted claim

of Rs. 14.62 crores.

53. Respondent No. 1 further states that revising the approved

Resolution Plan would have caused further delay in CIRP, contrary to the

time-bound mandate of the Code. Ld. Counsel submits that it is well

settled that commercial decisions of the CoC, including rejection of

Resolution Plans and refusal to extend timelines, are non-justiciable.

54. Making his final submissions, Ld. Counsel states that the CoC acted

strictly within the framework of the Code, and its decision does not

warrant any interference by this Hon'ble Tribunal.

Submissions of Respondent No.2: RP

55. Counsel for Respondent No. 2 respectfully submits that the

Resolution Professional, being an officer of the Court, has at all times acted

bonafidely, independently and without prejudice to the rights of any

stakeholder. It is submitted that Respondent No. 2 has no personal or

pecuniary interest in the outcome of the resolution process and has

discharged his statutory duties strictly in accordance with the provisions

of the Insolvency and Bankruptcy Code, 2016 and the CIRP Regulations.

56. He further submits that the entire Corporate Insolvency Resolution

Process of Rancom Healthcare Private Limited was conducted by the

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -23-

Resolution Professional in a fair, transparent and time-bound manner. All

statutory compliances including issuance of public announcement,

collation and verification of claims, constitution of the Committee of

Creditors, issuance of Form-G, preparation of Information Memorandum,

issuance of evaluation matrix and invitation for resolution plans were duly

carried out in accordance with law.

57. Ld. Counsel submits that there has been no violation whatsoever of

Section 30(2) of the Insolvency and Bankruptcy Code in the present case.

The resolution plan approved by the Committee of Creditors satisfies all

mandatory requirements of the Code and the Regulations, including

payment of CIRP costs in priority, compliance with liquidation value

safeguards, feasibility and viability of the plan, and adherence to Section

29A eligibility conditions.

58. Ld. Counsel further submitted that no material irregularity has been

committed by the Resolution Professional during the conduct of CIRP so

as to attract Section 61(3) of the Code. The Appellant has failed to

demonstrate any illegality, procedural impropriety or jurisdictional error

on part of the Resolution Professional. Mere dissatisfaction with the

commercial outcome of the process cannot be equated with material

irregularity under law.

59. Ld. Counsel submits that it is a settled position of law that the

commercial wisdom of the Committee of Creditors, while approving or

rejecting a resolution plan, is non-justiciable. The Hon'ble Supreme Court

has categorically held in Kalpraj Dharmashi and Anr. vs. Kotak Investment

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -24-

Advisors Limited and Anr., reported in (2021) 10 SCC 401 (para 158), that

neither the Adjudicating Authority nor the Appellate Authority can

interfere with the commercial decision taken by the CoC after due

deliberation.

60. He further submitted that there is no provision under the Insolvency

and Bankruptcy Code which mandates that the value of a resolution plan

must necessarily be higher than the liquidation value. The Hon'ble

Supreme Court in Maharashtra Seamless Limited vs. Padmanabhan

Venkatesh and Ors., reported in (2020) 11 SCC 467 (paras 27-30), has

expressly held that comparison of resolution plan value with liquidation

value is impermissible once the plan satisfies statutory requirements and

is approved by the CoC. This legal position has also been reiterated by the

Hon'ble NCLAT in Ramesh Kesavan vs. CA Josin Jose and Anr., reported

in 2024 SCC OnLine NCLAT 56 (para 9).

61. Ld. Counsel submits that there is no provision under the Code

which prohibits or bars a member of the Committee of Creditors from

participating in the CIRP as a Prospective Resolution Applicant. The Code

does not create any such disqualification, and therefore, the Appellant's

objection on this count is wholly misconceived and contrary to the

statutory framework.

62. It is submitted that in the 6th CoC meeting, the Committee of

Creditors recorded detailed and reasoned grounds for rejecting the

resolution plan submitted by the Appellant. Firstly, the CoC noted the lack

of sector-specific expertise of the Appellant, who is engaged in real estate

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -25-

business, whereas the Corporate Debtor operates in the business of

trading and supply of generic medicines. The Successful Resolution

Applicant, Mahavir Medicare, operates in the same line of business and

thus ensures continuity and revival of the Corporate Debtor.

63. Secondly, the CoC noted that the Appellant offered Rs. 10,00,000/-

against an admitted claim of Rs. 14,99,25,340/-, resulting in a haircut of

99.33%, which is commercially insignificant. Thirdly, the CoC was of the

view that entertaining another plan at such an advanced stage would

further delay the CIRP, which would be detrimental to the interests of the

sole creditor and contrary to the time-bound mandate of the Code.

64. Ld. Counsel submits that the resolution plan approved by the

Committee of Creditors and the Ld. Adjudicating Authority provides for a

total plan value of Rs. 12,61,136/-, which was to be implemented within

30 days from approval. The plan provides for payment of Rs. 1,00,000/-

to the sole operational creditor along with payment of CIRP costs on

actuals amounting to Rs. 11,61,136/- till submission of the resolution

plan.

65. It is further submitted that the approved plan clearly provides that

all applications relating to preferential, undervalued, fraudulent and

extortionate transactions (PUFE) shall be pursued by the Successful

Resolution Applicant, and the benefits arising therefrom shall accrue to

the CoC member itself. In this regard, IA No. 339 of 2024 under Section

45 of the Code involving Rs. 6.25 lakhs and IA No. 349 of 2024 under

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -26-

Section 66 of the Code involving Rs. 559.01 lakhs are pending and shall

be pursued as per the approved plan.

66. Ld. Counsel submits that both the resolution plans, namely that of

the Appellant and that of the Successful Resolution Applicant, provide for

payment of CIRP costs in full. Therefore, CIRP costs ought not to be

considered for the purpose of comparative evaluation between the two

plans. It is further submitted that both plans also provide for infusion of

funds by way of share capital for carrying on the business of the Corporate

Debtor. Hence, this component equally does not warrant comparative

analysis.

67. The principal distinguishing factor between the two plans lies in the

amount offered to the sole creditor. Under the approved plan, the SRA

offers Rs. 1,00,000/- plus CIRP costs on actuals, whereas under the

Appellant's plan, Rs. 10,00,000/- is offered. However, the sole beneficiary

of both amounts is the SRA itself, being the only creditor. In effect, under

its own plan, the SRA pays itself Rs. 1,00,000/-, which is akin to an

internal adjustment, whereas under the Appellant's plan, the SRA would

receive Rs. 10,00,000/- from an external party.

68. It is submitted that despite the higher apparent offer, the SRA, in

exercise of its commercial wisdom, consciously rejected the Appellant's

plan. Additionally, the Appellant's plan provides for an additional Rs.

10,00,000/- towards contingent liabilities, whereas no such provision

exists in the approved plan. The present appeal itself is a live illustration

of a contingent liability arising post approval of the plan.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -27-

69. Ld. Counsel submits that these commercial considerations fall

squarely within the exclusive domain of the Committee of Creditors and

are not amenable to judicial review.

70. Ld. Counsel humbly submits that pursuant to the approval of the

resolution plan by the Ld. Adjudicating Authority on 12.11.2024, the

Successful Resolution Applicant has already implemented the plan in its

entirety. Payments aggregating to Rs. 23,00,734/-, including CIRP costs,

which are higher than the liquidation value, were made on 11.12.2024

and duly distributed amongst stakeholders.

71. It is submitted that all other aspects of the approved resolution plan

stand fully implemented. The Monitoring Committee has been constituted,

meetings have been held, and the Corporate Debtor has exited CIRP.

Therefore, the resolution plan has attained finality and implementation,

rendering the present appeal devoid of merit and infructuous.

72. Ld. Counsel respectfully submits that the Resolution Professional

has acted strictly in accordance with law, without any bias or irregularity,

and the present appeal deserves to be dismissed on facts as well as in law.

Analysis and Findings

73. We have carefully considered the pleadings on record, the rival

submissions advanced by the parties, and the material placed before us.

74. At the outset, we note that the present case arises from an unusual

and peculiar factual situation. In the present Corporate Insolvency

Resolution Process, there is no Financial Creditor. The CIRP was initiated

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -28-

by an Operational Creditor, namely Respondent No.1. No other creditor

filed any claim. As a result, Respondent No.1 became the sole claimant

and the only member of the Committee of Creditors, holding 100% voting

rights. The same Operational Creditor also submitted its own Resolution

Plan and later on became the Successful Resolution Applicant. The Interim

Resolution Professional initially appointed in the process was later

confirmed as the Resolution Professional by the same sole-member CoC.

Thus, the entire CIRP was effectively controlled by one stakeholder, who

acted as the petitioning creditor; the only member of the CoC; the sole

voting authority with 100% voting rights; the Resolution Applicant, and

the sole beneficiary of the approved Resolution Plan.

75. In the above factual background, two important issues arise for our

consideration.

i. The first issue is whether a Resolution Applicant who is also a

Operational Creditor of the CD and sole member of Committee of

Creditors, holding 100% voting rights can approve its own

Resolution Plan?

ii. The second and linked issue is whether such a Committee of

Creditors, consisting of only one member, who is also a Resolution

Applicant and who is directly interested in the outcome of the

resolution process in its own favour can fairly, objectively, and

independently assess the feasibility and viability of competing

Resolution Plans submitted by other Resolution Applicants,

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -29-

particularly when such assessment involves comparative evaluation

and exercise of discretion.

76. The Appellant has argued that the entire resolution process is unfair

and legally flawed due to a clear conflict of interest. It is submitted that

the Committee of Creditors consisted of only one Operational Creditor who

had 100% voting rights and who also submitted and approved its own

Resolution Plan. The Appellant submits that this defeats the basic

principles of fairness, transparency, and value maximisation under the

Insolvency and Bankruptcy Code. It is further argued that despite a clear

direction of the Adjudicating Authority dated 10.09.2024 to freshly

consider the Appellant's Resolution Plan, the same was rejected in a

routine and mechanical manner without proper evaluation under

Regulation 39 of the CIRP Regulations. The Appellant also submits that

its Resolution Plan offered much higher value and better chances of

revival, but was rejected on weak grounds such as sector mismatch and

possible delay. According to the Appellant, the actions of the Resolution

Professional and the CoC have caused serious prejudice and the impugned

order cannot be sustained.

77. Per contra, the Respondent No.1 has defended the impugned order

by stating that the decision taken by the Committee of Creditors is based

on its commercial wisdom and should not be interfered with. It is

submitted that the Appellant's Resolution Plan was submitted late and,

even after reconsideration, was found to be unviable and offering very low

recovery in percentage terms. Respondent No.1 contends that factors such

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -30-

as experience in the relevant business sector and timely completion of the

CIRP were valid reasons for rejecting the Appellant's plan. It is further

submitted that the Resolution Plan of Respondent No.1 has already been

approved and implemented, and therefore the appeal deserves to be

dismissed.

78. Respondent No.2, the Resolution Professional, has submitted that

all the steps taken during the CIRP were in accordance with the Insolvency

and Bankruptcy Code and the CIRP Regulations. It is stated that the

Appellant failed to submit its Resolution Plan within the prescribed time

and that the Resolution Professional could not accept a belated plan

without approval of the CoC. It is further submitted that in compliance

with the order dated 10.09.2024, the Appellant's Resolution Plan was

placed before the CoC and considered in the 6th CoC meeting. According

to Respondent No.2, the rejection of the Appellant's plan was based on

commercial considerations recorded in the minutes, and therefore no

illegality or unfairness can be attributed to the Resolution Professional.

79. We first examine Issue No. 1, and note that Section 30(5) of the Code

provides an important statutory safeguard to ensure fairness in the

decision-making process of the Committee of Creditors. The relevant

Section 30 (5) of the Code has been reproduced below:

"Section 30: Submission of resolution plan.

(5) The resolution applicant may attend the meeting of

the committee of creditors in which the resolution plan

of the applicant is considered:

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -31-

Provided that the resolution applicant shall not have a

right to vote at the meeting of the committee of creditors

unless such resolution applicant is also a financial

creditor."

80. There are two parts to this section of IBC. The first part gives the

Resolution Applicant discretion to attend the meeting of CoC in which its

resolution plan is considered. The second part of proviso to the Section

30(5), however states that voting right in CoC is vested in a resolution

applicant, only if he is a financial creditor. The object of this provision is

to prevent a resolution applicant from influencing the decision-making

process in its own favour and to ensure that voting on Resolution Plans

remains independent and free from conflict of interest. In the present case,

Respondent No.1, who is an Operational Creditor and not a Financial

Creditor, acted not only as a Resolution Applicant, but also as the sole

member of the Committee of Creditors with 100% voting rights and

proceeded to vote in favour of its own Resolution Plan. Such a situation

directly defeats the spirit and purpose of Section 30(5), which seeks to

separate the role of a Resolution Applicant from the role of a voting

decision-maker.

81. In the present case the Resolution Applicant is an Operational

Creditor and not a Financial Creditor. In such a situation it is clearly

barred, from voting on its own Resolution Plan, submitted for resolution

of Corporate Debtor. Such voting and approval of its own Resolution Plan

by the Operational Creditor is in the face of express bar provided in Section

30 (5) of the Code. The question of commercial wisdom of Committee of

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -32-

Creditors is meaningless in this situation, as the resolution plan approval

by the CoC comprising of Resolution Applicant, who is also an OC is in

express violation of Section 30 (5) of the Code, and such approval of CoC

is void-ab-initio.

82. For the reasons discussed above, we hold that the conduct of the

Committee of Creditors in the present case is in clear violation of Section

30(5) of the Insolvency and Bankruptcy Code. The said provision expressly

prohibits the Resolution Applicant, who is not a Financial Creditor from

voting on its resolution plan in the meeting of Committee of Creditors. In

the present case, the sole Operational Creditor acted as a Resolution

Applicant and, at the same time, exercised 100% voting rights to approve

its own Resolution Plan. Such conduct is in face of the statutory bar

provided by Section 30(5) of Code. Permitting a Resolution Applicant, who

is not a Financial Creditor, to effectively vote on and approve its own

Resolution Plan amounts to a material irregularity in the decision-making

process. Accordingly, Issue No. 1 is answered in negative.

83. We now proceed to examine Issue No. 2 by closely analysing the

manner in which the 6th meeting of the Committee of Creditors was

conducted. The proceedings of the said meeting are central to determining

whether the Committee of Creditors fairly and objectively assessed the

feasibility and viability of the Resolution Plans submitted by the Appellant

and the Respondent.

84. The relevant portion of minutes of 6th CoC meeting held on

18.09.2024 are extracted below:

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -33-

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -34-

85. We note from the minutes of the 6th meeting of the Committee of

Creditors that the Resolution Professional placed on record the stark

difference between the competing Resolution Plans. The Resolution

Professional specifically informed the CoC that the Resolution Plan

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -35-

submitted by Respondent No.1 (Mahaveer Medicare) was of a value of Rs.

1 Lakh, whereas the Resolution Plan submitted by the Appellant, M/s

Pragiti Constructions, was of a value of Rs. 20 Lakhs, out of which Rs. 10

Lakhs was proposed to be distributed to the operational creditor. The

Resolution Professional further pointed out that the offer of Rs. 20 Lakhs

was only an initial offer and that, if the Appellant's Resolution Plan was

taken up for review and competition, the value could be increased. It was

also suggested by the Resolution Professional that consideration of the

Appellant's Resolution Plan would create a healthy competitive process.

86. Despite these observations, the sole CoC member, through its

representative Mr. Harshvardhan Sharma, rejected the very idea of

considering or reviewing the Appellant's plan, stating that the purpose was

not to match or increase values or to encourage competition, but only to

assess recovery for creditors, and further stating that the Appellant's plan

involved a haircut of 99.33%. It was further stated that the CoC had

already internally discussed the matter and concluded that

reconsideration of the Appellant's Resolution Plan would lead to extension

of the CIRP period and delay in the process, since the Resolution Plan of

Respondent No.1 had already been approved and filed before the

Adjudicating Authority in IA No. 401 of 2024. On this basis, the CoC

expressed its unwillingness to repeat the process and rejected the

Appellant's Resolution Plan.

87. What is significant is that this rejection was based on a pre-

determined conclusion based on internal discussion by the Operational

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -36-

Creditor/ 100% CoC and not on any fresh or structured evaluation,

notwithstanding the direction of AA to reconsider the Appellant's plan. The

matter was not even discussed within the CoC with RP, as there were only

two members in CoC. The Resolution Professional on its part did not carry

out proper evaluation of the Appellant's plan and did not prepare or place

any evaluation matrix before the Committee of Creditors, as required

under Regulation 39 of the CIRP Regulations. The minutes of the meeting

do not show any analysis of relative merits of the Appellant's plan and the

plan submitted by Respondent No.1/ Operational Creditor.

88. The Appellant was also not invited to the said meeting, where its

Resolution Plan was discussed and rejected, which deprived the Appellant

of any opportunity to explain or clarify its proposal. Section 30 (5) of the

Code gives the discretion to Resolution Applicant to attend the CoC

meeting, where its Resolution Plan is to be considered. In this case it was

a duty cast upon the RP to inform the Appellant about 6th CoC meeting

and invite him to attend the same. This becomes especially important in

the present case because the only member of the Committee of Creditors

was also the competing Resolution Applicant. We further note that

important information relating to avoidance and fraudulent transaction

proceedings was not shared with the Appellant, even though such

information was relevant for a fair assessment of the Resolution Plan. The

voting process was also not conducted fairly, as both Resolution Plans

were not placed for consideration and voting at the same time.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -37-

89. We also find it necessary to address the factual aspect concerning

the stark difference in the plan values offered by the competing Resolution

Applicants, as this assumes relevance not for substituting our commercial

opinion, but for examining whether the decision-making process was fair

and bona fide. It is an admitted position on record that the Resolution Plan

submitted by the Appellant proposed a total plan value of Rs. 20 Lakhs,

apart from CIRP costs, whereas the Resolution Plan submitted by

Respondent No.1 contemplated an upfront amount of only Rs. 1 Lakh,

apart from CIRP costs. Such a substantial variance in plan value, by itself,

may not compel acceptance of the higher offer; however, it unquestionably

triggered a heightened obligation upon the Committee of Creditors,

particularly in the context of a judicial direction dated 10.09.2024, to

undertake a reasoned, structured, and transparent comparative

evaluation. The absence of any evaluation matrix, financial comparison,

or reasoned explanation as to why a plan offering twenty times the upfront

value was rejected in favour of a significantly lower-valued plan reinforces

the conclusion that the reconsideration was neither meaningful nor

objective. In the peculiar facts of the present case, where the sole member

of the CoC was also the beneficiary of the lower-valued plan, the failure to

address this glaring financial disparity further strengthens the inference

of procedural infirmity and conflict of interest, thereby vitiating the

decision-making process.

90. In this context, we are unable to accept the submission that the

decision of the CoC is immune from scrutiny merely because it is styled

as an exercise of commercial wisdom. The supremacy of commercial

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -38-

wisdom cannot be extended to shield a process that is fundamentally

flawed due to conflict of interest, violation of Section 30(5) of the Code and

absence of procedural safeguards. The present case, therefore, stands on

a distinct footing from the usual cases where deference is shown to CoC

decisions taken by a body comprising multiple financial operational

creditors.

91. As a result, the Appellant's Resolution Plan, which offered an

amount twenty times higher than the plan of the Successful Resolution

Applicant, was effectively ignored rather than genuinely evaluated. The

subsequent incorporation of a written statement of rejection after the

conclusion of the meeting only reinforces the view that the decision was

already taken and the meeting was conducted merely as a formality. These

lapses show that the 6th CoC meeting was conducted only as a formality,

and not as a meaningful exercise of consideration, thereby constituting a

serious procedural irregularity.

92. We note that the Adjudicating Authority, by its order dated

10.09.2024, had issued a clear and unambiguous direction to the

Committee of Creditors to freshly consider the Resolution Plan submitted

by the Appellant along with the already approved plan, keeping in view the

relevant parameters including the total plan value. Such a direction was

not merely procedural in nature but was intended to ensure a meaningful,

objective, and unbiased consideration of the Appellant's plan. Once such

a direction was issued, it was incumbent upon the Resolution Professional

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -39-

and the Committee of Creditors to comply with the same in both letter and

spirit.

93. In the present case, we note that the manner in which the 6th

meeting of the Committee of Creditors was conducted suffers from serious

procedural irregularities and violation of principles of natural justice. Not

inviting the appellant for the meeting was a violation of Section 30 (5) of

the Code, which provides discretion to the Resolution Applicant and not

to RP. The Appellant's Resolution Plan was not fairly or objectively

evaluated, no proper evaluation matrix was applied, relevant material

information was not shared, and the Appellant was not invited to or

permitted to participate in the 6th CoC meeting, where its Resolution Plan

was discussed and rejected. The assessment of the Resolution Plan was

carried out by a single-member Committee of Creditors who was the only

other Resolution Applicant directly interested in the outcome of the

process. Such a process cannot be said to be fair, transparent, or

impartial. The failure to invite the Appellant to the meeting, coupled with

the predetermined rejection of its Resolution Plan, amounts to denial of a

meaningful opportunity and constitutes a clear violation of principles of

natural justice.

94. We derive support from the decision of the Hon'ble Supreme Court

in Essar Steel India Ltd. v. Satish Kumar Gupta [(2019) 16 SCC 479],

wherein it has been authoritatively held that while the commercial wisdom

of the Committee of Creditors is supreme, such wisdom must be exercised

in furtherance of the objectives of the Insolvency and Bankruptcy Code,

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -40-

one of the foremost being maximisation of the value of the assets of the

Corporate Debtor. Applying the said principle to the facts of the present

case, we find that the Committee of Creditors failed to act in conformity

with this core objective. The Appellant's Resolution Plan admittedly offered

a value much higher than the only other Resolution Plan on record, yet

the same was not taken up for genuine consideration. The reasons

advanced for rejection, namely that the Appellant belonged to an

"incompatible sector" and that consideration of the Appellant's Resolution

Plan would result in loss of time, do not address the central requirement

of value maximisation. Sectoral incompatibility, by itself, cannot override

the statutory objective of maximising value without a proper assessment

of feasibility and viability, and delay cannot be cited as a ground when

consideration of the plan itself was directed by the Adjudicating Authority.

The arbitrary refusal to meaningfully consider a substantially higher-value

Resolution Plan, therefore, runs contrary to the ratio laid down in Essar

Steel, and demonstrates that the commercial wisdom in the present case

was not exercised in accordance with the objectives of the Code.

"45. However, as has been correctly argued on behalf of the operational creditors, the preamble of the Code does speak of maximisation of the value of assets of corporate debtors and the balancing of the interests of all stakeholders. There is no doubt that a key objective of the Code is to ensure that the corporate debtor keeps operating as a going concern during the insolvency resolution process and must therefore make past and present payments to various operational creditors without which such operation as a going concern would become impossible. Sections 5(26), 14(2), 20(1), 20(2)(d) and (e) of the Code read with Regulations 37 and

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -41-

38 of the 2016 Regulations all speak of the corporate debtor running as a going concern during the insolvency resolution process. Workmen need to be paid, electricity dues need to be paid, purchase of raw materials need to be made, etc. This is in fact reflected in this court's judgment in Swiss Ribbons (supra) as follows:

"26. The Preamble of the Code states as follows: "An Act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto."

46. This is the reason why Regulation 38(1A) speaks of a resolution plan including a statement as to how it has dealt with the interests of all stakeholders, including operational creditors of the corporate debtor. Regulation 38(1) also states that the amount due to operational creditors under a resolution plan shall be given priority in payment over financial creditors. If nothing is to be paid to operational creditors, the minimum, being liquidation value - which in most cases would amount to nil after secured creditors have been paid - would certainly not balance the interest of all stakeholders or maximise the value of assets of a corporate debtor if it becomes impossible to continue running its business as a going concern. Thus, it is clear that when the Committee of Creditors exercises its commercial wisdom to arrive at a business decision to revive the corporate debtor, it must necessarily take into account these key features of the Code before it arrives at a commercial decision to pay off the dues of financial and operational creditors. There is no doubt whatsoever that the ultimate discretion of what to

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -42-

pay and how much to pay each class or subclass of creditors is with the Committee of Creditors, but, the decision of such Committee must reflect the fact that it has taken into account maximising the value of the assets of the corporate debtor and the fact that it has adequately balanced the interests of all stakeholders including operational creditors. This being the case, judicial review of the Adjudicating Authority that the resolution plan as approved by the Committee of Creditors has met the requirements referred to in Section 30(2) would include judicial review that is mentioned in Section 30(2)(e), as the provisions of the Code are also provisions of law for the time being in force. Thus, while the Adjudicating Authority cannot interfere on merits with the commercial decision taken by the Committee of Creditors, the limited judicial review available is to see that the Committee of Creditors has taken into account the fact that the corporate debtor needs to keep going as a going concern during the insolvency resolution process; that it needs to maximise the value of its assets; and that the interests of all stakeholders including operational creditors has been taken care of. If the Adjudicating Authority finds, on a given set of facts, that the aforesaid parameters have not been kept in view, it may send a resolution plan back to the Committee of Creditors to re-submit such plan after satisfying the aforesaid parameters. The reasons given by the Committee of Creditors while approving a resolution plan may thus be looked at by the Adjudicating Authority only from this point of view, and once it is satisfied that the Committee of Creditors has paid attention to these key features, it must then pass the resolution plan, other things being equal.

(Emphasis supplied)

95. We also draw support from the judgment of the Hon'ble Supreme

Court in 'Swiss Ribbons Pvt. Ltd. v. Union of India' [(2019) 4 SCC 17],

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -43-

wherein the Court has emphasised that the Insolvency and Bankruptcy

Code is founded on the principles of fairness, transparency, and

maximisation of value, and that the insolvency process must be conducted

in a manner that is just, equitable, and procedurally sound. The Hon'ble

Supreme Court has clearly observed that exclusion of bona fide resolution

applicants, without due process violates the very spirit of the Code.

Applying this settled position to the present case, we find that the

approach adopted by the Committee of Creditors falls short of these

principles. The CoC has noted in the 6th CoC meeting that the Resolution

Plan of the Appellant offers 0.67% of the total dues of the Operational

Creditor, who is also the sole CoC member and the Successful Resolution

Applicant. However, such an observation ignores the admitted factual

position that the Appellant's Resolution Plan offers an amount ten times

higher to the Operational Creditor and that the overall plan value proposed

by the Appellant is also twenty times the value of the competing Resolution

Plan submitted by the Successful Resolution Applicant. The CoC failed to

examine whether the revival of the Corporate Debtor would be better

achieved under the Resolution Plan submitted by the Appellant as

compared to the plan submitted by the Operational Creditor itself. We also

find that a relevant and material factor was completely overlooked, namely

that the Successful Resolution Applicant is based in Bengaluru and

proposes to revive the business of the Corporate Debtor situated in

Lucknow, whereas the Appellant is already carrying on business in

Lucknow and proposed revival of the Corporate Debtor at the same

location. This aspect, which had a direct bearing on feasibility, viability,

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -44-

and effective revival, was ignored altogether. The failure to consider these

material factors, coupled with rigid reliance on selective percentages

without holistic evaluation, demonstrates lack of fairness and

transparency in the process and results in exclusion of a bona fide

Resolution Applicant without due process, which is impermissible in view

of the law laid down in Swiss Ribbons (supra). The relevant paras 11 and

12 of the aforesaid Judgment are extracted below:

"11. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the interests of all stakeholders are looked after as the corporate debtor itself becomes a beneficiary of the resolution scheme - workers are paid, the creditors in the long run will be repaid in full, and shareholders/investors are able to maximize their investment. Timely resolution of a corporate debtor who is in the red, by an effective legal framework, would go a long way to support the development of credit markets. Since more investment can be made with funds that have come back into the economy, business then eases up, which leads, overall, to higher economic growth and development of the Indian economy. What is interesting to note is that the Preamble does not, in any manner, refer to liquidation, which is only availed of as a last resort if there is either

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -45-

no resolution plan or the resolution plans submitted are not up to the mark. Even in liquidation, the liquidator can sell the business of the corporate debtor as a going concern. [See ArcelorMittal (supra) at paragraph 83, footnote 3].

12. It can thus be seen that the primary focus of the legislation is to ensure revival and continuation of the corporate debtor by protecting the corporate debtor from its own management and from a corporate death by liquidation. The Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters / those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor's assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends."

96. We also take note of judgment of this Appellate Tribunal in 'Binani

Industries Ltd. v. Bank of Baroda', [Company Appeal (AT) (Insolvency) No.

82 of 2018], wherein it has been held that Resolution Plans must be

evaluated on the basis of their overall feasibility, viability, and value

contribution, and that such plans cannot be rejected on technicalities or

marginal considerations. The Tribunal has emphasised that the resolution

process must be fair and aimed at maximising value, and that arbitrary or

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -46-

biased exclusion of a competing Resolution Plan defeats the purpose of the

Code. Applying this principle to the present case, we find that the conduct

of the Committee of Creditors clearly reflects bias, as the substantially

better Resolution Plan submitted by the Appellant was not taken up for

genuine consideration and was rejected on frivolous and extraneous

grounds. The failure to meaningfully evaluate a competing plan offering

significantly higher value, while approving the plan submitted by the sole

CoC member itself, is directly contrary to the law laid down in Binani

Industries (supra) and vitiates the decision-making process. Relevant

paras 30 to 33 and 47 of the aforesaid Judgment are extracted below:

"30. Keeping in mind the aforesaid proposition, it is to be seen:

(i) Whether the 'Committee of Creditors' discriminated between the eligible 'Resolution Applicants', while considering the 'Resolution Plan' of 'Rajputana Properties Private Limited? and;

(ii) Whether the Resolution Plan submitted by Rajputana Properties Private Limited is discriminatory?

31. The Adjudicating Authority has noticed that the 'Committee of Creditors' had extensive negotiations and consultations with the Rajputana Properties Private Limited' on the ground that it was the highest 'Resolution Applicant and also obtained certain clarification: after due deliberation voted in favour of the Resolution Plan' of the "Rajputana Properties Private Limited in its meeting held on 14th March, 2018. At the same time the Committee of Creditors' discriminated with the other Resolution Applicants which will be evident from the fact that the proposal for negotiation and better proposal given by the Ultratech Cement Limited' was not at all considered though it was submitted on 8th March, 2018 i.e. much prior to the approval of the plan (14th March, 2018). The 'Committee of Creditors' have

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -47-

taken plea that the revised offer given by Ultratech Cement Limited' was merely an e-mail with an offer. The other plea taken was that the offer was not made in accordance with the process document and if it is considered then it would be a deviation of the process laid down in the process document' by the 'Committee of Creditors'. Third objection was that the offer was beyond the time as stipulated under the 1&B Code'.

32. The Adjudicating Authority has rejected such objections by detailed impugned order. It appears that the process document' was issued on 20th December, 2017 which inter alia stipulated general and qualitative parameters. It clearly indicated that Committee of Creditors' will negotiate only with the 'Resolution Applicant' which reveals highest score based on the evaluation criteria and whose Resolution Plan' is in compliance with the requirements of the 1&B Code' as confirmed by the 'Resolution Professional' We have dealt with the object of the 'T&B Code' as recorded above. The Resolution Professional as well as the Committee of Creditors' are duty bound to ensure maximization of value within the time frame prescribed by the 1&B Code'. Such an object in finding out a Resolution Applicant' who can offer maximum amount so as to safeguard the interest of all stakeholders of the 'Corporate Debtor' is lacking in the case in hand from the side of the 'Committee of Creditors'

33. In the present case, the 'Committee of Creditors' not only failed to safeguard the interest of the stakeholders of the Corporate Debtor while approving the 'Resolution Plan' submitted by 'Rajputana Properties Private Limited', also ignored the revised 'Resolution Plan' offered by "Ultratech Cement Limited' which has taken care of maximization of the assets of the Corporate Debtor' and also balanced the claim of all the stakeholders of the Corporate Debtor'.

47. We have noticed the relevant provision of the process document and Section 25(2)(h) and held that the 'Committee of Creditors' have not acted in terms with the provisions of the

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -48-

I&B Code' and the 'process document. The maximization of the value assets of the Corporate Debtor' cannot be ignored nor it can be ignored that the same should balance all the stakeholders."

97. The maxim nemo judex in causa sua, that no person can be a judge

in his own case, is not a mere technical rule but a foundational principle

intended to preserve the integrity of adjudicatory and decision-making

processes. When the same entity proposes a Resolution Plan, evaluates

competing plans, rejects them, and finally approves its own plan, the

process ceases to be fair, impartial, or credible. Even if actual mala fides

are not expressly proved, the existence of a real likelihood of bias is

sufficient to vitiate the process. Justice must not only be done but must

also appear to have been done.

98. In view of the aforesaid discussion, we are satisfied that the rejection

of the Appellant's Resolution Plan is vitiated by material irregularity,

violation of principles of natural justice, and non-compliance with binding

judicial directions. Accordingly, we hold that the decision of CoC which

comprised of a Resolution Applicant who was also an Operational Creditor

and had 100% voting rights in CoC on the resolution plan of the appellant

was vitiated by material irregularity. A single member of CoC who is also

a Resolution Applicant would always have conflict of interest vis-a-vis

another Resolution Applicant and his decision in such cases would be in

violation of principles of natural justice. The second issue is decided

accordingly.

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -49-

99. The Resolution Professional plays a pivotal role in proceedings

under the Code. It is expected that RP would conduct the CIRP

proceedings in accordance with the provisions of the Code including the

Rules and Regulations thereunder. It was the duty of RP to highlight the

provisions of Section 30 (5) to the notice of Operational Creditor and the

Adjudicating Authority. Had it been done on time, this proceeding would

not have wasted so much of time and resources of NCLT and this Appellate

Tribunal. A RP is supposed to be well versed in the relevant legal

provisions of the Code. His failure to take note of Section 30 (5) of the Code

is viewed seriously. The matter is brought to the notice of IBBI for

appropriate action against the RP. IBBI is further directed to take note of

peculiar legal situation of the present case and initiate necessary

amendments to the Insolvency and Bankruptcy Code.

100. The Adjudicating Authority has also failed to note the provisions of

Section 30 (5) of the Code. Had it taken the note of the same in time this

proceeding would have ended much earlier. In the present case, the

Adjudicating Authority correctly referred the resolution plan of appellant

to the CoC vide its direction dated 10.09.2024, but it did not address the

concerns arising from non-compliance with its directions i.e. whether the

RP and CoC while evaluating the resolution plan of the appellant abided

by the principles of natural justice and provisions of the Code.

101. In our considered view, where the statutory framework is silent and

a clear conflict of interest emerges, both the Resolution Professional and

the Adjudicating Authority are required to act as institutional safeguards

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024 -50-

to prevent abuse of the process. Their failure to do so in the present case

has materially affected the resolution process.

102. We note that peculiar situation in the present case reflects a

legislative vacuum, wherein the IBC which is a complete Code and

provides legal mechanism for CIRP in all types of cases cannot throw light

about the manner in which this type of case is to be resolved. As we have

already held that the resolution plan suffers from material irregularity and

is in express violation of Section 30(5) of the Code. The resolution of the

Corporate Debtor is not possible within the current legislative framework

and liquidation is the only solution in this case.

103. Accordingly, we set aside the impugned order and order the

liquidation of the Corporate Debtor. C.P. (IB) No. 31/ALD/2021 is restored

to its original position. Parties to appear before the Ld. Adjudicating

Authority (National Company Law Tribunal, Allahabad Bench) on

18.02.2026.

[Justice N Seshasayee] Member (Judicial)

[Mr. Arun Baroka] Member (Technical)

[Mr. Indevar Pandey] Member (Technical)

SA/Pragya (LRA)

Company Appeal (AT) (Ins.) Nos. 2330 & 2331 of 2024